BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE NIOBRARA FORMATION, UNNAMED FIELD, ADAMS COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 161200510
TYPE: SPACING
ORDER NO. 535-769
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REPORT OF THE COMMISSION
The Commission heard this matter on March 20, 2017, at the Larimer County Conference Center at The Ranch, First National Bank Building, 5280 Arena Circle, Loveland, Colorado, upon application for an order to: (1) vacate an approximate 1280-acre exploratory drilling and spacing unit established by Order No. 535-531 for Sections 31 and 32, Township 3 South, Range 64 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; (2) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-702 for Section 36, Township 3 South, Range 65 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; and (3) establish an approximate 1280-acre drilling and spacing unit for Section 36, Township 3 South, Range 65 West, 6th P.M., and Section 31, Township 3 South, Range 64 West, 6th P.M., and approve one horizontal well in the unit for the production of oil, gas and associated hydrocarbons from of 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 December 16, 2011, effective December 12, 2011, the Commission entered Order No., 535-101, which granted a well location exception to the requirements of Commission Rule 318.a. for certain lands in Section 19 and 31, Township 3 South, Range 64 West, 6th P.M., and Section 19, Township 3 South, Range 65 West, 6th P.M., for the development and production of the oil, gas and related hydrocarbons from the Niobrara Formation, 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.
5. On September 22, 2014, effective September 15, 2014, the Commission entered Order No. 535-531, which vacated a well location exception established by Order No. 535-101 for Section 31, Township 3 South, Range 64 West, 6th P.M., and established a 1,280-acre exploratory drilling and spacing unit for Sections 31 and 32, Township 3 South, Range 64 West, 6th P.M., and approving a total of up to two horizontal wells within the unit for production of oil, gas and associated hydrocarbons from the Niobrara Formation, providing that the productive interval of the wellbore shall be located no closer than 460 feet from the unit boundaries, and no closer than 960 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director.
6. On September 21, 2015, effective September 14, 2015, the Commission entered Order No. 535-702, which established an approximate 640-acre drilling and spacing unit for Section 36, Township 3 South, Range 65 West, 6th P.M., and approving a total of up to two horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, providing that 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 an exception is granted by the Director, and that ConocoPhillips shall submit a Communitization Agreement to the BLM for any existing wells within 60 days of the entry of the Order, and that 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’s Rules) from the initial well drilled within the drilling and spacing unit.
7. 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 1280-acre exploratory drilling and spacing unit established by Order No. 535-531 for Sections 31 and 32, Township 3 South, Range 64 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, (2) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-702 for Section 36, Township 3 South, Range 65 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and (3) establish an approximate 1280-acre drilling and spacing unit for below described lands (“Application Lands”) and to approve one horizontal well in the unit for the production of oil, gas and associated hydrocarbons from of the Niobrara Formation, with the treated interval of any horizontal well to be located no closer than 460 feet from the boundaries of the unit, and no closer than 150 feet from the treated interval of another well within the unit:
Township 3 South, Range 65 West, 6th P.M.
Section 36: All
Township 3 South, Range 64 West, 6th P.M.
Section 31: All
7. On January 9, 2017, amended March 17, 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.
8. On January 9, 2017, ConocoPhillips, by its attorneys, and the Bureau of Land Management (BLM) agreed that the Application Lands contain federal minerals. As such, ConocoPhillips agreed to submit a Communitization Agreement to the BLM for any existing wells within 60 days of the entry of an order. ConocoPhillips also agreed to submit a Communitization Agreement to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission’s Rules) from the initial well drilled within the drilling and spacing unit for the Application Lands.
9. 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.
10. 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.
11. Engineering testimony and exhibits submitted in support of the Application by Jeff Stine, Senior Reservoir Engineer for ConocoPhillips, showed that ConocoPhillips is planning to drill one horizontal well in the Niobrara Formation. Engineering testimony further showed that the drainage area for an approximately two-mile-long horizontal Niobrara Formation well is 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.
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: (1) vacate an approximate 1280-acre exploratory drilling and spacing unit established by Order No. 535-531 for Sections 31 and 32, Township 3 South, Range 64 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; (2) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-702 for Section 36, Township 3 South, Range 65 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; and (3) establish an approximate 1280-acre drilling and spacing unit for Section 36, Township 3 South, Range 65 West, 6th P.M., and Section 31, Township 3 South, Range 64 West, 6th P.M., and approve one horizontal well in the unit for the production of oil, gas and associated hydrocarbons from of the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 1280-acre exploratory drilling and spacing unit established by Order No. 535-531 for Sections 31 and 32, Township 3 South, Range 64 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, is vacated.
2. An approximate 640-acre drilling and spacing unit established by Order No. 535-702 for Section 36, Township 3 South, Range 65 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, is vacated.
3. An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and one horizontal well within the unit is hereby approved for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:
Township 3 South, Range 65 West, 6th P.M.
Section 36: All
Township 3 South, Range 64 West, 6th P.M.
Section 31: All
4. The productive interval of each wellbore shall be no closer than 460 feet from the boundaries of the unit, and no closer than 150 feet from the treated interval of another well within the unit, unless the Director grants an exception.
5. ConocoPhillips shall submit a Communitization Agreement to the BLM for any existing wells within 60 days of the entry of this Order. 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’s Rules) from the initial well drilled within the drilling and spacing unit for the above described lands.
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 28th day of March, 2017, as of March 20, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By_____________________________________
Peter Gowen, Acting Secretary