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 LANSING, MARMATON, CHEROKEE, ATOKA, MORROW (PENNSYLVANIAN AGE), ST. LOUIS, SPERGEN, WARSAW, HARRISON, GILMORE CITY (MISSISSIPPIAN AGE), ARBUCKLE AND REAGAN FORMATIONS, UNNAMED FIELD, ELBERT COUNTY, COLORADO

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CAUSE NO.  554

 

DOCKET NO. 150700443

 

TYPE: SPACING

 

ORDER NO. 554-1

REPORT OF THE COMMISSION

 

The Commission heard this matter on July 20, 2015, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to establish an approximate 160-acre drilling and spacing unit for portions of Sections 22, 23, 26 and 27, Township 13 South, Range 59 West, 6th P.M., and approve one vertical well in the proposed unit, for the production of oil, gas and associated hydrocarbons from the Lansing, Marmaton, Cherokee, Atoka, Morrow, St. Louis, Spergen, Warsaw, Harrison, Gilmore City, Arbuckle, and Reagan Formations (“Target Formations”).

 

FINDINGS

 

The Commission finds as follows:

 

1.        Mustang Creek Operating, LLC, Operator No. 10446 (“Mustang” 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 Commission requires that, on unspaced lands, wells drilled in excess of 2,500 feet in depth shall 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 22, 23, 26 and 27, Township 13 South, Range 59 West, 6th P.M. are subject to Rule 318.a. for the Target Formations.

 

5.        On May 21, 2015, Mustang, by its attorneys, filed a verified application pursuant to §34-60-116, C.R.S., for an order to establish an approximate 160-acre drilling and spacing unit for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Target Formations; and approve one vertical well within the unit, with the productive interval of each wellbore located no closer than 600 feet from the unit boundaries, and no closer than 600 feet from the productive interval of any other wellbore producing from the Target Formations, without exception being granted by the Director:

 

Township 13 South, Range 59 West, 6th P.M.
Section 22:      SE¼SE¼
Section 23:      SW¼SW¼

Section 26:      NW¼NW¼

Section 27:      NE¼NE¼

 

7.        On May 21, 2015, Mustang, 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.        Land testimony and exhibits submitted in support of the Application by Bob Davis, Vice President of Land for Mustang, showed that the surface and minerals in the Application Lands are owned in fee.  They further showed that Mustang Creek Energy Partners, LLC, parent company of Applicant, owns 100% of the working interest in the proposed drilling and spacing unit within the Application Lands. 

 

9.        Geology testimony and exhibits submitted in support of the Application by Roger Falk, Vice President of Exploration for Mustang, showed that the proposed spacing unit is in an area of very sparse oil and gas development with limited offset well data; the nearest well that penetrates the Target Formations is about six miles away.  This testimony further showed that based on the limited information available, including confidential and proprietary 3d seismic data and offset well data some distance, the Target Formations are likely uniformly present throughout the Application Lands and are over 2000 feet thick.

 

10.      Engineering testimony and exhibits submitted in support of the Application by Christian E. Hansen, P.E., consulting petroleum engineer for Mustang, showed that offset well data in the near vicinity to the Application Lands is sparse, but that the well data available indicates that within tolerances for statistical error, one well in each of the Target Formations will not drain an area larger than that of the Proposed Spacing Unit.  This testimony further showed that the requested spacing unit is necessary to protect correlative rights, prevent waste and facilitate efficient and economic production of oil, gas and related hydrocarbons within the Application Lands.

 

11.      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.

 

12.      Mustang agrees to be bound by oral order of the Commission. 

 

13.      Based on the facts stated in the verified Application, all protests having been withdrawn, 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 drilling and spacing unit for the portions of Sections 22, 23, 26 and 27, Township 13 South, Range 59 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Target Formations and approve one vertical well within the unit.

 


 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 160-acre drilling and spacing unit for the below-described lands, is hereby established, and one vertical well within the unit, is hereby approved, for the production of oil, gas and associated hydrocarbons from the Target Formations:

 

Township 13 South, Range 59 West, 6th P.M.
Section 22:      SE¼SE¼
Section 23:      SW¼SW¼

Section 26:      NW¼NW¼

Section 27:      NE¼NE¼

 

            2.         The productive interval of each wellbore shall be located no closer than 600 feet from the unit boundaries, and no closer than 600 feet from the productive interval of any other wellbore producing from the Target Formations, without exception being granted by the Director.

 

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 4th day of August, 2015, as of July 20, 2015.

 

           

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By___________________________________

Julie Murphy, Secretary