BEFORE
THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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REPORT OF THE COMMISSION
The Commission heard this matter on July 20, 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 an approximate 400-acre designated wellbore spacing unit established for portions of Sections 13, 14, 23 and 24, Township 3 North, Range 68 West, 6th P.M., for the drilling of the Docheff 34N-13HZ Well, for the development and operation of the Niobrara 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 13, 14, 23 and 24, Township 3 North, Range 68 West, 6th P.M. are subject to Rule 318A for the Niobrara Formation.
5. On May 21, 2015, 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 the approximate 400-acre designated wellbore spacing unit established for the below-described lands (“Application Lands”), and subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., effective as of the earlier of the date of the Application, or the date that any of the costs specified in §34-60-116(7)(b), C.R.S., were first incurred for the drilling of the Docheff 34N-13HZ Well (API No. 05-123-40588), for the development and operation of the Niobrara Formation.
Township 3 North, Range 68 West, 6th P.M.
Section 13: SW¼SW¼
Section 14: S½S½
Section 23: N½N½
Section 24: NW¼NW¼
6. On May 21, 2015, 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 Jay Errebo, Senior Staff Landman for Kerr McGee, showed that Kerr-McGee has been unable to effect the voluntary pooling of interests in an approximate 400-acre horizontal wellbore spacing units established for the Application Lands. Further, 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 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), C.R.S.
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 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 400-acre designated wellbore spacing unit established for portions of Sections 13, 14, 23 and 24, Township 3 North, Range 68 West, 6th P.M., for the drilling of the Docheff 34N-13HZ Well, for the development and operation of the 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 an approximate 400-acre designated horizontal wellbore spacing units established for the below-described lands, are hereby pooled, for the development and operation of the Niobrara Formation, effective as of the date of the Application, for the drilling of the Docheff 34N-13HZ Well (API No. 05-123-40588):
Township 3 North, Range 68 West, 6th P.M.
Section 13: SW¼SW¼
Section 14: S½S½
Section 23: N½N½
Section 24: NW¼NW¼
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, Any wellbore spacing unit described above shall be considered a drilling and spacing unit established by the Commission for purposes of Rule 530.
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 4th day of August 2015, as of July 20, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Julie Murphy, Secretary