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 NIOBRARA FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 150400248
ORDER NO. 407-1304 |
REPORT OF THE COMMISSION
The Commission heard this matter on April 13, 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 in two approximate 320-acre designated horizontal wellbore spacing units for Section 2, Township 5 North, Range 62 West, 6th P.M. and Section 35, Township 6 North, Range 62 West, 6th P.M., for the drilling of the State Antelope #A-U-2HNB Well, and the State Antelope #A11-U41-2HNC Well (“Wells”), for the development and operation of the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1. Bonanza Creek Energy 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.
5. On November 29, 2010, the Commission entered Order No. 407-380, which among other things, established 21 approximate 640-acre drilling and spacing units for various lands in Township 5 North, Ranges 61 and 62 West, 6th P.M. and Township 6 North, Range 62 West, 6th P.M., and approved one horizontal well within each unit, with initial penetration of the Codell and Niobrara Formations, lateral, and bottomhole location not closer than 460 feet from the boundaries of the unit.
6. On February 22, 2011 (Corrected July 29, 2013), the Commission entered Order No. 535-4 which, among other things, established 74 approximate 640-acre drilling and spacing units for certain lands in Townships 4, 5 and 6 North, Ranges 61 and 62, 6th P.M., and approved one horizontal well in each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation and approved the request to correct references consistent with Rule 318A.
7. On May 29, 2012, the Commission entered Order No. 407-633 which, among other things, approved one or more additional horizontal wells within each existing approximate 640-acre drilling and spacing unit, for certain lands in Townships 5 North, Ranges 61 and 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
8. On July 29, 2013, the Commission entered Order No. 535-381 which, among other things, 1) approved an additional seven horizontal wells, for a total of up to eight horizontal wells, within an approximate 640-acre drilling and spacing unit consisting of Section 35, Township 6 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) established an approximate 640-acre drilling and spacing unit for Section 35, Township 6 North, Range 62 West, 6th P.M. and approved up to four horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Codell Formation.
9. On January 27, 2014, the Commission entered Order No. 407-914 which, among other things, pooled all interests in an approximate 640-acre drilling and spacing unit established for Section 35, Township 6 North, Range 62 West, 6th P.M., for the development and operation of the Codell and Niobrara Formations.
10. On March 17, 2014, the Commission entered Order No. 407-945 which, among other things, 1) maintained two approximate 640-acre drilling and spacing units established for Sections 34 and 35, Township 6 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons produced from existing wells completed in the Niobrara Formation; 2) vacated Order Nos. 407-821 and 535-381; 3) established an approximate 1,280-acre drilling and spacing unit for Section 34 and 35, Township 6 North, Range 62 West, 6th P.M., and approved a total of up to 16 horizontal wells, within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
11. On February 12, 2015, 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 two approximate 320-acre designated horizontal wellbore spacing units established for the below-described lands (“Application Lands”), for the development and operation of the Niobrara Formation, effective as of the date of the Application, for the drilling of the State Antelope #A-U-2HNB Well (API No. 05-123-41071), and the State Antelope #A11-U41-2HNC Well (API No. 05-123-41072) (collectively “Wells):
Township 5 North, Range 62 West, 6th P.M. (WSU #1)
Section 2: N˝N˝
Township 6 North, Range 62 West, 6th P.M.
Section 35: S˝S˝
Township 5 North, Range 62 West, 6th P.M. (WSU #2)
Section 2: N˝N˝
Township 6 North, Range 62 West, 6th P.M.
Section 35: S˝S˝
12. On March 23, 2015, 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.
13. Land testimony and exhibits submitted in support of the Application by Juan Bustillos, Landman II for Bonanza, showed that Applicant has been unable to effect voluntary pooling of interests within the horizontal wellbore spacing units. Land testimony also stated that Rule 530 does not apply to the owners to be pooled by the Application, and Applicant is not seeking cost recovery penalties in the Application.
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 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 Officer review of the Application under Rule 511, the Commission should enter an order to pool all interests in two approximate 320-acre designated horizontal wellbore spacing units established for Section 2, Township 5 North, Range 62 West, 6th P.M., and Section 35, Township 6 North, Range 62 West, 6th P.M., for the State Antelope #A-U-2HNB Well and the State Antelope #A11-U41-2HNC Well, for the development and operation of the Niobrara Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that:
1. Pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an order to pool all interests in two approximate 320-acre designated horizontal wellbore spacing units established for the below-described lands (“Application Lands”), for the development and operation of the Niobrara Formation, effective as of the date of the Application, for the drilling of the State Antelope #A-U-2HNB Well (API No. 05-123-41071), and the State Antelope #A11-U41-2HNC Well (API No. 05-123-41072):
Township 5 North, Range 62 West, 6th P.M. (WSU #1)
Section 2: N˝N˝
Township 6 North, Range 62 West, 6th P.M.
Section 35: S˝S˝
Township 5 North, Range 62 West, 6th P.M. (WSU #2)
Section 2: N˝N˝
Township 6 North, Range 62 West, 6th P.M.
Section 35: S˝S˝
2. The production obtained from the 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 wellbore spacing units; each owner of an interest in the wellbore spacing units shall be entitled to receive its share of the production of the Wells located on the wellbore spacing units applicable to its interest in the wellbore spacing units.
3. The operator of the Wells drilled on the above-described wellbore spacing units shall furnish the non-consenting owners with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.
4. 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.
5. The wellbore spacing units described above shall be considered drilling and spacing units 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 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 27th day of April, 2015, as of April 13, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ____________________________________
Julie Murphy, Secretary