BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE NIOBRARA FORMATION, UNNAMED FIELD, ARAPAHOE COUNTY, COLORADO

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CAUSE NO. 535

 

DOCKET NO. 151200735

 

TYPE: SPACING

 

ORDER NO. 535-714

 

 

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on January 26, 2016 at Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to vacate an approximate 640-acre exploratory drilling and spacing unit established by Order No. 535-582 for Section 5, Township 5 South, Range 64 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and to establish an approximate 960-acre drilling and spacing unit for Sections 5 and 6, Township 5 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         ConocoPhillips Company (“Conoco” or “Applicant”), as applicant herein, is an interested party in the subject matter of the above-referenced hearing.

 

2.         Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

 

3.         The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.

 

4.         Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that, on unspaced lands, wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. Section 6, Township 5 South, Range 64 West, 6th P.M. is subject to Rule 318.a. for the Niobrara Formation.

5.         On October 27, 2014, the Commission entered Order No. 535-582 which, among other things, established an approximate 640-acre exploratory drilling and spacing unit for Section 5, Township 5 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

6.         On October 8, 2015 (amended October 29, 2015), Conoco, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to vacate an approximate 640-acre exploratory drilling and spacing unit established by Order No. 535-582 for Section 5, Township 5 South, Range 64 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and establish an approximate 960-acre drilling and spacing unit for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation and to approve up to seven vertical or horizontal wells within the unit, the productive interval of the wellbore to be located no closer than 460 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception granted by the Director:

Township 5 South, Range 64 West, 6th P.M.

Section 5:        All

Section 6:        E˝

 

Applicant states that the proposed wells shall be located on no more than four wellpads within the unit.

 

7.         On November 16, 2015 (Supplemented on January 6, 2016), Conoco, by its attorneys, filed with the Commission a written request to approve the Application based on the merits of the verified Application and the supporting exhibits.  Sworn written testimony and exhibits were submitted in support of the Application.

 

8.         Land testimony and exhibits submitted in support of the Application by Jace McKenzie, Associate Landman for Conoco, showed that both the mineral and surface interests in the Application Lands are owned federally and in fee, and that Conoco owns a partial undivided leasehold ownership interest in the Application Lands.

 

9.         Geoscience testimony and exhibits submitted in support of the Application by Christian Marine Lahsberg, Staff Geophysicist for Conoco, showed the Niobrara Formation is present throughout the Application Lands, and is approximately 310 feet thick.

 

10.       Engineering testimony and exhibits submitted in support of the Application by Christopher Isenberger, Reservoir Engineer for Conoco, demonstrated that the drainage area for analog horizontal wells in the Niobrara Formation of the Application Lands is not greater than 960 acres for seven wells (five horizontal wells and two vertical wells), and that the proposed 960-acre drilling and spacing unit, with the requested setbacks. Engineering testimony further showed that drilling 6000-foot laterals with an estimated fracture half-length of 300 feet would yield an estimated drainage area of 55 acres per well and 6 acres for a vertical well, and an appropriate 960-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by seven wells (five horizontal and 2 vertical monitoring wells) producing oil, gas and associated hydrocarbons from the Niobrara Formation

 

11.       The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.

 

12.       Conoco agreed to be bound by oral order of the Commission. 

 

13.       Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Officer review of the Application under Rule 511, the Commission should vacate an approximate 640-acre exploratory drilling and spacing unit established by Order No. 535-582 for Section 5, Township 5 South, Range 64 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and to establish an approximate 960-acre drilling and spacing unit for Sections 5 and 6, Township 5 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 640-acre exploratory drilling and spacing unit established by Order No. 535-582 for Section 5, Township 5 South, Range 64 West, 6th P.M., is hereby vacated, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

2.         An approximate 960-acre drilling and spacing unit for the below-described lands, is hereby established, and up to seven vertical or horizontal wells for the Niobrara Formation, are hereby approved:

 

Township 5 South, Range 64 West, 6th P.M.

Section 5:        All

Section 6:        E˝

 

3.         The productive interval of the wellbores shall be located no closer than 460 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director.

           

4.         The proposed wells shall be located on no more than four wellpads within the drilling and spacing unit.

 

IT IS FURTHER ORDERED:

 

1.         The provisions contained in the above order shall become effective immediately.

 

2.         The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

                                   

3.         Under the State Administrative Procedure Act, the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.

 

4.         An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.

 

ENTERED this 5th day of February, 2016, as of January 26, 2016.       

                                                                             

                                                                        OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

By__________________________________

Julie Murphy, Secretary