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

 

IN THE MATTER OF AN APPLICATION BY WPX ENERGY ROCKY MOUNTAIN, LLC FOR AN ORDER TO ESTABLISH AN APPROXIMATE 473-ACRE EXPLORATORY DRILLING AND SPACING UNIT FOR SECTIONS 5 AND 8, TOWNSHIP 7 SOUTH, RANGE 96 WEST, 6TH P.M., FOR PRODUCTION FROM THE SEGO, MANCOS, NIOBRARA, FRONTIER, MOWRY, AND DAKOTA FORMATIONS, GRAND VALLEY FIELD, GARFIELD COUNTY, COLORADO

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CAUSE NO. 510

 

DOCKET NO. 1403-SP-2031

 

ORDER NO. 547-7

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on March 17, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to establish an approximate 473-acre exploratory drilling and spacing unit for Sections 5 and 8, Township 7 South, Range 96 West, 6th P.M., and to approve up to 20 horizontal, vertical or directional wells within the unit, for the production of oil, gas and associated hydrocarbons from the Sego, Mancos, Niobrara, Frontier, Mowry and Dakota 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 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.  Sections 5 and 8, Township 7 South, Range 96 West, 6th P.M. are subject to Rule 318.a. for the Sego, Mancos, Niobrara, Frontier, Mowry and Dakota Formations (“Deep Formations”)

 

5.         On January 16, 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 establish an approximate 473-acre exploratory drilling and spacing unit for the below-described lands (“Application Lands”), and approve one or more horizontal wells and one or more vertical or directional well within the unit, for the production of oil, gas and associated hydrocarbons from the Sego, Mancos, Niobrara, Frontier, Mowry and Dakota Formations, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, 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: 

 

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

Section 5:        W˝ SEĽ, E˝ SEĽ (also described as Lot 6, the NEĽ SEĽ for 36.44-                                         acres, more or less, and Lot 7, the SEĽ SEĽ for 36.55-acres, more or less)

Section 8:        W˝ NEĽ, SEĽ NEĽ, NEĽ NEĽ (also described as Lot 1 for 39.66-acres,                                              more or less), and SEĽ.

 

Applicant stated all wells will be drilled from no more than one surface location per quarter quarter section or lots or parcels approximately equivalent thereto.

 

6.         On March 7, 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.         Land testimony and exhibits submitted in support of the Application by Christopher Walsh, 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.

 

8.         Geologic testimony and exhibits submitted in support of the Application by Jonathan Cantwell, Senior Staff Geologist for WPX, showed that the Niobrara Formation underlies the entirety of the Application Lands and is approximately 1,200 feet thick consisting primarily of calcareous mudstones, marls and limestones 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.  Conventional log interpretation supports the presence of gas supply through the entirety of the Deep Formations underlying the Application Lands.

 

9.         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 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.  Testimony supported the request to drill up to twenty horizontal, vertical or directional wells with intra-well setbacks to be no closer than 300 feet from the productive interval of any other wellbore.

 

10.       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.

 

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

 

            12.       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 473-acre exploratory drilling and spacing unit for Sections 5 and 8, Township 7 South, Range 96 West, 6th P.M., and to approve up to 20 horizontal, vertical or directional wells within the unit, for the production of oil, gas and associated hydrocarbons from the Deep Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 473-acre exploratory drilling and spacing unit for the below-described lands, is hereby established, and up to 20 horizontal, vertical or directional wells, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Sego, Mancos, Niobrara, Frontier, Mowry and Dakota Formations, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, 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: 

 

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

Section 5:        W˝ SEĽ, E˝ SEĽ (also described as Lot 6, the NEĽ SEĽ for 36.44-                                         acres, more or less, and Lot 7, the SEĽ SEĽ for 36.55-acres, more or less)

Section 8:        W˝ NEĽ, SEĽ NEĽ, NEĽ NEĽ (also described as Lot 1 for 39.66-acres,                                              more or less), and SEĽ.

 

2.         All wells will be drilled from no more than one surface location 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   11th   day of April, 2014, as of March 17, 2014.

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary