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

REPORT OF THE COMMISSION

The Commission heard this matter on November 15, 2012, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to approve an exception location for the Williams GM 701-4 HN1 Well, to authorize the completion and production of the treated interval of the wellbore to be no closer than 300 feet from any lease line, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.         WPX Energy Rocky Mountain, LLC (“WPX” 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, unless authorized by order of the Commission upon hearing.

5.         On May 9, 2012, an Application for Permit-to-Drill (“APD”), Form 2, was approved for the Williams GM 701-4 HN1 Well (API No. 05-045-21487)(“Well”), with the permitted top of the treated interval for the Niobrara Formation to be no closer than 1,890 feet FNL and no closer than 510 feet FEL of Section 4, Township 7 South, Range 96 West, 6^th P.M.

6.         WPX is drilling the Well, a horizontal well drilled from a surface location in the NE¼ NE¼ of Section 4, Township 7 South, Range 96 West, 6^th P.M., with the lateral portion of the wellbore located in the Niobrara Formation, traversing Sections 3, 4, 9 and 10 of Township 7 South, Range 96 West, 6^th P.M. to a bottomhole location in the SW¼ NW¼ of Section 10.

7.         On September 17, 2012, WPX, by its attorneys, filed with the Commission a verified application (“Application”) for an order approving an exception location for the Well, to authorize the completion and production of the treated interval of the wellbore to be no closer than 300 feet from any lease line, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

8.         On November 2, 2012, WPX, 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.

9.         Land testimony and exhibits submitted in support of the Application by Christopher M. Walsh, Senior Staff Landman for WPX, showed WPX has a leasehold interest in the Application Lands and that all interested parties received notice of this Application.

10.       Geologic testimony and exhibits submitted in support of the Application by Jonathan Cantwell, Geoscientist Senior Staff for WPX, showed that with a “closest” perforation at a 300-foot setback distance from the lease boundary, the area drained would extend 175 feet towards that boundary and leave a 125-foot buffer zone to protect correlative rights and prevent waste. 

11.       Engineering testimony and exhibits submitted in support of the Application by Chris Caplis, Senior Staff Petroleum Engineer for WPX, showed that a 300 foot setback will prevent waste by recovering additional reserves that would otherwise not be recovered with a 600 foot setback.

12.       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.

13.       WPX agreed to be bound by oral order of the Commission. 

14.       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 approve an exception location for the Williams GM 701-4 HN1 Well, to authorize the completion and production of the treated interval of the wellbore to be no closer than 300 feet from any lease line, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

ORDER

NOW, THEREFORE IT IS ORDERED, that an exception location for the Williams GM 701-4 HN1 Well, is hereby approved, authorizing the completion and production of the treated interval of the wellbore to be no closer than 300 feet from any lease line, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

IT IS FURTHER ORDERED, that 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 30 days after the date 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 ____ day of November, 2012, as of November 15, 2012.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________         

                                                                                    Robert J. Frick, Secretary