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

REPORT OF COMMISSION

           The Commission heard this matter on September 19, 2011, at the Broomfield City & County Building, One Descombes Drive, Broomfield, Colorado 80020, upon application for an order to establish four approximate 640-acre drilling and spacing units for Sections 21, 28, 31, and 33, Township 9 North, Range 57 West, 6th P.M., and approve one horizontal well within each unit for the production of oil, gas, and related hydrocarbons  of the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.     Marathon Oil Company (“Marathon” 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 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.  Sections 21, 28, 31, and 33, Township 9 North, Range 57 West, 6^th P.M. are subject to this Rule for the Niobrara Formation.

5.  On July 21, 2011, Marathon, by its attorneys, filed with the Commission a verified application (the “Application”) for an order to establish four (4) approximate 640-acre drilling and spacing units for the below-listed lands (the “Application Lands”), and approve one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the surface location of the permitted well to be located on the surface anywhere within the proposed unit and the treated interval of the wellbore for the permitted well to be no closer than 600 feet from the unit boundaries, without exception being granted by the Director:

Township 9 North, Range 57 West, 6^th P.M.

6.  On September 6, 2011, Marathon, by its attorney, 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.

7.  Land testimony and exhibits submitted in support of the Application by Tricia Clark, Land Professional for Marathon showed that Marathon has either fully or partially leased the mineral interests in each section of the Application Lands, and that the Application Lands are private fee leases. 

8.  Geology testimony and exhibits submitted in support of the Application by Mathew Humphreys, Petroleum Geologist for Marathon, showed that the Niobrara Formation underlies the Application Lands and that the total thickness of the Niobrara Formation ranges from 270 feet to 320 feet across the Application Lands.

9.  Engineering testimony and exhibits submitted in support of the Application by Tara Salinas, Reservoir Engineer for Marathon, showed that analysis of two nearby wells expected to be analogues for the Application Lands have respective drainage areas of 197 acres and 362 acres respectively. The Silo field, north of the Application Lands in southern Wyoming, is a major field producing from the Niobrara Formation yields drainage estimates varying from 29 to 504 acres.  The testimony concluded that Marathon’s proposed development of the Application Lands is economic.

10.  The Application was reviewed by the Colorado Department of Public Health and Environment (“CDPHE”) pursuant to consultation provisions of Rule 306.d.  In a letter dated September 7, 2011, the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any additional conditions of approval are necessary in approving the Application.

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.   Marathon 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 enter an order to establish four approximate 640-acre drilling and spacing units for Sections 21, 28, 31, and 33, Township 9 North, Range 57 West, 6th P.M., and approve one horizontal well within each unit for the production of oil, gas, and related hydrocarbons of the Niobrara Formation.

ORDER

                        NOW, THEREFORE IT IS ORDERED, that four approximate 640-acre drilling and spacing units are hereby established for the below-listed lands, and one horizontal well is authorized within each unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the surface location of the permitted well to be located on the surface anywhere within the proposed unit, and the treated interval of the wellbore for the permitted well to be no closer than 600 feet from the unit boundaries, without exception being granted by the Director:

Township 9 North, Range 57 West, 6^th P.M.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.

                        IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

                        IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 30 days after the date this Order is mailed by the Commission.

                        IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.

                        ENTERED this    23^rd   day of September, 2011, as of September 19, 2011.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________       

                                                                                    Peter J. Gowen, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

September 23, 2011