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 NIOBRARA FORMATION, CRIST FIELD, SEDGWICK AND PHILLIPS COUNTY, COLORADO

)

)

)

)

)

CAUSE NO. 551

 

DOCKET NO. 1410-SP-2156

 

ORDER NO. 551-1

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on October 27, 2014 at the Durango Public Library, 1900 E. 3rd Avenue, Durango, CO  81301, upon application for an order to: 1) reduce permitted inter-well setbacks for Sections 2, 3, 10, 11, 14-16, 21-23, 27, and 28, Township 9 North, Range 46 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) authorize the drilling of Niobrara Formation wells to bottomhole locations not less than 200 feet from any lease line, and no closer than 300 feet from any other well producing from the Niobrara Formation, with no setback requirement from any quarter section boundary.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Black Raven Energy, Inc. (“Black Raven” or “Applicant”) 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, on unspaced lands, 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 2, 3, 10, 11, 14, 15 and 16, Township 9 North, Range 46 West, 6th P.M. are subject to Rule 318.a. for the Niobrara Formation

 

5.         Rule 318B of the Rules and Regulations of the Oil and Gas Conservation Commission requires all wells drilled to the Niobrara Formation in the Special Well Location Rule area to have: 1) no more than four Niobrara wells may drilled in any quarter section; 2) no more than one well may be located in any quarter quarter section; and 3) be located at least 300 feet from the boundary of the quarter section and lease line and at least 900 feet from any producible well drilled to the Niobrara prior to the July 30, 2006. Under this Rule, no minimum distance will be required between wells producing from the Niobrara Formation in any quarter section. Sections 21, 22, 23, 27 and 28, Township 9 North, Range 46 West, 6th P.M. are subject to Rule 318.B. for the Niobrara Formation

 

6.         On August 28, 2014, Black Raven, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to: 1) reduce permitted inter-well setbacks for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) authorize the drilling of Niobrara Formation wells to bottomhole locations not less than 200 feet from any lease line, and no closer than 300 feet from any other well producing from the Niobrara Formation, with no setback requirement from any quarter section boundary, without exception being granted by the Director:

 

Township 9 North, Range 46 West, 6th P.M.
Section 2:        All
Section 3:        SE¼
Section 10:      E½
Section 11:      All
Section 14:      All
Section 15:      All
Section 16:      All

Township 9 North, Range 46 West, 6th P.M.
Section 21:      All
Section 22:      All
Section 23:      All
Section 27:      All
Section 28:      All

 

7.         On September 29, 2014, Paul Eckman, Zachary Eckman and Adam Eckman (“Protestants”), by their attorney, filed a protest to the application alleging that the granting of the application will affect their interests and requested that the Commission establish a pooling order. 

 

8.         On October 2, 2014, Protestants withdrew the protest and requested that it be converted to a Rule 510 statement.

 

9.         On October 6, 2014, Black Raven, 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.

 

            10.       Land testimony and exhibits submitted in support of the Application by Janice Aldstadt, Land Manger for Black Raven, showed that Black Raven holds oil and gas leasehold interests and has a right to drill in the Application Lands.      

 

11.       Geologic testimony and exhibits submitted in support of the Application by David Kunovic, Executive Vice-President for EnerJex Resources, Inc., showed that the Niobrara Formation is present under the Application Lands with an anticipated producing-interval thickness of 38 feet.  Wells to be drilled in the Application Lands are expected to encounter the Niobrara Formation at a depth between 2,832 and 2,870 feet. The Niobrara Formation underlying the Application Lands, according to 3D seismic data, contains faults. The faulting creates very narrow fault-bound positive structures that area characteristic of this area.  In order to drill and complete commercial, economic gas wells, a well must be located very precisely as dictated by the 3D seismic data.  As a result, at least eight proposed wells must be located closer than 600 feet from lease lines.  A reduced setback of 200 feet and no closer than 300 feet from the productive interval of any other wellbore located in the unit will allow wells to be drilled at their optimal locations and will result in a larger number of wells being drilled and completed.

 

12.       Further testimony showed that there is an area, Amherst Field, close to the Application Lands, in which the Applicant drilled 226 wells at depths between 2350 and 2500 feet. The wells in the analogous field were drilled subject to Rule 318.a. and drilled no closer than 200 feet from the lease lines.

 

13.       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.

 

14.       Black Raven agreed to be bound by oral order of the Commission.

 

15.       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: 1) reduce permitted inter-well setbacks for Sections 2, 3, 10, 11, 14-16, 21-23, 27, and 28, Township 9 North, Range 46 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) authorize the drilling of Niobrara Formation wells to bottomhole locations not less than 200 feet from any lease line, and no closer than 300 feet from any other well producing from the Niobrara Formation, with no setback requirement from any quarter section boundary.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Permitted inter-well setbacks for the below-described lands, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, are hereby reduced, with the bottomhole locations to be located no closer than 200 feet from any lease line, 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 9 North, Range 46 West, 6th P.M.
Section 2:        All
Section 3:        SE¼
Section 10:      E½
Section 11:      All
Section 14:      All
Section 15:      All
Section 16:      All

Township 9 North, Range 46 West, 6th P.M.
Section 21:      All
Section 22:      All
Section 23:      All
Section 27:      All
Section 28:      All

 

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 18th day of November, 2014, as of October 27, 2014.        

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By__________________________________

Robert J. Frick, Secretary