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 FOR THE MANCOS AND NIOBRARA FORMATIONS, UNNAMED FIELD, MOFFAT COUNTY, COLORADO

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CAUSE NO. 540

 

DOCKET NO. 1406-SP-2060

 

ORDER NO: 540-49

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on June 17, 2014, at the Rifle Branch Library, Garfield County Public Library District, 207 East Avenue, Rifle, Colorado, upon application for an order to establish an approximate 800-acre drilling and spacing unit for Sections 1, 2, 11 and 12, Township 6 North, Range 92 West, 6th P.M. and to approve up to 28 horizontal wells and four vertical 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.         Southwestern Energy Production Company (“Southwestern” 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. requires that, for unspaced lands, 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 6 North, Range 92 West, 6th P.M. are subject to Rule 318.a. for the Mancos and Niobrara Formations.

 

5.         On April 17, 2014 (Amended May 27, 2014), Southwestern, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to establish an approximate 800-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 28 horizontal wells and four vertical wells within the unit, for the production of oil, gas and associated hydrocarbons from the Mancos and Niobrara Formations, 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 6 North, Range 92 West, 6th P.M.

            Section 1:        S½ SW¼

            Section 2:        S½ SE¼

            Section 11:      E½

            Section 12:      W½

 

Applicant stated that all horizontal wells will be drilled from no more than 10 multi-well pads within the unit, with no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto).

 

6.         On June 3, 2014, Southwestern, 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 Bryce Moore, Senior Landman for Southwestern, showed the surface of the Application Lands is owned in fee, the minerals in the Application Lands are owned in fee, and the Applicant is an owner with the right to drill within the unit.  Testimony further showed that all interested parties received notice and a copy of the Application.

 

8.         Geologic Testimony and exhibits submitted in support of the Application by Tyler Englehardt, Geologist for Southwestern, showed that the Niobrara Formation is consistent, continuous, and underlying all of the Application Lands.  An isopach map of the interval from the top of the Niobrara Formation to the base of the Niobrara Formation showed that the Niobrara Formation averages 1,450 feet within the Application Lands, and gradually thickens to the west, with no existing wellbores in the Application Lands.

 

9.         Engineering Testimony and exhibits submitted in support of the Application by Ami Arief, Reservoir Engineering Manager for the Sand Wash Team at Southwestern, showed that the initial proposed horizontal well should exhibit an estimated ultimate recovery (“EUR”) of 200 MBO plus associated gas and processed natural gas liquids (NGL’s), that stacked lateral development for the entire Niobrara Formation is necessary to effectively and efficiently develop the resource, and that a calculated interior well setback of 150 feet is needed to achieve the development scenario described in the Application.  Testimony concluded the plan was economic.

 

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.       Southwestern 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 800-acre drilling and spacing unit for Sections 1, 2, 11 and 12, Township 6 North, Range 92 West, 6th P.M. and to approve up to 28 horizontal wells and four vertical wells within the unit, for the production of oil, gas and associated hydrocarbons from the Mancos and Niobrara Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 800-acre drilling and spacing unit for the below-described lands, is hereby established, and up to 28 horizontal wells and four vertical wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Mancos and Niobrara Formations, 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 6 North, Range 92 West, 6th P.M.

            Section 1:        S½ SW¼

            Section 2:        S½ SE¼

            Section 11:      E½

            Section 12:      W½

 

2.         All horizontal wells shall be drilled from no more than 10 multi-well pads within the unit, with no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto).

 

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 35 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 18TH day of July, 2014, as of June 17, 2014.                      

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary