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, UNNAMED FIELD, GARFIELD COUNTY, COLORADO |
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CAUSE NO. 547
DOCKET NO. 1409-SP-2136
ORDER NO. 547-15 |
REPORT OF THE COMMISSION
The Commission heard this matter on September 15, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln St., Suite 801, Denver, CO, upon application for an order to establish an approximate 2,400-acre drilling and spacing unit for Sections 31 and 32, Township 6 South, Range 95 West, 6th P.M., and Sections 5 and 6, Township 7 South, Range 95 West, 6th P.M., and approve up to 80 horizontal, directional or vertical wells within the unit, for the production of gas and associated hydrocarbons from the Mancos, Niobrara, Frontier, Mowry, and Dakota Formations (collectively, the “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. Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that, on 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 31 and 32, Township 6 South, Range 95 West, 6th P.M., and Sections 5 and 6, Township 7 South, Range 95 West, 6th P.M. are subject to Rule 318.a. for the Deep Formations.
5. On July 17, 2014, WPX, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to establish an approximate 2,400-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 80 horizontal, directional or vertical wells within the unit, for the production of gas and associated hydrocarbons from the Deep Formations, with the productive interval of the wellbore to be located no closer than 300 feet from the northern and southern unit boundaries (with the 600 foot setback from the eastern and western unit boundaries maintained under this Application), and no closer than 300 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:
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Township 6 South, Range 96
West, 6th P.M. Section 26: Lots 1 thru 7, E½ NW¼, NE¼, N½ SE, and NE¼ SW¼ (All) Section 35: Lots 1 thru 16 (All) |
Applicant also requested that all proposed wells be drilled from a new, common or existing well pad, with no more than four well pads per quarter section.
6. On August 25, 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. The approximate 2,400-acre exploratory drilling unit contains federal leased and/or unleased minerals. As such, WPX agrees to submit a Communitization Agreement (“CA”) to the BLM for any existing wells within 60 days of the entry of this order. WPX also agrees to submit a CA to the BLM within 90 days from the date of first production (as defined in the COGCC Rules) from the initial well drilled within the exploratory drilling unit.
8. Land testimony and exhibits submitted in support of the Application by Maxwell Faith, Senior Landman for WPX, showed that WPX 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 Trevor Gates, Petroleum Geologist for WPX, showed that Deep Formations exist underneath the entirety of the Application Lands, are thousands of feet thick, and are a common source of supply. Testimony further showed that conventional log interpretation supports the presence of gas supply throughout the Deep Formations underlying the Application Lands.
10. Engineering 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 is the most efficient and economic method of developing the resource for the Deep Formations underlying the Application Lands. Testimony further showed that based on the micro seismic analysis, drilling up to 80 horizontal, directional and vertical wells with reduced inter-well spacing of no less than 300 feet for the proposed exploratory drilling unit and a 300 foot setback from the northern and southern unit boundaries is necessary to promote efficient drainage while protecting correlative rights.
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. WPX 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 2,400-acre drilling and spacing unit for Sections 31 and 32, Township 6 South, Range 95 West, 6th P.M., and Sections 5 and 6, Township 7 South, Range 95 West, 6th P.M. and to approve up to 80 horizontal, directional, or vertical wells within the unit, for the production of gas and associated hydrocarbons from the Deep Formations.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 2,400-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 80 horizontal, directional or vertical wells within the unit, are hereby approved, for the production of gas and associated hydrocarbons from the Deep Formations:
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Township 6 South, Range 96
West, 6th P.M. Section 26: Lots 1 thru 7, E½ NW¼, NE¼, N½ SE, and NE¼ SW¼ (All) Section 35: Lots 1 thru 16 (All) |
2. The productive interval of the wellbore shall be located no closer than 300 feet from the northern and southern unit boundaries (with the 600 foot setback from the eastern and western unit boundaries maintained under this Application), and no closer than 300 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:
3. The proposed wells shall be drilled from a new, common or existing well pad, with no more than four well pads per quarter section.
4. WPX agrees to submit a Communitization Agreement (“CA”) to the BLM for any existing wells within 60 days of the entry of this order. WPX also agrees to submit a CA to the BLM within 90 days from the date of first production (as defined in the COGCC Rules) from the initial well drilled within the exploratory drilling 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 22nd day of September, 2014, as of September 15, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary