BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF AXIA ENERGY, LLC FOR AN ORDER TO ESTABLISH
AN APPROXIMATE 2613.44-ACRE UNIT IN SECTIONS 3, 4, 9 AND 10, TOWNSHIP 8 NORTH,
RANGE 90 WEST, 6TH P.M., UNNAMED FIELD, MANCOS AND NIOBRARA
FORMATIONS, MOFFAT COUNTY, COLORADO |
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CAUSE NO. 540
DOCKET NO. 1303-SP-40
ORDER NO. 540-12
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REPORT OF THE COMMISSION
The Commission heard this matter on March 25, 2013, at the Colorado
Oil and Gas
Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon
application for an order to establish an approximate 2613.44-acre unit for
Sections 3, 4, 9 and 10, Township 8 North, Range 90 West, 6th P.M.
and approve an appropriate number of wells within the unit, for the production
of oil, gas and associated hydrocarbons from the Mancos and Niobrara Formations.
FINDINGS
The Commission finds as follows:
1.
Axia Energy, LLC (“Axia” 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 all persons and property, public and
private, necessary to enforce the provisions of the Oil and Gas Conservation Act
(“Act”), and has the power to make and enforce rules, regulations, and orders
pursuant to the Act, and to do whatever may reasonably be necessary to carry out
the provisions of the Act.
§34-60-105 C.R.S. The Commission has
the authority to regulate the drilling, producing and spacing of wells. § 34-60-106(2) C.R.S.
4.
The Commission finds it has jurisdiction over the subject matter embraced
in said Notice, and that the Notice provided meets all requirements of law.
5.
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.
Sections 3, 4, 9 and 10, Township 8 North, Range 90 West, 6th P.M.
are subject to Rule 318.a for the Mancos and Niobrara Formations.
6.
On January 24, 2013, Axia, by its attorneys, filed with the Commission a
verified application (“Application”) for an order to establish an approximate
2613.44-acre unit for the below described lands (“Application Lands”), for the
production of oil, gas and associated hydrocarbons from Mancos and Niobrara
Formations, and authorize the appropriate
number of wells in order to effectively and efficiently recover the oil, gas and
associated hydrocarbons from the proposed unit, with a limit of eight
horizontal wellpads per section on the Application Lands, or located on adjacent
lands, with the treated interval of any horizontal well to be no closer than 600
feet from the unit boundaries, without exception being granted by the Director:
Township 8 North, Range 90 West, 6TH
P.M.
Section 3:
All (a/d/a Lots 2, 5-18, SW¼ NE¼)
Section 4:
All (a/d/a Lots 5-20)
Section 9:
All (a/d/a Lots 1-16)
Section 10:
All (a/d/a Lots 1-15, SE¼ SE¼)
7.
On March 12, 2012, Axia, by its
attorneys, filed with the Commission a written request to approve the
Application based on its 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
Tab McGinley, Vice President of Land for Axia, showed that Axia holds a mineral
leasehold interest in the Application Lands.
9.
Geologic testimony and exhibits submitted in support of the Application
by Brian Berwick, Senior Geologist for Axia, showed that the Mancos and Niobrara
Formations exists under all of the Application Lands. Additional testimony
showed that the total thickness of the interval from the top of the Mancos to
the base of the Niobrara Formation under the Application Lands is 3700 feet
thick.
10.
Engineering testimony and exhibits submitted in support of the
Application by Taryn Frenzel, Senior Completions Engineer for the Sand Wash Team
for Axia, showed that stacked horizontal wells will be
necessary to develop the resource and effectively drain the Mancos and Niobrara
Formation within the Application Lands.
The testimony further showed that the ability to drill 9000 feet
laterals will allow for more efficient development by eliminating unnecessary
surface locations.
11.
The above-referenced testimony and exhibits show that the granting of the
Application will allow more efficient reservoir drainage, and will prevent
waste, will assure a greater ultimate recovery of hydrocarbons and will not
violate correlative rights.
12.
Axia has agreed to be bound by the oral order of the Commission.
13.
The Commission finds that the unconventional resource unit shall be
considered a drilling and spacing unit established by the Commission for
purposes of Rule 530.a.
14.
The Commission requested that this matter be set for review by the
Commission in one year.
15.
Based on the facts stated in the
Application, having received no protests, and upon a hearing before the
Commission, the Commission should enter an order to establish an approximate
2613.44-acre unit for Sections 3, 4, 9 and 10, Township 8 North, Range 90 West,
6th P.M. and approve an appropriate number of wells within the unit,
for the production of oil, gas and associated hydrocarbons from the Mancos and
Niobrara Formations.
ORDER
NOW, THEREFORE, IT IS ORDERED, that an approximate 2613.44-acre
unconventional resource unit for the below-described lands, is hereby
established, and an appropriate number of horizontal wells to efficiently and
economically recover the oil, gas and associated hydrocarbons within the unit,
are hereby approved, for the production of
oil, gas and associated hydrocarbons from the Mancos and Niobrara Formations,
with a limit of eight horizontal wellpads per section on the Application Lands,
or located on adjacent lands, with the treated interval of any horizontal
well to be no closer than 600 feet from the unit boundaries, without exception
being granted by the Director:
Township 8 North, Range
90 West, 6TH P.M.
Section 3:
All (a/d/a Lots 2, 5-18, SW¼ NE¼)
Section 4:
All (a/d/a Lots 5-20)
Section 9:
All (a/d/a Lots 1-16)
Section 10:
All (a/d/a Lots 1-15, SE¼ SE¼)
IT IS FURTHER ORDERED, 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 thirty (30) days after the date of 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 5th day
of April, 2013, as of March 25, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Robert J. Frick, Secretary