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 2572.41-ACRE UNIT IN
SECTIONS 15, 16, 21 AND 22 TOWNSHIP 8 NORTH, RANGE 90 WEST, 6TH P.M.,
UNNAMED FIELD, MANCOS AND NIOBRARA FORMATIONS, MOFFAT COUNTY, COLORADO |
)
)
)
)
)
)
) |
CAUSE NO. 540
DOCKET NO. 1303-SP-45
ORDER NO. 540-17
|
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 2572.41-acre unit for
Sections 15, 16, 21, and 22, 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
15, 16, 21, and 22, 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
2572.41-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 15:
All (a/d/a Lots 1-14, E½ NE¼)
Section 16:
All
Section 21:
All (a/d/a Lots 1-16)
Section 22:
All (a/d/a Lots 1-16)
7.
On March 11, 2013,
QEP Resources (“QEP” or “Protestant”) filed a protest to the Application.
8.
On March 15, 2013, 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.
9.
On March 18, 2013,
QEP withdrew its protest to the Application.
10.
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.
11.
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.
12.
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.
13.
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.
14.
Axia has agreed to be bound by the oral order of the Commission.
15.
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.
16.
The Commission requested that this matter be set for review by the
Commission in one year.
17.
Based on the facts stated in the Application, having resolved all
protests, and upon a hearing before the Commission, the Commission should enter
an order to establish an approximate 2572.41-acre unit for Sections 15, 16, 21,
and 22, 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 2572.41-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 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 15:
All (a/d/a Lots 1-14, E½ NE¼)
Section 16:
All
Section 21:
All (a/d/a Lots 1-16)
Section 22:
All (a/d/a Lots 1-16)
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