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, NIOBRARA, FRONTIER, MOWRY, AND DAKOTA FORMATIONS, UNNAMED FIELD, GARFIELD COUNTY, COLORADO

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CAUSE NO. 547 DOCKET NO. 1412-AW-28 ORDER NO. 547-17 CORRECTED

REPORT OF THE COMMISSION

            The Commission heard this matter on March 2, 2015 at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to approve an additional eight horizontal wells, for a total of up to 10 horizontal wells, within the approximate 362.73-acre drilling and spacing unit established for the Application Lands, for the production of gas and associated hydrocarbons from the Mancos, Niobrara, Frontier, Mowry, and Dakota Formations.

FINDINGS

The Commission finds as follows:

1.         WPX Energy Rocky Mountain, LLC (“WPX” 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.     On September 16, 2013, the Commission entered Order No. 547-3 which established an approximate 362.73-acre drilling and spacing unit for the Application Lands, and approved up to two horizontal wells within the unit, 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 150 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 October 16, 201, WPX,, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S. for an order to approve an additional eight horizontal wells, for a total of up to 10 horizontal wells, within the approximate 362.73-acre drilling and spacing unit established for the Application Lands, for the production of gas and associated hydrocarbons from the Mancos, Niobrara, Frontier, Mowry, and Dakota Formations (“Deep Formations”), 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 not less than 150 feet from the productive interval of any other wellbore located in the unit, without exception from the Director:

Township 6 South, Range 96 West, 6^th P.M.

Section 21:      Lots 1 thru 5, NE¼ SW¼, and E½ NW¼

Section 28:      Lots 3 and 4

Applicant states that the approved wells shall be located from a new, common or existing well pad, with no more than one wellpad per quarter quarter section, without exception from the Director.

8.         On November 20, 2014, WPX requested, and Commission staff granted, a continuance to the January 26, 2015 hearing.

9.         On December 19, 2015, WPX requested, and Commission staff granted, a continuance to the March 2, 2015 hearing.

10.       On February 10, 2015, 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.

11.    On December 9, 2014, the Bureau of Land Management (“BLM”) and WPX reached an agreement wherein, WPX shall submit a CA to BLM within 90 days of the spud of the first well, or within 60 days of the date of this Order is there is an existing well completed in the spaced formation, whichever applies first, in any drilling and spacing unit that contains Federal minerals managed by BLM.  The Application Lands contain Federal minerals managed by the BLM.

12.       Land testimony and exhibits submitted in support of the Application Christopher M. Walsh, Senior Staff Landman for WPX, showed that WPX holds oil and gas leasehold interests and has a right to drill in the Application Lands.      

13.       Geologic testimony and exhibits submitted in support of the Application by Laura BeVier Levorsen, Petroleum Geologist for WPX, showed that the Mancos Group was deposited as shales, siltstones, sandstones, and limestones in the Cretaceous Interior Seaway in a deep water marine environment.  Further testimony showed a subsea structure map and a type log demonstrating that the Mancos Group underlies the Application Lands and the total thickness of the Mancos Group underlying the Application Lands are thousands of feet in thickness.

14.       Engineering testimony and exhibits submitted in support of the Application by Tyler Peters, Reservoir Engineer for WPX, showed the micro-seismic analysis suggests 300 foot well setbacks from northern and southern unit boundaries are appropriate to efficiently recover reserves while protecting correlative rights; the adequate exploratory evaluation of each objective zone will require multiple wells which may be horizontal, vertical, or directional.

15.       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.

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

17.       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 additional eight horizontal wells, for a total of up to 10 horizontal wells, within the approximate 362.73-acre drilling and spacing unit established for the Application Lands, for the production of gas and associated hydrocarbons from the Deep Formations.

ORDER

IT IS HEREBY ORDERED:

1.         An additional eight horizontal wells, for a total of up to 10 horizontal wells, within an appropriate 362.73-acre drilling and spacing unit established for the below-described lands, are hereby approved, for the production of gas and associated hydrocarbons from the Mancos, Niobrara, Frontier, Mowry, and Dakota (“Deep”) Formations:

Township 6 South, Range 96 West, 6^th P.M.

Section 21:     Lots 1 thru 5, NE¼ SW¼, and E½ NW¼

Section 28:     Lots 3 and 4

2.         The productive intervals of the wellbore shall be located no closer than 300 feet 300 feet from the northern and southern unit boundaries (with the 600 foot setback from the eastern and western unit boundaries remaining unchanged) and not less than 150 feet from the productive interval of any other wellbore located in the unit, without exception from the Director.

3.         All proposed wells shall be drilled  from new, common or existing well pads within the unit, with no more than one wellpad per quarter quarter section, without exception from the Director.

4.         The drilling and spacing 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 (or 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 16^th day of March, 2015, as of March 2, 2015.

CORRECTED this 24^th day of June 2015, as of March 2, 2015.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By__________________________________

Julie Murphy, Secretary