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 NIOBRARA FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO |
) ) ) ) ) ) ) |
CAUSE NO. 407
DOCKET NO. 160600225
TYPE: POOLING
ORDER NO. 407-1721 |
REPORT OF THE COMMISSION
The Commission heard this matter on June 6, 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 within one approximate 200-acre horizontal wellbore spacing unit, one approximate 240-acre horizontal wellbore spacing unit, four approximate 400-acre horizontal wellbore spacing units and one approximate 480-acre horizontal wellbore spacing units, established for portions of Sections 17 and 18, Township 5 North, Range 64 West, 6TH p.m. and Section 13, Township 5 North, Range 65 West, 6th P.M., for the Schaumberg 17G-214 well, the Schaumberg 17F-204 well, the Schaumberg 17F-334 well, the Schaumberg 17F-234 well, the Schaumberg 17F-202 well, the Schaumberg 17F-332 well, the Schaumberg 17G-312 well, the Schaumberg 17G-202 well, the Schaumberg 17G-314 well, and the Schaumberg 17F-232 well, for the development and operation of the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1. PDC Energy, Inc. (Operator No. 69175) (“PDC” 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 17 and 18, Township 5 North, Range 64 West, 6TH p.m. and Section 13, Township 5 North, Range 65 West, 6th P.M. are subject to this Rule for the Niobrara Formation.
5. On April 7, 2016 (amended April 25, 2016), PDC, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S. for an order to pool all interests in one approximate 200-acre horizontal wellbore spacing unit, one approximate 240-acre horizontal wellbore spacing unit, four approximate 400-acre horizontal wellbore spacing units and four approximate 480-acre horizontal wellbore spacing units established for the below-described lands (“Application Lands”), for the development and operation of the Niobrara Formation, 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, 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 Schaumberg 17G-214 well (API No. 05-123-43089), the Schaumberg 17F-204 well (API No. 05-123-43091), the Schaumberg 17F-334 well (API No. 05-123-43092), the Schaumberg 17F-234 well (API No. 05-123-43094), the Schaumberg 17F-202 well (API No. 05-123-43088), the Schaumberg 17F-332 well (API No. 05-123-43087), the Schaumberg 17G-312 well (API No. 05-123-43093), the Schaumberg 17G-202 well (API No. 05-123-43095), the Schaumberg 17G-314 well (API No. 05-123-43090), and the Schaumberg 17F-232 well (API No. 05-123-43096):
Township 5 North, Range 64 West, 6th P.M.
Section 17: SW¼NW¼, NW¼SW¼
Section 18: S½N½, N½S½
Township 5 North, Range 65 West, 6th P.M.
Section 13: SE¼NE¼, NE¼SE¼
Wellbore Spacing Unit (“WSU”) No. 1 (480-acres)
Schaumberg
17G-214 well
Township 5 North, Range 64 West, 6th P.M.
Section 17: W½NW¼
Section 18: N½
Township 5 North, Range 65 West, 6th P.M.
Section 13: E½NE¼
WSU Nos. 2 thru 4 (480-acres)
Schaumberg
17F-204 well
Schaumberg 17F-334 well
Schaumberg 17F-234 well
Township 5 North, Range 64 West, 6th P.M.
Section 17: N½
Section 18: E½NE¼
WSU Nos. 5 and 6 (400-acres)
Schaumberg
17F-202 well
Schaumberg 17F-332 well
Township 5 North, Range 64 West, 6th P.M.
Section 17: S½N½, N½S½
Section 18: SE¼NE¼, NE¼SE¼
WSU Nos. 7 and 8 (400-acres)
Schaumberg
17G-312 well
Schaumberg 17G-202 well
Township 5 North, Range 64 West, 6th P.M.
Section 17: SW¼NW¼
Section 18: S½N½
Township 5 North, Range 65 West, 6th P.M.
Section 13: SE¼NE¼
WSU No. 9 (240-acres)
Schaumberg 17G-314
well
Township 5 North, Range 64 West, 6th P.M.
Section 17: S½N½
Section 18: SE¼NE¼
WSU No. 10 (200-acres)
Schaumberg 17F-232
well
6. On May 16, 2016, PDC, by its attorneys, requested that WSU Nos. 2-4 established for the Schaumberg 17F-204 well (API No. 05-123-43091), the Schaumberg 17F-334 well (API No. 05-123-43092), and the Schaumberg 17F-234 well (API No. 05-123-43094) be removed from the Application.
7. On May 16, 2016, PDC, 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.
8. Land testimony and exhibits submitted in support of the Application by Sam McClung, Senior Regional Landman for PDC, showed that all nonconsenting interest owners were notified of the Application and received an Authority for Expenditure (“AFE”) and offer to participate in the Wells. Further testimony concluded that the AFE sent by the Applicant to the interest owners was a fair and reasonable estimate of the costs of the proposed drilling operation and was received at least 35 days prior to the June 6, 2016, hearing date.
