BEFORE THE OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE MANCOS, NIOBRARA, FRONTIER, MOWRY, AND DAKOTA FORMATIONS, GRAND VALLEY FIELD, GARFIELD COUNTY, COLORADO |
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CAUSE NO. 547
DOCKET NO. 1404-SP-2055
ORDER NO. 547-10 |
REPORT OF THE COMMISSION
The Commission heard this matter on July 28, 2014, at the Weld County Administration Building - Events Center, 1150 “O” Street, Greeley, CO upon application for an order to amend the well location rules in Order No. 510-59 to allow the treated interval of any permitted well within an approximate 2605-acre exploratory drilling unit for Sections 22, 23, 26 and 27, Township 7 South, Range 96 West, 6th P.M. to be located no closer than 300 feet from the northern and southern unit boundaries and 600 feet from the eastern and western unit boundaries, and no closer than 300 feet from the treated interval of any other wellbore producing from the same source of supply, for the production of gas and associated hydrocarbons from the Mancos, Niobrara, Frontier, Mowry, and Dakota Formations (“Deep Formations”).
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. On February 16, 2012, the Commission entered Order No. 510-59 which, among other things, established an approximate 2,605.97-acre exploratory drilling unit for Sections 22, 23, 26 and 27, Township 7 South, Range 96 West, 6th P.M., for horizontal and vertical well development, for the production of oil, gas and associated hydrocarbons from the Deep Formations, with the treated interval of the permitted wellbore(s) to be located no closer than 600 feet from the outer boundaries of the unit and not less than 600 feet from any other well or treated interval of a well producing from the same common source of supply, without exception from the Director.
5. On February 27, 2014, WPX, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to amend the well location rules in Order No. 510-59 to allow the treated interval of any permitted well within an approximate 2605-acre exploratory drilling unit for the below-described lands (“Application Lands”) for the production of gas and associated hydrocarbons from the Deep Formations, to be located no closer than 300 feet from the northern and southern unit boundaries and 600 feet from the eastern and western unit boundaries, and no closer than 300 feet from the treated interval of any other wellbore producing from the same source of supply, without exception being granted by the Director:
Township 7 South, Range 96 West, 6th P.M.
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Applicant states that the wells permitted under this Order will be drilled from the surface either vertically or directionally using existing location in adjacent lands or from no more than one pad per quarter quarter section (or lots or parcels approximately equivalent thereto).
6. On April 15, 2014, 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.
7. On April 16, 2014, the Bureau of Land Management (“BLM”) filed a protest (“Protest’) to the Application.
8. On April 16, 2014, the Commission Staff continued this matter to the June hearing.
9. On June 10, 2014, the Commission Staff continued this matter to the June hearing. On the same day, the BLM withdrew its Protest.
10. Testimony and exhibits submitted in support of the Application by Maxwell Faith, Senior Staff Landman for WPX, showed that WPX owns substantial leasehold interests in the Application Lands with numerous Williams Fork wells holding the entirety of the those leasehold interests.
11. Testimony and exhibits submitted in support of the Application by Ryan Kowalski, Senior Geologist for WPX, showed that the Deep Formations underlies the entirety of the Application Lands and is a common source of supply. Further testimony showed that pressure testing and conventional core data in adjacent wells would support efficient gas production through hydraulic fracture stimulation and that naturally occurring fractures support generally east-west primary frac propagation. Conventional log interpretation supports the presence of gas supply through the entirety of the Deep Formations underlying the Application Lands.
12. Testimony and exhibits submitted in support of the Application by Tyler Peters, Senior Reservoir Engineer for WPX, showed that drilling and completing a combination of horizontal and vertical wells in the “N1” and “N2” benches of the Niobrara Formation underlying the Application Lands is the most efficient and economic method of developing the resource. Additional testimony supported interwell spacing of no closer than 300 feet for the proposed exploratory drilling unit and a 300 foot setback from the north and south unit boundaries to promote efficient drainage while protecting correlative rights.
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. WPX agrees to be bound by oral order of the Commission.
15. Based on the facts stated in the verified Application, having resolved all protests, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order to amend the well location rules in Order No. 510-59 to allow the treated interval of any permitted well within an approximate 2,605-acre exploratory drilling unit for Sections 22, 23, 26, and 27, Township 7 South, Range 96 West, 6th P.M. to be located no closer than 300 feet from the northern and southern unit boundaries and 600 feet from the eastern and western unit boundaries, and no closer than 300 feet from the treated interval of any other wellbore producing from the same source of supply, for the production of gas and associated hydrocarbons from the Mancos, Niobrara, Frontier, Mowry, and Dakota Formations (“Deep Formations”).
ORDER
IT IS HEREBY ORDERED:
1. The well location rules in Order No. 510-59 for the approximate 2,605-acre exploratory drilling unit established for the below-described lands, are hereby amended, for the production of gas and associated hydrocarbons from the Deep Formations, to allow the treated interval of any permitted well to be located no closer than 600 feet from the eastern and western boundaries of the proposed exploratory drilling unit, no closer than 300 feet from the northern and southern boundaries of the proposed exploratory drilling unit, and no closer than 300 feet from any other well or treated interval of a well producing from the Deep Formations, without exception being granted by the Director.
Township 7 South, Range 96 West, 6th P.M.
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2. All wells permitted under this Order shall be drilled from the surface either vertically or directionally using existing location in adjacent lands or from no more than one pad per 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 29th day of July, 2014, as of July 28, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary