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. 161200508

 

TYPE: SPACING

 

ORDER NO. 535-753

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on December 12, 2016, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-97 for Section 8, Township 4 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate Order No. 535-613; and 3) establish an approximate 1280-acre drilling and spacing unit for Sections 7 and 8, Township 4 South, Range 64 West, 6th P.M., and approve up to one horizontal well within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         ConocoPhillips Company (Operator No. 19160) (“ConocoPhillips” or “Applicant”) 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 7, Township 4 South, Range 66 West, 6th P.M., is subject to this Rule for production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

5.           On November 29, 2011, effective October 31, 2011, the Commission entered Order No. 535-97, which established 25 approximate 640-acre drilling and spacing units for certain lands located in Townships 4 and 5 South, Ranges 64 and 65 West, and approved up to two horizontal wells within each unit, with surface locations being located anywhere within the unit or surrounding lands but the lateral of such well may not enter the Niobrara Formation any closer than 300 feet from the section line, with the treated interval of the permitted wellbore to be located no closer than 460 feet from the boundary of the unit and no closer than 920 feet from the treated interval of any other well in the unit producing from the Niobrara Formation, without exception being granted by the Director, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Section 8, Township 4 South, Range 64 West, 6th P.M., is subject to this Order.

 

6.         On December 16, 2011, effective December 12, 2011, the Commission entered Order No. 535-100, which granted a well location exception to the requirements of Commission Rule 318.a. for certain lands located in Township 4 South, Ranges 64 and 65 West, providing that the surface location for each horizontal well drilled within a given section of said lands may be located anywhere within the section or on adjoining lands with appropriate surface owner approval, the lateral of a given horizontal well may enter the Niobrara Formation no closer than 300 feet from the section line, the treated interval within the Niobrara Formation may be located not closer than 460 feet from the section line, and the distance between the treated interval of Niobrara wells within the Application Lands shall not be less than 920 feet; for production of oil, gas, and other hydrocarbons from the Niobrara Formation.  Section 7, Township 4 South, Range 64 West, 6th P.M., is subject to this Order.

 

7.         On January 8, 2015, effective December 15, 2014, the Commission entered Order No. 535-613, which modified Order No. 535-97 to allow for the lateral of a given horizontal well to enter the Niobrara Formation anywhere within the approximate 640-acre drilling and spacing unit established for Section 8, Township 4 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

8.         On October 13, 2016, ConocoPhillips, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-97 for Section 8, Township 4 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate Order No. 535-613; and 3)  establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with 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, unless an exception is granted by the Director:

 

Township 4 South, Range 64 West, 6th P.M.

Section 7:        All 

Section 8:        All

 

9.         On November 21, 2016, ConocoPhillips, 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.

 

            10.       Land testimony and exhibits submitted in support of the Application by Jace McKenzie, Associate Landman for ConocoPhillips, showed that ConocoPhillips holds oil and gas leasehold interests and has a right to drill in the Application Lands.        

 

11.       Geologic testimony and exhibits submitted in support of the Application by Adam Mullins, Staff Geologist for ConocoPhillips, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 320 feet thick, and is generally of uniform thickness throughout the Application Lands.

 

12.       Engineering testimony and exhibits submitted in support of the Application by Jeff Stine, Senior Reservoir Engineer for ConocoPhillips, showed that the drainage area for analog horizontal Niobrara Formation wells are estimated at 407.3 acres, and an approximate 1280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Niobrara Formation.

 

13.       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.

 

14.       ConocoPhillips agreed to be bound by oral order of the Commission.

 

15.       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: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-97 for Section 8, Township 4 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate Order No. 535-613; and 3) establish an approximate 1280-acre drilling and spacing unit for Sections 7 and 8, Township 4 South, Range 64 West, 6th P.M., and approve up to one horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 640-acre drilling and spacing unit established by Order No. 535-97 for Section 8, Township 4 South, Range 66 West, 6th P.M., is hereby vacated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

2.         Order No. 535-613 is hereby vacated.

 

3.      An approximate 1280-acre drilling and spacing unit for the below-described lands is hereby established, and a total of up to one horizontal well within the unit is hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

 

Township 4 South, Range 64 West, 6th P.M.

Section 7:        All 

Section 8:        All

 

3.         The productive interval of the wellbore will 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, unless the Director grants an exception.

 

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 20th day of December, 2016, as of December 12, 2016.   

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By__________________________________

Julie Murphy, Secretary