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. 170100053

 

TYPE: SPACING

 

ORDER NO. 535-766

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on January 30, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to modify Order No. 535-740 to approve a 1,278.1-acre drilling and spacing unit for portions of Sections 34 and 35, Township 4 South, Range 65 West, 6th P.M., and approve up to three horizontal wells 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.         On October 24, 2016, the Commission entered Order No. 535-740 which, among other things, established an approximate 1,280-acre drilling and spacing unit for the Application Lands and approved up to two (2) horizontal wells within the drilling and spacing unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore of each well 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.

 

5.         On December 1, 2016, amended December 7, 2016, ConocoPhillips, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to Modify Order No. 535-740 to allow for an approximate 1,278.1-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to three horizontal wells 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, without exception being granted by the Director:

 

Township 4 South, Range 65 West, 6th P.M.

Section 34:      All, less a 1.9-acre tract (containing 638.1 acres)

Section 35:      All

 

Applicant stated that the proposed wells will be drilled from no more than three multi-well pads within the unit, or from a legal location on adjacent lands, unless the Director grants an exception.

 

6.         On January 9, 2017, 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.

 

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

 

8.         The drilling and spacing unit contains federal minerals.  As such, ConocoPhillips agreed to submit a Communitization Agreement (“CA”) to the Bureau of Land Management (“BLM”) for any existing wells within 60 days of the entry of the Order, and ConocoPhillips agreed to submit a CA to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the initial well drilled within the drilling and spacing unit.

9.         The drilling and spacing unit contains Colorado State Board of Land Commissioners (State Land Board) leased and/or unleased minerals.  A CA with the State Land Board will be required for all wells drilled under the terms of this order.  A CA must be obtained prior to drilling operations that access any State Land Board minerals.

 

10.       Geoscience testimony and exhibits submitted in support of the Application by Adam Mullins, Staff Geologist for Conoco, showed the Niobrara Formation is present throughout the Application Lands and is approximately 303 feet thick.

 

11.       Engineering testimony and exhibits submitted in support of the Application by Jeff Stine, Senior Reservoir Engineer at Conoco, showed that the drainage area for analog horizontal Niobrara Formation wells are estimated at 407.3 acres, and an approximate 1,278.1-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.

 

12.       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.

 

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

 

14.       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 modify Order No. 535-740 to approve a 1,278.1-acre drilling and spacing unit for portions of Sections 34 and 35, Township 4 South, Range 65 West, 6th P.M., and approve up to three horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Order No. 535-740 is hereby amended to reflect that an approximate 1,278.1-acre drilling and spacing unit for the below-described lands, is established, and a total of up to three horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

 

Township 4 South, Range 65 West, 6th P.M.

Section 34:      All, less a 1.9-acre tract (containing 638.1 acres)

Section 35:      All

 

2.         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.

 

3.         The proposed wells shall be located on no more than three multi-well pads within the drilling and spacing unit, or from a legal location on adjacent lands, unless the Director grants and exception.

 

4.         ConocoPhillips shall submit a Communitization Agreement to the BLM for any existing wells within 60 days of the entry of this Order, and ConocoPhillips shall submit a Communitization Agreement to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the initial well drilled within the drilling and spacing unit.

 

5.         The drilling and spacing unit contains State Land Board leased and/or unleased minerals.  A Communitization Agreement with the State Land Board will be required for all wells drilled under the terms of this order.  A Communitization Agreement must be obtained prior to drilling operations that access any State Land Board minerals.

 

 

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 1st day of February, 2017, as of January 30, 2017.            

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

                                                                        By__________________________________

Julie Murphy, Secretary