9. Land testimony showed the Applicant complied with the requirements of Rule 530, and is entitled to the cost recovery provisions pursuant to §34-60-116(7), C.R.S., for the Wells, but did not provide testimony for any subsequent wells.
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. PDC agreed to be bound by oral order of the Commission.
12. 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 one approximate 200-acre horizontal wellbore spacing unit, one approximate 240-acre horizontal wellbore spacing unit, four approximate 400-acre horizontal wellbore spacing units and one approximate 480-acre horizontal wellbore spacing units, established for portions of Sections 17 and 18, Township 5 North, Range 64 West, 6TH p.m. and Section 13, Township 5 North, Range 65 West, 6th P.M., for the Schaumberg 17G-214 well, the Schaumberg 17F-202 well, the Schaumberg 17F-332 well, the Schaumberg 17G-312 well, the Schaumberg 17G-202 well, the Schaumberg 17G-314 well, and the Schaumberg 17F-232 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 one approximate 200-acre horizontal wellbore spacing unit, one approximate 240-acre horizontal wellbore spacing unit, four approximate 400-acre horizontal wellbore spacing units and one approximate 480-acre 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, or the date that any of the costs specified in §34-60-116(7)(b)(ll), C.R.S., are first incurred for the drilling of the Schaumberg 17G-214 well (API No. 05-123-43089), the Schaumberg 17F-202 well (API No. 05-123-43088), the Schaumberg 17F-332 well (API No. 05-123-43087), the Schaumberg 17G-312 well (API No. 05-123-43093), the Schaumberg 17G-202 well (API No. 05-123-43095), the Schaumberg 17G-314 well (API No. 05-123-43090), and the Schaumberg 17F-232 well (API No. 05-123-43096) (“Wells”):
Township 5 North, Range 64 West, 6th P.M.
Section 17: SW¼NW¼, NW¼SW¼
Section 18: S½N½, N½S½
Township 5 North, Range 65 West, 6th P.M.
Section 13: SE¼NE¼, NE¼SE¼
Wellbore Spacing Unit (“WSU”) No. 1 (480-acres)
Schaumberg 17G-214
well
Township 5 North, Range 64 West, 6th P.M.
Section 17: W½NW¼
Section 18: N½
Township 5 North, Range 65 West, 6th P.M.
Section 13: E½NE¼
WSU Nos. 5 and 6 (400-acres)
Schaumberg 17F-202
well
Schaumberg 17F-332 well
Township 5 North, Range 64 West, 6th P.M.
Section 17: S½N½, N½S½
Section 18: SE¼NE¼, NE¼SE¼
WSU Nos. 7 and 8 (400-acres)
Schaumberg 17G-312
well
Schaumberg 17G-202 well
Township 5 North, Range 64 West, 6th P.M.
Section 17: SW¼NW¼
Section 18: S½N½
Township 5 North, Range 65 West, 6th P.M.
Section 13: SE¼NE¼
WSU No. 9 (240-acres)
Schaumberg 17G-314
well
Township 5 North, Range 64 West, 6th P.M.
Section 17: S½N½
Section 18: SE¼NE¼
WSU No. 10 (200-acres)
Schaumberg 17F-232
well
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 units; 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 designated horizontal wellbore spacing units applicable to its interest in the designated horizontal wellbore spacing units.
3. The non-consenting leased (working interest) owners must reimburse the consenting working interest owners for their share of the costs and risks of drilling and operating the Wells (including penalties as provided by §34-60-116(7)(b), C.R.S.) out of production from the wellbore spacing units representing the cost-bearing interests of the non-consenting working interest owners as provided by §34-60-116(7)(a), C.R.S.
4. Any unleased owners are hereby deemed to have elected not to participate and shall therefore be deemed to be non-consenting as to the Wells and be subject to the penalties as provided for by §34-60-116 (7), C.R.S. Any party seeking the cost recovery provisions of §34-60-116(7), C.R.S., shall first comply with subsection (d) for any subsequent well(s).
5. Each non-consenting unleased owner within the wellbore spacing units shall be treated as the owner of the landowner's royalty to the extent of 12.5% of its record title interest, whatever that interest may be, until such time as the consenting owners recover, only out of each non-consenting owner's proportionate 87.5% share of production, the costs specified in §34-60-116(7)(b), C.R.S. as amended. After recovery of such costs, each unleased non-consenting mineral owner shall then own its proportionate 8/8ths share of the Well, surface facilities and production, and then be liable for its proportionate share of further costs incurred in connection with the Application Wells as if it had originally agreed to the drilling.
6. 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.
7. 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.
8. The wellbore spacing units described above shall be considered 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 20th day of June, 2016, as of June 6, 2016.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Julie Murphy, Secretary