BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

IN THE MATTER OF THE APPLICATION OF QUICKSILVER RESOURCES INC. FOR AN ORDER TO ESTABLISH AN APPROXIMATE 949-ACRE EXPLORATORY DRILLING AND SPACING UNIT  FOR SECTIONS 25 AND 26, TOWNSHIP 7 NORTH, RANGE 87 WEST, 6TH P.M. FOR THE NIOBRARA FORMATION, UNNAMED FIELD, ROUTT COUNTY, COLORADO

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CAUSE NO. 540

 

DOCKET NO. 1312-SP-1205

 

ORDER NO. 540-48

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on December 16, 2013, at the Ralph L. Carr Colorado Judicial Center, 1300 Broadway, 1st Floor, Room 1E, Denver, Colorado, upon application for an order to establish an approximate 949-acre exploratory drilling and spacing unit for Sections 25 and 26, Township 7 North, Range 87 West, 6th P.M., and approve up to four horizontal wells and up to four vertical or directional wells, for a total of eight within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Quicksilver Resources Inc. (“Quicksilver” 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.  Sections 25 and 26, Township 7 North, Range 87 West, 6th P.M. are subject to Rule 318.a. for the Niobrara Formation.

 

5.         On October 17, 2013, Quicksilver, by its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an order to establish an approximate 949-acre exploratory drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to four horizontal wells and up to four vertical or directional wells, for a total of eight wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, 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 7 North, Range 87 West, 6th P.M.

                        Section 25:  All            (a/k/a Lots 1 through 16)

                        Section 26:  E½

 

6.         On December 3, 2013, Quicksilver, 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.

 

7.         Land testimony and exhibits submitted in support of the Application by Kevin Sulley, Director of Land for Quicksilver, showed the minerals are comprised of fee and federal minerals and that Quicksilver owns a leasehold interest in the Application Lands.  Testimony stated the surface location located in the SW¼ SE¼ of Section 26, Township 7 North, Range 87 West, 6th P.M. is an exception location due to the rugged topography and that Quicksilver has obtained a Surface Use Agreement from Pirtlaw Partners Ltd. covering the Application Lands.

 

8.         Geologic testimony and exhibits submitted in support of the Application by Brad Boothe, Geology Manager for Quicksilver, showed that the Niobrara Formation underlies the entirety of the Application Lands and is approximately 1,025 to 1,125 feet thick.  Testimony concluded that geologic data from nearby type wells indicated the presence of hydrocarbons, but that data was limited due to the exploratory nature of the proposed unit.

 

9.         Engineering testimony and exhibits submitted in support of the Application by Sam Steward, Senior Reservoir Engineer for Quicksilver, stated that 17 nearby wells had produced in excess of 4,000 MBO, averaging 275 MBO per well.  Modeling for the entire 949-acre unit estimated the  ultimate recovery (“EUR”) to be 480 MBO at a 2% recovery factor, to 720 MBO at a 3% recovery factor.  Testimony further stated that these high rates and/or high cumulative volumes are indicative of the wellbore penetrating open natural fractures.  Testimony concluded that that horizontal well technology would intercept more of these open natural fracture networks, resulting in the most efficient way to drain the resources from the Application Lands.

 

10.       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.

 

11.       Quicksilver agreed to be bound by oral order of the Commission. 

 

12.       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 an approximate 949-acre exploratory drilling and spacing unit for Sections 25 and 26, Township 7 North, Range 87 West, 6th P.M., and approve up to four horizontal wells and up to four vertical or directional wells, for a total of eight wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 949-acre exploratory drilling and spacing unit for the below-described lands, is hereby established, and up to four horizontal wells and up to four vertical or directional wells, for a total of eight wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, 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 7 North, Range 87 West, 6th P.M.

                        Section 25:  All            (a/k/a Lots 1 through 16)

                        Section 26:  E½

 

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 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 _____ day of January, 2014, as of December 16, 2013.

           

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary