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 IN AN UNNAMED FIELD,

ADAMS COUNTY, COLORADO

 

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CAUSE NO. 535

 

ORDER NO. 535-89

 

REPORT OF COMMISSION

 

                        The Commission heard this matter on October 31, 2011, at the City of Littleton Council Chambers, 2255 West Berry Avenue, Littleton, Colorado 80120 upon application for an order to establish 18 approximate 640 acre drilling and spacing units for lands in Sections 18 and 26, Township 3 South, Range 64 West 6th P.M., and Sections 13, 14, 16, 17, 20 through 24, 26, 28 through 30, and 32 through 34, Township 3 South, Range 65 West, 6th P.M., Adams County,  and authorize up to two horizontal wells in each unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.    Anadarko E & P Company LP, (“Anadarko” 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.  The below-listed lands are subject to this Rule for the Niobrara Formation:

 

Township 3 South, Range 64 West 6th P.M.

Sections 18 and 26

 

Township 3 South, Range 65 West, 6th P.M.

Sections 13, 14, 16, 17, 20 through 24, 26, and 28 through 34

 

5.    On August 31, 2011, Anadarko, by its attorneys, filed with the Commission a verified application (“Application”) for an order to: 1) establish 19 approximate 640-acre drilling and spacing units for the below listed lands for production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) approve 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, without exception being granted by the Director:

 

Township 3 South, Range 64 West 6th P.M.

Sections 18 and 26

 

Township 3 South, Range 65 West, 6th P.M.

Sections 13, 14, 16, 17, 20 through 24, 26, and 28 through 34

 

                        6.  On October 7, 2011, Anadarko, by its attorney, asked to withdraw Section 31, Township 3 South, Range 65 West, 6th P.M. from the application. As a result, the following lands remain subject to the Application (“Application Lands”):

 

Township 3 South, Range 64 West 6th P.M.

Sections 18 and 26

 

Township 3 South, Range 65 West, 6th P.M.

Sections 13, 14, 16, 17, 20 through 24, 26, and 28 through 30, and 32 through 34

 

7.  On October 18, 2011, Anadarko, 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.

 

                        8.  Land testimony and exhibits submitted in support of the Application by Enrique B. Nelson, Landman for Anadarko, showed that Anadarko owns a leasehold interest in the Application Lands.

 

                        9.   Geologic testimony and exhibits submitted in support of the Application by Peter K. Kubik, Petroleum Geologist for Anadarko, showed the Niobrara Formation is laterally continuous across the Application Lands, with a thickness ranging between 250 and 310 feet. 

 

                        10.  Engineering testimony and exhibits submitted in support of the Application by Robert A. King, Petroleum Engineer for Anadarko, showed calculated a drainage area for a single horizontal well of 283 acres, and a total of 566 acres for two horizontal wells within a 640-acre unit. The testimony concluded that 2 horizontal wells on the Application Lands with the proposed setbacks, will promote efficient drainage. 

 

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.   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 October 21, 2011, the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any additional conditions of approval are necessary for approving the amended Application.

 

13.  Anadarko 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 establish 18 approximate 640 acre drilling and spacing units for lands in Sections 18 and 26, Township 3 South, Range 64 West 6th P.M., and Sections 13, 14, 16, 17, 20 through 24, 26, 28 through 30, and 32 through 34, Township 3 South, Range 65 West, 6th P.M., Adams County,  and authorization to drill up to two horizontal wells in each unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

15.  On October 21, 2011, Lowell Piland  submitted an email to the Hearings Manager explaining that he was the owner of Piland Well, 15-3 Township 3 South Range 64 West 6th P.M.  and recently became aware of the application from Anadarko in this matter. He expressed concern about the impact the reduction in the setbacks from section lines and from other wells would have on his well and requested that his concerns be considered. 

 

16.  On October 31, 2011 the Commission heard this matter.  Counsel for Anadarko argued that the Piland email was not a proper protest and should only be considered as a Rule 510 statement. Mr. Piland did not appear.  The Commission considered the Piland email and arguments made by counsel for Anadarko, without a formal ruling as to whether the Piland email was a proper protest. The Commission’s decision is considered a decision on the merits and the totality of the record before it.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that 18 approximate 640-acre drilling and spacing units, are hereby established, for the below listed lands for production of oil, gas and associated hydrocarbons from the Niobrara Formation; and up to two horizontal wells within each unit, are hereby approved, 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, without exception being granted by the Director:

 

Township 3 South, Range 64 West 6th P.M.

Sections 18 and 26

 

Township 3 South, Range 65 West, 6th P.M.

Sections 13, 14, 16, 17, 20 through 24, 26, and 28 through 30, and 32 through 34

 

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   7th  day of November, 2011, as of October 31, 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

November 7, 2011