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. 160400192

 

ORDER NO. 407-1696

 

TYPE: POOLING

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on April 18, 2016, 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 263-acre drilling and spacing unit established for Section 1, Township 4 North, Range 68 West, 6th P.M., for the drilling of the Cito Trust HC 01-039HC Well, the Cito Trust HC 01-079HC Well, the Cito Trust HC 01-119HN Well, the Cito Trust HC 01-042HN Well, the Cito Trust HC 01-082HN Well, the Cito Trust HC 01-122HN Well, the Cito Trust HC 01-079HN Well, the Cito Trust HC 01-119HC Well, and the Cito Trust HC 01-159HC Well, for the development and operation of the Codell and Niobrara Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Great Western Operating Company, LLC (“Great Western” 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.  Section 1, Township 4 North, Range 68 West, 6th P.M. is subject to this Rule for the Codell and Niobrara Formations.

 

5.         On February 19, 1992 (amended August 20, 1993), the Commission entered Order No. 407-87 which, among other things, established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formations, the Codell Formation, and the Niobrara Formation underlying certain lands, including the Application Lands, with the permitted well locations in accordance with the provisions of Order No. 407-1.

 

6.         On February 18, 2016, Great Western, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified concurrent application (“Concurrent Application”) for an order to establish an approximate 263-acre drilling and spacing unit for the N˝ of Section 1, Township 4 North, Range 68 West, 6th P.M., and to approve up to nine horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

 

7.         On February 18, 2016, Great Western, 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 within an approximate 263-acre drilling and spacing unit for the below-described lands (“Application Lands”), for the development and operation of the Codell and Niobrara Formations, effective as of the earlier of the date of the Application or the date that the costs specified in §34-60-116(7)(b), C.R.S., are first incurred for the drilling of the Cito Trust HC 01-039HC Well (API No. Pending), the Cito Trust HC 01-079HC Well (API No. Pending), the Cito Trust HC 01-119HN Well (API No. Pending), the Cito Trust HC 01-042HN Well (API No. Pending), the Cito Trust HC 01-082HN Well (API No. Pending), the Cito Trust HC 01-122HN Well (API No. Pending), the Cito Trust HC 01-079HN Well (API No. Pending), the Cito Trust HC 01-119HC Well (API No. Pending), and the Cito Trust HC 01-159HC Well (API No. Pending) (“Wells”): 

 

Township 4 North, Range 68 West, 6th P.M.

Section 1:        N˝

 

8.         On March 28, 2016, Great Western, 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.

 

9.         Land testimony and exhibits submitted in support of the Application by Santiago Rodriguez, Senior Landman for Great Western, showed that all non-consenting interest owners were notified of the Application and that Applicant is not seeking cost recovery at this time. Additional testimony and exhibits submitted under Rule 511 in support of the Application provide for a reduction in the size of the drilling and spacing unit from 320-acres initially designated in the Application to 263-acres. The reduced 263-acre drilling and spacing unit does not affect the legal description of the Application Lands or the interest owners notified of the Application.

 

10.       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.

 

11.       Land testimony showed the Applicant is not seeking the cost recovery provisions pursuant to §34-60-116(7), C.R.S., for the Cito Trust HC 01-039HC Well, the Cito Trust HC 01-079HC Well, the Cito Trust HC 01-119HN Well, the Cito Trust HC 01-042HN Well, the Cito Trust HC 01-082HN Well, the Cito Trust HC 01-122HN Well, the Cito Trust HC 01-079HN Well, the Cito Trust HC 01-119HC Well, and the Cito Trust HC 01-159HC Well. 

 

12.       Great Western agreed to be bound by oral order of the Commission. 

 

13.       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 263-acre drilling and spacing unit established for Section 1, Township 4 North, Range 68 West, 6th P.M., for the drilling of the Cito Trust HC 01-039HC Well, the Cito Trust HC 01-079HC Well, the Cito Trust HC 01-119HN Well, the Cito Trust HC 01-042HN Well, the Cito Trust HC 01-082HN Well, the Cito Trust HC 01-122HN Well, the Cito Trust HC 01-079HN Well, the Cito Trust HC 01-119HC Well, and the Cito Trust HC 01-159HC Well, for the development and operation of the Codell and Niobrara Formations.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that:

 

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 263-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 earlier of the date of the Application, for the drilling of the Cito Trust HC 01-039HC Well (API No. Pending), the Cito Trust HC 01-079HC Well (API No. Pending), the Cito Trust HC 01-119HN Well (API No. Pending), the Cito Trust HC 01-042HN Well (API No. Pending), the Cito Trust HC 01-082HN Well (API No. Pending), the Cito Trust HC 01-122HN Well (API No. Pending), the Cito Trust HC 01-079HN Well (API No. Pending), the Cito Trust HC 01-119HC Well (API No. Pending), and the Cito Trust HC 01-159HC Well (API No. Pending) (“Wells”):

 

Township 4 North, Range 68 West, 6th P.M.

Section 1:        N˝

 

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 Wells located on the drilling and spacing unit applicable to its interest in the drilling and spacing unit.

 

3.         The operator of the Wells drilled on the above-described drilling and spacing unit 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.

 

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 3rd day of May, 2016, as of April 18, 2016.

 

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By:                                                                                 

Julie Murphy, Secretary