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 NIOBRARA FORMATION, BUCK PEAK FIELD, ROUTT COUNTY, COLORADO

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CAUSE NO. 540 DOCKET NO. 150500287 ORDER NO. 540-58 TYPE:  SPACING

REPORT OF THE COMMISSION

            The Commission heard this matter on July 20, 2015 at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado upon application for an order to establish an approximate 173.4145-acre drilling and spacing unit for portions of Section 29 and Section 32, Township 6 North, Range 89 West, 6^th P.M., and approve up to three horizontal wells and one vertical well within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.         SWN Production Company (Operator No. 10396) (“SWN” 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 Commission Rules provides a well that is to be drilled 2,500 feet or greater shall be located not less than 600 feet from any lease line, and shall be 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, unless authorized by the Commission upon hearing.

5.         On March 19, 2015, SWN, by its attorneys, filed with the Commission a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to establish an approximate 133-acre drilling and spacing unit.

6.         On June 15, 2015, SWN, by its attorneys, filed with the Commission a verified amended application (“Application”) pursuant to §34-60-116 C.R.S. for an order to establish an approximate 173.4145-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to three horizontal wells and one vertical well 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 6 North, Range 89 West, 6^th P.M.

                                    Section 29:      S/2 of Lot 9

                                                            E/2, SW/4 of Lot 15

                                                            W/2, NE/4 of Lot 16

                                    Section 32:      NW/4 of Lot 1

                                                            Lot 2

                                                            E/2 of Lot 3

                                                            N/2 of Lot 7

7.         On June 26, 2015, SWN, 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.

            8.         Land testimony and exhibits submitted in support of the Application by Leanne Hicks, Landman for SWN showed that SWN holds oil and gas leasehold interests and has a right to drill in the Application Lands.      

9.         Geologic testimony and exhibits submitted in support of the Application by Devon Meissen, Geologist for SWN showed that the Niobrara Formation is present throughout the Application Lands, is approximately 1,250 feet thick, and is generally of uniform thickness throughout the Application Lands.

10.       Engineering testimony and exhibits submitted in support of the Application by Matt Mendel, Engineer for SWN, showed that the Niobrara Formation covers a large gross interval necessitating multiple stacked laterals, and an appropriate 173.4145-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by three horizontal wells and one vertical well producing oil, gas and associated hydrocarbons from the Niobrara Formation.

11.       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.

12.       SWN agreed to be bound by oral order of the Commission.

13.       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 173.4145-acre drilling and spacing unit for Section 29 and Section 32, Township 6 North, Range 89 West, 6^th P.M., and to approve up to three horizontal wells and one vertical well within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

ORDER

IT IS HEREBY ORDERED:

1.         An approximate 173.4145-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to three horizontal wells and one vertical well within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

Township 6 North, Range 89 West, 6^th P.M.

                                    Section 29:      S/2 of Lot 9

                                                            E/2, SW/4 of Lot 15

                                                            W/2, NE/4 of Lot 16

                                    Section 32:      NW/4 of Lot 1

                                                            Lot 2

                                                            E/2 of Lot 3

                                                            N/2 of Lot 7

2.         The productive interval of the wellbore will 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 producing from the same source of supply within the unit, without exception being granted by the Director.

3.         A maximum of one existing surface locations will be allowed for development of minerals from the Niobrara Formation within the drilling and spacing unit.

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 _____ day of August, 2015, as of July 20, 2015.    

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By__________________________________

Julie Murphy, Secretary