BEFORE THE OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
|
IN THE MATTER OF THE APPLICATION OF JOHN C. NIERNBERGER FOR AN ORDER ESTABLISHING AN APPROXIMATE 160-ACRE ENHANCED RECOVERY UNIT FOR SECTION 14, TOWNSHIP 11 SOUTH, RANGE 46 WEST, 6TH P.M., AUTHORIZING ENHANCED RECOVERY OPERATIONS AND REQUESTING AN AQUIFER EXEMPTION FOR THE MORROW AND KEYES FORMATIONS, SMOKEY HILL FIELD, KIT CARSON COUNTY, COLORADO |
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CAUSE NO. 549
DOCKET NO. 1307-UP-149
ORDER NO. 549-1 |
REPORT OF THE COMMISSION
The Commission heard this matter on September 16, 2013, 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 160-acre enhanced recovery unit, the Lowe #1-B Unit, to accommodate the Lowe 1-B Well, and approve enhanced recovery operations and aquifer exemption for Section 14, Township 11 South, Range 46 West, 6th P.M., within the Smokey Hill Field, Kit Carson County, Colorado, for the development and operation of the Morrow and Keyes Formations.
FINDINGS
The Commission finds as follows:
1. John C. Niernberger (“Niernberger” 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. Section 14, Township 11 South, Range 46 West, 6th P.M. is subject to Rule 318.a. for the Morrow and Keyes Formations.
5. Rule 401 of the Rules and Regulations of the Oil and Gas Conservation Commission, requires that prior to performing enhanced recovery operations or carrying on any method of unit operations, written authorization from the Commission must first be obtained.
6. On May 30, 2013, Niernberger, by its attorneys, filed with the Commission pursuant to §34-60-118 C.R.S. and Rule 401, a verified application (“Application”) for an order to establish an approximate 160-acre enhanced recovery unit (“Lowe #1-B Unit”), to accommodate the Lowe 1-B Well (API No. 05-063-06186), and approve enhanced recovery operations for the below-described lands (“Application Lands”), within the Smokey Hill Field, Kit Carson County, Colorado, for the development and operation of the Morrow and Keyes Formations:
Township 11 South, Range 46 West, 6th P.M.
Section 14: E½ NW¼, W½ NE¼
Applicant stated that, on a tract participation basis, at least 80% of the owners of production, or proceeds therefrom, and at least 80% of those required to pay the costs of unit operations, will approve the Lowe #1-B Unit Agreement and Unit Operating Agreement for the Morrow and Keyes Formations no later than six months from the date on which the order providing for unit operations is made, as required by §34-60-118(5) C.R.S.
Applicant requested an aquifer exemption, pursuant to Rule 324B, to allow injection of water into the Morrow and Keyes Formations through an existing water injection well: the Lowe 1-B. Notice was given for the proposed unit and for the proposed aquifer exemption, including all lands within ½ mile of the proposed unit and within ¼ mile of the proposed injection wells.
7. On July 16, 2013, Niernberger, 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.
8. On July 25, 2013, Applicant learned that notice had not been published prior to the Commission’s July 29, 2013, hearing date, as required by §34-60-108(4), C.R.S. In order for proper notice to issue, Applicant requested that the Application be continued to the September 16, 2013 hearing date. Commission staff approved the request on July 26, 2013.
9. Land testimony and exhibits in submitted in support of the Application by John C. Niernberger, Production Manager for Ritchie Exploration, Inc. on his behalf and the other owners, indicated that Applicant has secured the approval of 100% of parties who will be required to pay at least 80% of the costs of the proposed unit operation and approval from the owners of greater than 80% of the production or proceeds thereof that will be credited to interests which are free of cost, such as royalties, overriding royalties, and production payments.
10. Additional land testimony showed all persons who own interests within the proposed unit area and all owners owning interests within one-half mile of the proposed unit area were given Notice of this unit application and notice of the related request for aquifer exemption by certified mail.
11. Geologic Testimony and exhibits submitted in support of the Application by John C. Niernberger, Production Manager for Ritchie Exploration, Inc. on his behalf and the other owners, showed geological characteristics and extensive development of the Morrow and Keyes formations in the proposed unit area.
12. Engineering Testimony and exhibits submitted in support of the Application Application by John C. Niernberger, Production Manager for Ritchie Exploration, Inc. on his behalf and the other owners, concluded that the proposed input/enhanced recovery operations are necessary to increase the ultimate recovery of oil, gas and associated hydrocarbons from the Morrow formation efficiently, without waste, without adverse environmental impacts and without injury to correlative rights.
13. Technical aspects of the proposed enhanced recovery operations were reviewed by the Commission staff underground injection control (“UIC”) program supervisor, who had no adverse comments about the Application.
14. The record shows all Interested Parties executed the Lowe #1-B Unit Letter Agreement which, among other things, pooled all interests within the 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. Niernberger 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 160-acre enhanced recovery unit, the Lowe #1-B Unit, to accommodate the Lowe 1-B Well, and approve enhanced recovery operations and aquifer exemption for Section 14, Township 11 South, Range 46 West, 6th P.M., within the Smokey Hill Field, Kit Carson County, Colorado, for the development and operation of the Morrow and Keyes Formations.
ORDER
IT IS HEREBY ORDERED:
1. Pursuant to Section 34-60-118 C.R.S. and Rule 401, an approximate 160-acre enhanced recovery unit, the Lowe #1-B Unit, is hereby established, and enhanced recovery operations, are hereby approved, for the Lowe 1-B Well, for the below-described lands within the Smokey Hill Field, Kit Carson County, Colorado, for the development and operation of the Morrow and Keyes Formations:
Township 11 South, Range 46 West, 6th P.M.
Section 14: E½ NW¼, W½ NE¼
2. Applicant is hereby granted an aquifer exemption for the injection of water into the Morrow and Keyes Formations within the Lowe #1-B Unit, for the purposes of enhanced recovery of oil, gas and associated hydrocarbons.
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 30 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 October, 2013, as of September 16, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary