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. 170300112

 

TYPE: ADDITIONAL WELLS

 

ORDER NO. 535-779

 

 

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 approve a total of up to five horizontal wells and one vertical well within an approximate 1,278.1-acre drilling and spacing unit established by Order No. 535-766 for Sections 34 and 35, Township 4 South, Range 65 West, 6th P.M., for the production of the oil, gas, and associated hydrocarbons from the Niobrara Formation. 

 

FINDINGS

 

The Commission finds as follows:

 

1.         ConocoPhillips Company (Operator No. 19160) (“ConocoPhillips” 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.         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 and approved up to two 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.  Sections 34 and 35, Township 4 South, Range 65 West, 6th P.M., are subject to this order for the production of the oil, gas, and associated hydrocarbons from the Niobrara Formation. 

 

5.         On January 30, 2017, the Commission entered Order No. 535-766 which modified Order No. 535-740 to establish an approximate 1,278.1-acre drilling and spacing unit and approved up to three horizontal wells 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 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 an exception is granted by the Director.  Sections 34 and 35, Township 4 South, Range 65 West, 6th P.M., are subject to this order for the production of the oil, gas, and associated hydrocarbons from the Niobrara Formation.  

 

6.         On January 19, 2017, ConocoPhillips, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to approve a total of up to five horizontal wells and one vertical well within an approximate 1,278.1-acre drilling and spacing unit established by Order No. 535-766 for the below-described lands (“Application Lands”), 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

 

7.         Applicant stated that any wells to be drilled under this Application will be drilled from no more than three multi-well pads within the unit, or on lands adjacent thereto, unless the Director grants an exception.

 

9.         On February 27, 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.

 

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

 

11.       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.

 

12.       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.

 

13.       Geologic testimony and exhibits submitted in support of the Application by Adam Mullins, Staff Geophysicist for ConocoPhillips, showed the Niobrara Formation is present throughout the Application Lands, is approximately 303 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Niobrara Formation is a sequence of chalks and marlstones and is a common source of supply. 

 

14.       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 five horizontal wells and one vertical well in the Niobrara Formation.  Engineering testimony further showed that the calculated drainage area for a horizontal Niobrara Formation well is 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 five horizontal wells and one vertical well producing oil, gas and associated hydrocarbons from the Niobrara Formation.

 

15.       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.

 

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

 

17.       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 approve a total of up to five horizontal wells and one vertical well within an approximate 1,278.1-acre drilling and spacing unit established by Order No. 535-766 for Sections 34 and 35, Township 4 South, Range 65 West, 6th P.M., for the production of the oil, gas, and associated hydrocarbons from the Niobrara Formation. 

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         A total of up to five horizontal wells and one vertical well within an approximate 1,278.1-acre drilling and spacing unit established by Order No. 535-766 for the below described lands 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 any horizontal wellbore shall be 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.         All wells permitted under this Order shall be drilled from no more than three multi-well pads within the Application Lands within the unit or adjacent thereto, unless the Director grants an 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 28th day of March, 2017, effective as of March 20, 2017.

           

OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

By: ____________________________________     

     Peter Gowen, Acting Secretary