BEFORE THE OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE APPLICATION OF AXIA ENERGY, LLC FOR AN ORDER TO ESTABLISH AN APPROXIMATE 2517.8-ACRE UNCONVENTIONAL RESOURCE UNIT IN SECTIONS 1, 2, 11 AND 12, TOWNSHIP 8 NORTH, RANGE 90 WEST, 6TH P.M., FOR THE MANCOS AND NIOBRARA FORMATIONS, UNNAMED FIELD, MOFFAT COUNTY, COLORADO |
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CAUSE NO. 540
DOCKET NO. 1309-SP-1182
ORDER NO. 540-33 |
REPORT OF THE COMMISSION
The Commission heard this matter on October 28, 2013, at the Limon Community Center, 477 D Avenue, Limon, Colorado, upon application for an order to establish an approximate 2517.8-acre unconventional resource unit, and approve an appropriate number of vertical, directional or horizontal wells in order to efficiently and economically recover the oil, gas and associated hydrocarbons from the proposed unit, for the production of oil, gas and associated hydrocarbons from 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 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. Sections 1, 2, 11 and 12, Township 8 North, Range 90 West, 6th P.M. are subject to Rule 318.a. for the Mancos and Niobrara Formations.
5. On July 18, 2013, Axia, by its attorneys, filed with the Commission, a verified application (“Application”) for an order to establish an approximate 2517.8-acre unconventional resource unit for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from Mancos and Niobrara Formations, and approve an appropriate number of vertical, directional or horizontal wells in order to efficiently and economically recover the oil, gas and associated hydrocarbons from the proposed unit, with a limit of four multi-well pads per section within the Application Lands, or located on adjacent lands, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:
Township 8 North, Range 90 West, 6th P.M.
Section 1: All (Lots 2, 3, 5-13, SE¼ NW¼, SW¼ NE¼, E½ SW¼, NW¼ SE¼)
Section 2: All (Lots 5-20)
Section 11: All (Lots 1-15, SW¼ SW¼)
Section 12: All (Lots 1-9, NE¼ NW¼, W½ NE¼, SW¼)
6. On August 21, 2013, Axia requested, and Commission staff granted, a continuance to the October 28, 2013 hearing.
7. On October 10, 2013, a Rule 510 Statement was filed by the Rollins Investment Company.
8. On October 10, 2013, a Rule 510 Statement was filed by the Michelle Smith, President of the National Association of Royalty Owners – Rockies Chapter.
9. On October 15, 2013, Axia, 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 Tab McGinley, Vice President of Land for Axia, showed that Axia holds a mineral leasehold interest within the Application Lands.
11. Geologic Testimony and exhibits submitted in support of the Application by Brian Berwick, Senior Geologist for Axia, showed an analysis of cross-sections from nearby Mancos and Niobrara Formations type wells, demonstrating the Mancos and Niobrara Formations underlies, and is generally of uniform thickness (3,850 feet) throughout the Application Lands.
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 the use of horizontal wells in the Application Lands is necessary to increase the recovery of hydrocarbons from the reservoir and minimize surface disturbances. Further testimony showed the estimated ultimate recovery of hydrocarbons (“EUR”) with a 20% recovery factor and a 9,000 foot horizontal lateral would produce approximately 219 MBO of oil and 7.3 BCF of gas per well. Testimony concluded the project is efficient and economic.
13. 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.
14. Axia agreed to be bound by oral order of the Commission.
15. The Commission requested that this matter be set for review by the Commission in one year and annually thereafter, without exception being granted by the Commission.
16. Based on the facts stated in the verified Application, having received no protests, and upon a hearing before the Commission, the Commission may enter an order to establish an approximate 2517.8-acre unconventional resource unit, and approve an appropriate number of vertical, directional or horizontal wells in order to efficiently and economically recover the oil, gas and associated hydrocarbons from the proposed unit, for the production of oil, gas and associated hydrocarbons from Mancos and Niobrara Formations.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 2517.8-acre unconventional resource unit for the below-described lands, is hereby established, for the production of oil, gas and associated hydrocarbons from Mancos and Niobrara Formations, and an appropriate number of vertical, directional or horizontal wells, are hereby approved, in order to efficiently and economically recover the oil, gas and associated hydrocarbons from the proposed unit, with a limit of four multi-well pads per section within the Application Lands, or located on adjacent lands, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:
Township 8 North, Range 90 West, 6th P.M.
Section 1: All (Lots 2, 3, 5-13, SE¼ NW¼, SW¼ NE¼, E½ SW¼, NW¼ SE¼)
Section 2: All (Lots 5-20)
Section 11: All (Lots 1-15, SW¼ SW¼)
Section 12: All (Lots 1-9, NE¼ NW¼, W½ NE¼, SW¼)
2. This matter shall be set for review by the Commission in one year and annually thereafter, without exception being granted by the Commission.
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 30 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 20th day of November, 2013, as of October 28, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary