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 AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 150100047

 

ORDER NO. 407-1218

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on January 26, 2015 at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to pool all interests within an approximate 1280-acre drilling and spacing unit established for Sections 4 and 9, Township 6 North, Range 62 West, 6th P.M., for the development and operation of the Codell and Niobrara Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Bonanza Creek Energy Operating Company LLC (Operator No. 8960) (“Bonanza Creek” or “Applicant”) 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.

 

5.         On April 4, 2011, the Commission entered Order No. 535-12 which established an approximate 640-acre drilling and spacing unit for Section 9, Township 6 North, Range 62 West, 6th P.M., and approved one horizontal well within the unit, for the production of gas and associated hydrocarbons from the Niobrara Formation. 

6.         On May 16, 2011, the Commission entered Order No. 535-15 which pooled all nonconsenting interests in the approximate 640-acre drilling and spacing unit established for Section 9, Township 6 North, Range 62 West, 6th  P.M., to accommodate the Degenhart 6-62 9-1H Well (API No. 05-123-32966), for the development and operation of the Niobrara Formation. 

7.         On June 27, 2011, the Commission entered Order No. 535-37 which established an approximate 640-acre drilling and spacing unit for Section 4, Township 6 North, Range 62 West, 6th P.M., and approved one horizontal well within the unit, for the production of gas and associated hydrocarbons from the Niobrara Formation. 

8.         On August 8, 2011, the Commission entered Order No. 535-67 which pooled all nonconsenting interests in the approximate 640-acre drilling and spacing unit established for Section 4, Township 6 North, Range 62 West, 6th P.M. to accommodate the Hoff #6-62 4-1H Well, for the development and operation of the Niobrara Formation. 

9.         On November 17, 2014, Applicant filed an application (Docket No. 15010045) to establish an approximate 1280-acre drilling and spacing unit for the Application Lands, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.

10.       On November 17, 2014, Bonanza Creek, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S. for an order to pool all interests in an approximate 1280-acre drilling and spacing unit established for the below-described lands (“Application Lands”), for the development and operation of the Codell and Niobrara Formations, effective as of the date of the Application:

 

Township 6 North, Range 62 West, 6th P.M.

Section 4:        All

Section 9:        All

 

11.       On January 5, 2015, Bonanza Creek, 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.

 

12.       Land testimony and exhibits submitted in support of the Application by Steve McPherson, Landman for Bonanza Creek, showed that all nonconsenting interest owners were notified of the Application.

 

13.       Applicant further stated that Commission Rule 530.b. and c. do not apply as Applicant is not seeking cost recovery pursuant to §34-60-116(7), for any wells within the unit.

 

14.       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.

 

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

 

16.       Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Unit review of the Application under Rule 511., the Commission should enter an order to pool all interests within an approximate 1280-acre drilling and spacing unit established for Sections 4 and 9, Township 6 North, Range 62 West, 6th P.M., for the development and operation of the Codell and Niobrara Formations.

 

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 1280-acre drilling and spacing unit established for the below-described lands, are hereby pooled, for the development and operation of the Codell and Niobrara Formations, effective as of the date of the Application:

 

Township 6 North, Range 62 West, 6th P.M.

Section 4:        All

Section 9:        All

 

2.         The production obtained from the drilling and 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 drilling and spacing unit; each owner of an interest in the drilling and spacing unit shall be entitled to receive its share of the production of the Well located on the drilling and spacing unit applicable to its interest in the drilling and 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.

 

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 ___ day of February, 2015, as of January 26, 2015.          

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                               OF THE STATE OF COLORADO

 

 

                                                                        By__________________________________

Jill Dorancy, Acting Secretary