BEFORE THE OIL AND GAS CONSERVATION
COMMISSION
OF THE STATE OF
IN THE
MATTER OF THE PROMULGATION AND ) CAUSE
NO. 318
ESTABLISHMENT
OF FIELD RULES TO GOVERN )
OPERATIONS
IN THE REPUBLICAN FIELD, ) ORDER NO. 318-8
This cause came on for
hearing before the Commission at 10:00 a.m. on March 15, 2004 in Suite 801, The
Chancery Building, 1120 Lincoln Street, Denver, Colorado on the verified
application of Petroleum Development Corporation for an order to allow up to a
total of three (3) wells to be drilled within each 160-acre drilling and
spacing unit for certain listed lands for the production of gas and associated
hydrocarbons from the Niobrara Formation, at the option of the operator, with the
permitted location to be anywhere within the 160-acre drilling and spacing unit
upon which it is drilled provided it is located no closer than 560 feet from
the outer boundaries of the unit.
The Commission finds as
follows:
1. Petroleum Development Corporation (“PDC”), 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.
5.
On July 17, 1994 (amended August 19, 1994), the Commission issued Order No.
318-5, which allowed an additional well to be drilled on each 160-acre drilling
and spacing unit in the Republican Field, at the option of the operator, for
the production of gas and associated hydrocarbons from the Niobrara Formation,
with the subsequent permitted well to be located no closer than 560 feet from
the outer boundaries of the unit. The
order also allowed the Director to grant exceptions to the permitted well
locations without prior notice or hearing upon an adequate showing by the
operator that topography makes it unreasonable to drill a second well within
the 560 feet setback, but no closer than 380 feet from the boundary of the
drilling and spacing unit and requests for any other exception location may be
granted in accordance with Rule 318.
6. On December 22, 2003, Petroleum Development
Corporation (“PDC”), by its attorney, filed
with the Commission a verified application for an order to allow up to a
total of three (3) wells to be drilled within each 160-acre drilling and spacing
unit for the below-listed lands for the production of gas and associated
hydrocarbons from the Niobrara Formation, at the option of the operator, with
the permitted location to be anywhere within the 160-acre drilling and spacing
unit upon which it is drilled provided it is located no closer than 560 feet
from the outer boundaries of the unit.
In addition, PDC requested that the Director be allowed to grant an
exception to the permitted well location without prior notice or hearing upon
an adequate showing by the operator that topography makes it unreasonable to
drill any additional well within a 560 foot setback, but no closer than 380
feet from the boundary of the drilling and spacing unit and requests that any
other exception location may be granted in accordance with Rule 318.
Township 1 North, Range 45 West, 6th PM
Sections 25 through 28: All
7. Testimony and exhibits presented at the
administrative hearing showed the outline of the application lands, which
consists of approximately four sections in the Republican Field in
8. Testimony and exhibits presented at the
administrative hearing indicated that the application lands are located in the
9. Testimony and exhibits presented at the
administrative hearing showed the current cumulative production, the estimated
ultimate recovery and the original gas in place for wells in the application
area. Additional testimony indicated that the average well in the application
area drains 65 acres and that a third additional well in each 160-acre drilling
and spacing unit would recover an additional 253 MMCF of reserves.
10. Testimony presented at the administrative
hearing indicated additional wells would be economic and have rates of return
in excess of 25%.
11. At the time of the administrative hearing, Petroleum
Development Corporation agreed to be
bound by oral order of the Commission.
12. Based upon the facts stated in the verified
application, and having been heard by the Hearing Officers who recommended
approval, the Commission should enter an order to allow up to a total of three
(3) wells to be drilled within each 160-acre drilling and spacing unit for the lands
described in Finding No. 6 above for the production of gas and associated
hydrocarbons from the Niobrara Formation, at the option of the operator, with
the permitted location to be anywhere within the 160-acre drilling and spacing
unit upon which it is drilled provided it is located no closer than 560 feet
from the outer boundaries of the unit.
In addition, the Director should be allowed to grant an exception to the
permitted well location without prior notice or hearing upon an adequate
showing by the operator that topography makes it unreasonable to drill any
additional well within a 560 foot setback, but no closer than 380 feet from the
boundary of the drilling and spacing unit and any other exception location may
be granted in accordance with Rule 318.
NOW, THEREFORE, IT IS
ORDERED, that a total of three (3) wells are hereby allowed to be drilled
within each 160-acre drilling and spacing unit for the below-listed lands for
the production of gas and associated hydrocarbons from the Niobrara Formation,
at the option of the operator, with the permitted location to be anywhere
within the 160-acre drilling and spacing unit upon which it is drilled provided
it is located no closer than 560 feet from the outer boundaries of the unit:
Township 1 North, Range 45 West, 6th PM
Sections 25 through 28: All
IT IS FURTHER ORDERED,
that the Director shall be allowed to grant an exception to the permitted well
location without prior notice or hearing upon an adequate showing by the
operator that topography makes it unreasonable to drill any additional well
within a 560 foot setback, but no closer than 380 feet from the boundary of the
drilling and spacing unit and requests for any other exception location shall
be granted in accordance with Rule 318.
IT IS
FURTHER ORDERED, that the provisions contained in the above order shall become
effective forthwith.
IT
IS FURTHER ORDERED, that the Commission expressly reserves its right, after
notice and hearing, to alter, amend or repeal any and/or all of the above
orders.
IT
IS FURTHER ORDERED, that under the State Administrative Procedure Act the
Commission considers this order to be final agency action for purposes of judicial
review within thirty (30) days after the date this order is mailed by the
Commission.
IT
IS FURTHER ORDERED, that an application for reconsideration by the Commission
of this order is not required prior to the filing for judicial review.
ENTERED
this _____ day of March, 2004, as of
OIL
AND GAS CONSERVATION COMMISSION
OF
THE STATE OF
By:
_____________________________
Patricia
C. Beaver, Secretary
Dated at
March 26, 2004