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. 1406-UP-179

 

ORDER NO. 407-1072

REPORT OF THE COMMISSION

The Commission heard this matter on June 17, 2014, at the Rifle Branch Library, Garfield County Public Library District, 207 East Avenue, Rifle, Colorado, upon application for an order to pool all interests in an approximate 720-acre designated wellbore spacing unit established for Sections 25, 26, 35 and 36, Township 3 North, Range 68 West, 6th P.M. and Sections 30 and 31, Township 3 North, Range 67 West, 6th P.M., for the drilling of the Hansen State 26C-36HZ Well, for the development and operation of the Codell Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Kerr-McGee Oil & Gas Onshore LP (“Kerr-McGee” 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 25, 26, 35 and 36, Township 3 North, Range 68 West, 6th P.M. and Sections 30 and 31, Township 3 North, Range 67 West, 6th P.M. are subject to Rule 318A for the Codell Formation.

 

5.         On April 17, 2014, Kerr-McGee, 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 720-acre horizontal wellbore spacing unit established for the below-described lands (“Application Lands”), for the drilling of the Hansen State 26C-36HZ well (API No. 05-123-39195) (“Well”), for the development and operation of the Codell Formation:

 

Township 3 North, Range 68 West, 6th P.M.

Section 25:      S½ S½ 

Section 26:      S½ S½

Section 35:      N½ N½

Section 36:      N½ N½

 

 

Township 3 North, Range 67 West, 6th P.M.

Section 30:      SW¼ SW¼ 

Section 31:      NW¼ NW¼ 

 

6.         On June 3, 2014, Applicant, 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.         Testimony and exhibits submitted in support of the Application by R.C. Kimball, Staff Landman for Applicant, stated that Kerr-McGee has been unable to effect the voluntary pooling of interests within the 720-acre horizontal wellbore spacing unit established for the Application Lands, and that based upon examination of relevant contracts and records, all owners of an oil and gas interest in the tracts to be pooled (who could be located by Kerr-McGee) received timely notice of the Application.

                                                 

8.         Applicant confirmed that Commission Rule 530b. and c. do 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).

 

9.         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.

 

10.       Applicant agreed to be bound by oral order of the Commission.

 

11.       Based on the facts stated in the verified Application, having received no protests, and upon a hearing before the Commission, the Commission may enter an order to pool all interests in an approximate 720-acre established horizontal wellbore spacing unit located in Sections 25, 26, 35 and 36, Township 3 North, Range 68 West, 6th P.M. and Sections 30 and 31, Township 3 North, Range 67 West, 6th P.M., , for the drilling of the Hansen State 26C-36HZ 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 720-acre horizontal wellbore spacing unit established for the below-described lands are hereby pooled, for the drilling of the Hansen State 26C-36HZ well (API No. 05-123-39195), for the development and operation of the Codell Formation:

 

Township 3 North, Range 68 West, 6th P.M.

Section 25:      S½ S½ 

Section 26:      S½ S½

Section 35:      N½ N½

Section 36:      N½ N½

 

Township 3 North, Range 67 West, 6th P.M.

Section 30:      SW¼ SW¼ 

Section 31:      NW¼ 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.

 

3.         Nothing in this order is intended to conflict with §34-60-116, C.R.S., as amended.  Any conflict that may arise shall be resolved in favor of the statute.

 

4.         The wellbore spacing unit described above, shall be considered a drilling and spacing unit established by the Commission for purposes of Rule 530.a.

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   8th    day of July, 2014, as of June 17, 2014.         

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary