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

 

IN THE MATTER OF THE APPLICATION OF MUSTANG CREEK OPERATING, LLC  FOR AN ORDER TO ESTABLISH AN APPROXIMATE 635.6-ACRE EXPLORATORY DRILLING AND SPACING UNIT FOR SECTION 32, TOWNSHIP 12 SOUTH, RANGE 59 WEST, 6TH P.M. AND SECTION 5, TOWNSHIP 13 SOUTH, RANGE 59 WEST, 6TH P.M., FOR MARMATON, CHEROKEE, ATOKA FORMATIONS AND FORMATIONS OF MISSISSIPPIAN, ORDOVICIAN AND CAMBRIAN AGE, UNNAMED FIELD, ELBERT COUNTY, COLORADO

)

)

)

)

)

)

)

)

)

)

)

CAUSE NO. 550

 

DOCKET NO. 1307-SP-1114

 

ORDER NO. 550-1

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on October 28, 2013, at the Limon Community Center, 477 D Avenue, Limon, Colorado, upon application for an order to establish an approximate 635.6-acre drilling and spacing unit for Section 32, Township 12 South, Range 59 West, 6th P.M. and Section 5, Township 13 South, Range 59 West, 6th P.M., and approve up to four wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Marmaton, Cherokee, and Atoka Formations and Formations of the Mississippian, Ordovician and Cambrian Age.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Mustang Creek Operating, LLC (“Mustang Creek” or “Applicant”), by its attorneys, 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 32, Township 12 South, Range 59 West, 6th P.M. and Section 5, Township 13 South, Range 59 West, 6th P.M. are subject to Rule 318.a. for the Marmaton, Cherokee, and Atoka Formations and Formations of the Mississippian, Ordovician and Cambrian Age.

 

5.         On May 30, 2013 (Amended on September 19, 2013), Mustang Creek, 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 635.6-acre exploratory drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to four wells within the unit, for the production of oil, gas and associated hydrocarbons from Marmaton, Cherokee, Atoka Formations and Formations of Mississippian, Ordovician and Cambrian Age, with the treated interval of the permitted wellbore to be no closer than 600 feet from the unit boundaries, without exception being granted by the Director:

 

Township 12 South, Range 59 West, 6th P.M.

Section 32:      S½ 

 

Township 13 South, Range 59 West, 6th P.M.

Section 5:        N½ 

 

6.         On July 19, 2013, Mustang Creek, by its attorneys, requested, and Commission staff granted, a continuance to the September hearing.

 

7.         On September 9, 2013, Mustang Creek, by its attorneys, requested and Commission staff granted, a continuance to the October hearing.

 

8.         On October 15, 2013, Mustang Creek, 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.

 

9.         Land Testimony and exhibits submitted in support of the Application by Bob Davis, Vice-President of Land for Mustang Creek, showed that Mustang Creek owns 100% of the surface and mineral interests in the Application Lands.

 

10.       Geologic Testimony and exhibits submitted in support of the Application by Roger Falk, Vice-President of Exploration for Mustang Creek, showed that the Marmaton, Cherokee and Atoka formations and formations of Mississippian, Ordovician and Cambrian age underlie the Application Lands.  An isopach map of the Cherokee to Morrow interval showed the average thickness as approximately 1,000 feet.  A type log of the Marmaton, Cherokee and Atoka formations and formations of Mississippian, Ordovician and Cambrian age showed resistivities similar to logs from analogous wells producing from the target formations.  Further testimony showed the Marmaton interval to Morrow interval is present underlying all the Application Lands.

 

11.       Engineering testimony and exhibits submitted in support of the Amended Application by Christian E. Hansen, P.E., Petroleum Engineer Consultant for Mustang Creek, showed a drainage area of between 48 to 197 acres for the Maramton and Cherokee Formations and an estimated drainage area of between 4 to 41 acres for the Atoka and Morrow formations.

 

12.       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.

 

13.       Mustang Creek agreed to be bound by oral order of the Commission. 

 

14.       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 635.6-acre exploratory drilling and spacing unit for Section 32, Township 12 South, Range 59 West, 6th P.M. and Section 5, Township 13 South, Range 59 West, 6th P.M., and approve up to four wells within the unit, for the production of oil, gas and associated hydrocarbons from Marmaton, Cherokee, Atoka Formations and Formations of Mississippian, Ordovician and Cambrian Age.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 636.6-acre drilling and spacing unit for the below-described lands, is hereby established, and up to four wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Marmaton, Cherokee, Atoka Formations and Formations of Mississippian, Ordovician and Cambrian Age, without exception by the Director:

 

Township 12 South, Range 59 West, 6th P.M.

Section 32:      S½ 

 

Township 13 South, Range 59 West, 6th P.M.

Section 5:        N½ 

 

3.         The treated interval of the horizontal wellbore shall be no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the treated interval of any other wellbore located in the 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 Procedures 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   8th   day of November, 2013, as of October 28, 2013.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary