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, GRAND VALLEY FIELD, GARFIELD COUNTY, COLORADO

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CAUSE NO. 547

 

DOCKET NO. 1404-SP-2053

 

ORDER NO. 547-8

 

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 establish an approximate 1295-acre exploratory drilling and spacing unit for Section 27 and 34, Township 6 South, Range 96 West, 6th P.M., and approve 40 horizontal, vertical, or directional wells within the unit, for the production of oil, gas, and associated hydrocarbons of the Mancos (including the Sego Formation), 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 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 27 and 34, Township 6 South, Range 96 West, 6th P.M. are subject to Rule 318.a. for the Deep Formations.

 

5.         On February 27, 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 1295-acre exploratory drilling and spacing unit for the below-described lands (“Application Lands”), and approve one or more horizontal, vertical, or directional wells within the unit, the production of oil, gas, and associated hydrocarbons of the Deep Formations, with the productive interval of the wellbore to be located no closer than 600 feet from the eastern and western unit boundaries and not less than 300 feet from the northern and southern unit boundaries, and no closer than 300 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

 

                       

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

Section 27:

All (Lots 1 thru 15, SE¼ SW¼)

Section 34:

All (Lots 1 thru 14, NW¼ NE¼, NE¼ NW¼)

 

Applicant requested that all proposed wells be drilled from new, common or existing well pads from the surface either on the Application Lands or on adjacent lands with consent of the landowner, from no more than one well pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto), without exception being granted by the Director.

 

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 to the Application requesting that the Commission not allow the well setback distance less than 600 feet from the unit boundary.

 

8.         On April 22, 2014, WPX, by its attorneys, requested, and Commission Staff granted, a continuance to the June hearing.

 

9.         On June 10, 2014, WPX, by its attorneys, requested, and Commission Staff granted, a continuance to the June hearing.

 

10.       On June 10, 2014, BLM withdrew its protest after WPX agreed to submit a Communitization Agreement (CA) to the BLM within 90 days of the spud of the first well in any drilling and spacing unit that contains leased and unleased Federal minerals.  The Application Lands contain leased and/or unleased minerals managed by BLM.

 

11.       On July 15, 2014, WPX, by its attorneys, filed with the Commission a supplemental sworn written testimony and supporting exhibits in support of the Application.

 

12.       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 the right to drill in the Application Lands.    

 

13.       Geologic testimony and exhibits submitted in support of the Application by Trevor Gates, Petroleum Geologist for WPX, showed that the Mancos Group was deposited as shales, siltstones, sandstones, and limestones in the Cretaceous Interior Seaway. Testimony further showed that the Deep Formations (Sego, Mancos, Niobrara, Frontier, Mowry, and Dakota Formations) are present and uniform throughout the Application Lands.

 

14.       Engineering testimony and exhibits submitted in support of the Application by Tyler Peters, Senior Reservoir Engineer for WPX, showed that the requested exploratory drilling unit would require 40 wells for adequate exploratory evaluation, and 1295-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Deep Formations and requesting approval of up to 40 wells within the proposed unit. 

 

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 establish an approximate 1295-acre exploratory drilling and spacing unit for Section 27 and 34, Township 6 South, Range 96 West, 6th P.M., and approve 40 horizontal, vertical, or directional wells within the unit, for the production of oil, gas, and associated hydrocarbons of the Mancos (including the Sego Formation), Niobrara, Frontier, Mowry, and Dakota Formations (collectively, the “Deep Formations”).

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 1295-acre exploratory drilling and spacing unit for the below-described lands, is hereby established, and 40 horizontal, vertical, or directional wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Mancos (including the Sego Formation), Niobrara, Frontier, Mowry, and Dakota Formations, with the productive interval of the wellbore to be located no closer than 600 feet from the eastern and western unit boundaries and not less than 300 feet from the northern and southern unit boundaries, and no closer than 300 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

 

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

Section 27:

All (Lots 1 thru 15, SE¼ SW¼)

Section 34:

All (Lots 1 thru 14, NW¼ NE¼, NE¼ NW¼)

 

 

2.         The proposed wells shall be located on new, common or existing well pads from the surface either on the Application Lands or on adjacent lands with consent of the landowner, from no more than one well pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto), without exception being granted by the Director.

 

3.         WPX shall submit a Communitization Agreement (CA) to the BLM within 90 days of the spud of the first well in any drilling and spacing unit that contains leased and/or unleased Federal minerals.  

 

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   13th  day of August, 2014, as of July 28, 2014.     

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary