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 MANCOS (INCLUDING THE SEGO SANDSTONE), NIOBRARA, FRONTIER, MOWRY, AND DAKOTA FORMATIONS, RULISON FIELD, GARFIELD   COUNTY, COLORADO

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CAUSE NO. 139

 

DOCKET NO. 1407-SP-2102

 

ORDER NO. 139-120

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on July 28, 2014, at the Weld County Administration Building - Events Center, 1150 “O” Street, Greeley, CO upon application for an order to establish an approximate 1280-acre exploratory drilling and spacing unit for Sections 21 and 28, Township 6 South, Range 94 West, 6th P.M., and approve up to 40 horizontal, vertical or directional wells within the unit, for the production of oil, gas and associated hydrocarbons from the Mancos (including the Sego Sandstone), Niobrara, Frontier, Mowry, and Dakota Formations (collectively, “Deep Formations”).

 

FINDINGS

 

The Commission finds as follows:

 

1.         WPX Energy Rocky Mountain, LLC (“WPX” 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, 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 21 and 28, Township 6 South, Range 94 West, 6th P.M. are subject to Rule 318.a. for the Deep Formations.

 

5.         On May 29, 2014, WPX, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to establish an approximate 1280-acre exploratory drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to 40 horizontal, vertical or directional wells within the unit, for the production of oil, gas and associated hydrocarbons from the Mancos Formation (including the Sego Sandstone), Niobrara, Frontier, Mowry, and Dakota Formations, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, 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 6 South, Range 94 West, 6th P.M.

                        Section 21:      All

                        Section 28:      All

 

Applicant requests to locate the proposed wells be drilled from new, common or existing wellpads, from no more than one well pad per quarter quarter section (or lots or parcels approximately equivalent thereto) within the unit.

 

6.         On July 15, 2014, WPX, 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.

 

7.         On July 22, 2014, the Bureau of Land Management (“BLM”) and WPX reached an agreement wherein WPX agrees to submit a Communitization Agreement (CA) to the BLM within 90 days of the spud of the first well in any drilling and spacing unit that contains leased Federal minerals.  The Application Lands contain leased minerals managed by BLM.

 

8.         Land Testimony and exhibits submitted in support of the Application by Barbara Siegrist, Senior Landman for WPX, showed that WPX owns substantial leasehold interests in the Application Lands and those Lands are held by production by numerous producing wells.

 

9.         Geologic Testimony and exhibits submitted in support of the Application by Laura BeVier Levorson, Senior Staff Geoscientist for WPX, showed that the Mancos Formation was deposited as shales, siltstones, sandstones, and limestones in the Cretaceous Interior Seaway. Testimony further showed that the Mancos Formation underlies the entirety of the Application Lands and is thousands of feet thick and conventional log interpretation supports the presence of gas supply through the entirety of the Deep Formations underlying the Application Lands.

 

10.       Engineering Testimony and exhibits submitted in support of the Application by Tyler Peters, Senior Reservoir Engineer for WPX, showed that drilling and completing a combination of horizontal and vertical wells in the “N1” and “N2” benches of the Niobrara Formation underlying the Application Lands is the most efficient and economic method of developing the resource. Testimony further showed that 1280-acre drilling and spacing unit is not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Deep Formations.  Such testimony also indicated the proposed drilling and spacing unit will prevent or assist in preventing waste by ensuring that the pool as a whole may be efficiently and economically developed, without prejudice to the rights of other leasehold or mineral owners.

 

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.       WPX agreed to be bound by oral order of the Commission. 

 

13.       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 1280-acre exploratory drilling and spacing unit for Sections 21 and 28, Township 6 South, Range 94 West, 6th P.M., and approve up to 40 horizontal, vertical or directional wells within the unit, for the production of oil, gas and associated hydrocarbons from the Mancos (including the Sego Sandstone), Niobrara, Frontier, Mowry, and Dakota Formations (collectively, “Deep Formations”).

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 1280-acre exploratory drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 40 horizontal, vertical, and directional wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Deep Formations, with the productive interval of the wellbore will be located no closer than 300 feet from the southern and northern unit boundaries and no more than 600 feet from the eastern and western unit boundaries, 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 6 South, Range 94 West, 6th P.M.

                        Section 21:      All

                        Section 28:      All

 

2.         The proposed wells shall be drilled from new, common or existing wellpads, from no more than one well pad per quarter quarter section  (or lots or parcels approximately equivalent thereto) within the unit.

 

3.         WPX shall submit a Communitization Agreement (CA) to the BLM within 90 days of the spud of the first well in any drilling and spacing unit that contains leased Federal minerals.

 

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   13th  day of August, 2014, as of July 28, 2014.     

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary