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 CODELL FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 1404-UP-94

 

ORDER: 407-1008

 

REPORT OF THE COMMISSION

The Commission heard this matter on April 28, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to pool all interests in an approximate 480-acre designated wellbore spacing unit established for Sections 4, 5, 8 and 10, Township 4 North, Range 63 West, 6th P.M., to accommodate the Wetco Farms A-4-9MRLC Well, for the development and operation of the Codell Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Bonanza Creek Energy Operating Company LLC ("Bonanza 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.         On April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Sections 4, 5, 8 and 9, Township 4 North, Range 63 West, 6th P.M. are subject to Rule 318A for the Codell Formation.

 

5.         On February 27, 2014, Bonanza, by its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an order to pool all interests in an approximate 480-acre designated wellbore spacing unit established for the below-described lands (“Application Lands”), for the development and operation of the Codell Formation, effective as of the earlier of the date of the Application, or the date that any of the costs specified in C.R.S. §34-60-116(7)(b)(II) were first incurred for the drilling of the Wetco Farms A-4-9MRLC Well (API No. 05-123-39024) (“Well”), and to subject any nonconsenting interests to the cost recovery provisions of C.R.S. §34-60-116(7):

 

Township 4 North, Range 63 West, 6th P.M.

Section 4:        W½ W½

Section 5:        E½ E½

Section 8:        E½ NE¼

Section 9:        W½ NW¼

 

            6.         On April 15, 2014, Bonanza, 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.         Land testimony and exhibits submitted in support of the Application by Caroline Heuring, Landman for Bonanza, showed certain royalty owners have oil and gas leases which pre-date the widespread use of horizontal drilling and did not contemplate the formation of large spacing units to accommodate long lateral wellbores. Applicant contacted each of these royalty owners, or has made diligent efforts to do so, to obtain their consent to participate in the spacing unit for purposes of royalty payments. Despite such diligent efforts, Applicant has not been able to contact some of these individuals, or has received no response from them. Applicant confirmed that Commission Rule 530 does not apply as there are no working interest owners or unleased mineral interest owners subject to the Application, and Applicant is not seeking cost recovery pursuant to §34-60-116(7) for the Well.

 

8.         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.

 

9.         Bonanza agreed to be bound by oral order of the Commission. 

 

10.       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 pool all interests in an approximate 480-acre designated wellbore spacing unit established for Sections 4, 5, 8 and 10, Township 4 North, Range 63 West, 6th P.M., to accommodate the Wetco Farms A-4-9MRLC Well, for the development and operation of the Codell Formation.

 

ORDER

 

            IT IS HEREBY ORDERED:

 

1.            Pursuant to the provisions of §34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act, all interests in an approximate 480-acre wellbore spacing unit established for the below-described lands, are hereby pooled, for the development and operation of the Codell Formation, effective as of the earlier of the date of the Application, or the date that any of the costs specified in C.R.S. §34-60-116(7)(b)(II) are first incurred for the drilling of the Wetco Farms A-4-9MRLC Well:

 

Township 4 North, Range 63 West, 6th P.M.

Section 4:        W½ W½

Section 5:        E½ E½

Section 8:        E½ NE¼

Section 9:        W½ NW¼

 

2.         The production obtained from the wellbore spacing unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within the wellbore spacing unit; each owner of an interest in the wellbore spacing unit shall be entitled to receive its share of the production of the Well located on the wellbore spacing unit applicable to its interest in the wellbore spacing 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 Procedure 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   23rd  day of May, 2014, as of April 28, 2014.         

           

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary