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 FORMATION, GRAND VALLEY FIELD, GARFIELD COUNTY, COLORADO

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CAUSE NO.  547

 

DOCKET NO.  150500275

 

ORDER NO. 547-20

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on May 18, 2015, at Aims Community College, Fort Lupton Campus, 260 College Avenue, Fort Lupton, upon an application for an order to approve an exception location from Rule 318.a. for the GM 704-32-9-HMB2 Well, a planned horizontal well, to allow for the drilling, completion and production of the landing point location to a point not closer than 300 feet from the lease line to the north of the wellbore, in order to accommodate geologic conditions, for the production of gas and associated hydrocarbons from the Mancos Formation.

 

FINDINGS

 

            The Commission finds as follows:

 

1.            WPX Energy Rocky Mountain, LLC, Operator No.  (“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 herein, 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, on unspaced lands, 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.  The NE¼ NE¼ of Section 4, Township 7 South, Range 96 West, 6th P.M., is subject to this Rule for the production of gas and associated hydrocarbons from the Mancos Formation.

 

5.            Rule 318.c. of the Rules and Regulations of the Oil and Gas Conservation Commission states that the Director may grant an operator’s request for a well location exception to the requirements of Rule 318 or any order because of geologic, environmental, topographic or archaeological conditions, irregular sections, a surface owner request, or for other good cause shown provided that a waiver or consent signed by the lease owner toward whom the well location is proposed to be move, agreeing that said well may be located at the point at which the operator proposes to drill the well and where correlative rights are protected. However, if the operator of the proposed well is also the operator of the unspaced offset lease toward which the well is proposed to be moved, waivers are to be obtained from the mineral interest owners under such lands.  If waivers cannot be obtained from all parties and no party objects to the location, the operator may apply for a variance under Rule 502.b.

 

6.            On March 19, 2015, WPX Energy Rocky Mountain, LLC, Operator #96850 (“WPX” or “Applicant”), filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to approve an exception location from Rule 318.a. for the GM 704-32-9-HMB2 Well (“Well”), a planned horizontal well, to allow for the drilling, completion and production of the landing point location to a point not closer than 300 feet from the lease line to the north of the wellbore, in order to accommodate geologic conditions, for the production of gas and associated hydrocarbons from the Mancos Formation.  The encroached upon lease line.is the southern boundary of the below-described lands (“Application Lands”):

 

                                    Township 7 South, Range 96 West, 6th P.M.

  Section 4:

NE¼ NE¼ (Lot 1)

 

7.            On April 22, 2015, WPX, by and through its attorneys, filed with the Commission a written request to approve the Application based on the merits of the verified application, written testimony and supporting exhibits.

 

8.            Land testimony and exhibits presented in support of the Application by Christopher M. Walsh, Sr. Staff Landman for WPX, showed WPX owns a large federal lease to the South of the NE¼ NE¼ (Lot 1) of Section 4, Township 7 South, Range 96 West, 6th P.M., and has plans to drill the Well from a surface location in the southern boundary of Lot 1 through Section 4 and a bottomhole location Section 9, Township 7 South, Range 96 West, 6th P.M.

 

9.            Geologic testimony and exhibits in support of the Application from Trevor Gates, Petroleum Geologist for WPX, showed that east-west frac promulgation from a north-south horizontal well drilled in the Mancos Formation underlying the Application Lands with reduced setbacks to 300 feet from the lease line will promote greater reservoir drainage, reduce waste by preventing the drilling of unnecessary wells, while protecting the correlative rights of adjacent owners.

 

10.          Engineering testimony and exhibits presented by Tyler Peters, Reservoir Engineer for WPX, showed that a reduction of setbacks from 600 to 300 feet at the landing point for completion of the Well will prevent waste by recovering additional reserves that would be left behind if the 600 foot setback were maintained.

 

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 agrees to be bound by the 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 approving an exception location from Rule 318.a. for the GM 704-32-9-HMB2 Well, a planned horizontal well, to allow for the drilling, completion and production of the landing point location to a point not closer than 300 feet from the lease line to the north of the wellbore, in order to accommodate geologic conditions, for the production of gas and associated hydrocarbons from the Mancos Formation.

 

IT IS HEREBY ORDERED:

 

1.         An exception location from Rule 318.a. which authorizes a bottomhole location for the drilling, completion and production of the GM 704-32-9-HMB2 Well, a planned horizontal well, is hereby approved, to allow for the landing point location to a point not closer than 300 feet from the lease line in the below-described lands, to the north of the wellbore, in order to accommodate geologic conditions, for the production of gas and associated hydrocarbons from the Mancos Formation.

 

                                    Township 7 South, Range 96 West, 6th P.M.

  Section 4:

NE¼ NE¼ (Lot 1)

 

 

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 1st day of June 2015, as of May 18, 2015.

 

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

            Julie Murphy, Secretary