BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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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. 150100051
ORDER NO. 407-1221 |
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 two approximate 640-acre designated horizontal wellbore spacing units established for Sections 11 and 14, Township 2 North, Range 67 West, 6th P.M., and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S. for the Barclay 28C-11HZ and Barclay 2N-11HZ Wells, for the development and operation of the Codell and Niobrara Formations.
FINDINGS
The Commission finds as follows:
1. Kerr-McGee Oil & Gas Onshore LP (Operator No. 47120) (“Kerr-McGee” 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. Sections 11 and 14, Township 2 North, Range 67 West, 6th P.M. are subject to this Rule for the Codell and Niobrara Formations.
5. On November 17, 2014, Kerr-McGee, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S. for an order to pool all interests in two approximate 640-acre designated horizontal wellbore spacing units established for the below-described lands (“Application Lands”), for the development and operation of the Codell and Niobrara Formations, and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., effective as of the date of the Application, for the drilling of the Barclay 28C-11HZ (API No. 05-123-39058) and the Barclay 2N-11HZ (API No. 05-123-39060) (“Wells”):
Township 2 North, Range 67 West, 6th P.M.
Section 11: E˝W˝, W˝E˝
Section 14: E˝W˝, W˝E˝
Wellbore Spacing Unit (“WSU”) No. 1
Township 2 North, Range 67 West, 6th P.M.
Section 11: E˝
Section 14: E˝
WSU No. 2
6. On January 5, 2015, Kerr-McGee, 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 Jim Grant, Staff Landman for Kerr-McGee, showed that Kerr-McGee has been unable to effect the voluntary pooling of interests within the 640-acre horizontal wellbore spacing units 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 Rules 530.b. 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. Kerr-McGee 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 based on the Hearing Unit review of the Application under Rule 511., the Commission should enter an order to pool all interests within two approximate 640-acre designated horizontal wellbore spacing units established for Sections 11 and 14, Township 2 North, Range 67 West, 6th P.M., for the development and operation of the Codell and Niobrara 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 two approximate 640-acre designated horizontal wellbore spacing units established for the below-described lands, are hereby pooled, for the development and operation of the Codell and Niobrara Formation, effective as of the date of the Application, for the drilling of Barclay 28C-11HZ (API No. 05-123-39058) and the Barclay 2N-11HZ (API No. 05-123-39060) Wells:
Township 2 North, Range 67 West, 6th P.M.
Section 11: E˝W˝, W˝E˝
Section 14: E˝W˝, W˝E˝
Wellbore Spacing Unit (“WSU”) No. 1
Township 2 North, Range 67 West, 6th P.M.
Section 11: E˝
Section 14: E˝
WSU No. 2
2. The production obtained from the designated horizontal wellbore spacing units 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 designated horizontal wellbore spacing unit; each owner of an interest in the designated horizontal wellbore spacing unit shall be entitled to receive its share of the production of the Well located on the designated horizontal wellbore spacing unit applicable to its interest in the designated horizontal 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. Any 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 ___ day of February, 2015, as of January 26, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Jill Dorancy, Acting Secretary