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 OPERATION FOR THE CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY,      COLORADO

)

)

)

)

)

)

)

 

CAUSE NO. 407

 

DOCKET NO. 161000398

 

TYPE:  POOLING

 

ORDER NO. 407-1808

REPORT OF THE COMMISSION

 

The Commission heard this matter on October 24, 2016, at the Northeastern Junior College, Hayes Student Center Ballroom, 100 College Avenue, Sterling, Colorado, upon application for an order pool all interests in three approximate 556.47-acre horizontal wellbore spacing units established for certain portions of Sections 4 and 9, Township 1 North, Range 66 West, 6th P.M. and Section 33, Township 2 North, Range 66 West, 6th P.M., 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”), 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.

 

5.         On August 25, 2016, 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 three approximate 556.47-acre 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 C.R.S. §34-60-116(7), C.R.S., for the drilling of the Highlands 27C-33HZ Well (API No. 05-123-42620) as to the Codell Formation, and the Highlands 27N-33HZ Well (API No. 05-123-42612) and the Highlands 2N-33HZ Well (API No. 05-123-42609) as to the Niobrara Formation (“Wells”):

 

 

Township 1 North, Range 66 West, 6th P.M.

Section 4:        E½ 

Section 9:        NE¼ 

 

Township 2 North, Range 66 West, 6th P.M.

Section 33:      S½SE¼  

 

Wellbore Spacing Unit (WSU No. 1, 2, and 3)

Highlands 27C-33HZ Well (API No. 05-123-42620) (Codell)

Highlands 27N-33HZ Well (API No. 05-123-42612) (Niobrara)

Highlands 2N-33HZ Well (API No. 05-123-42609) (Niobrara)

 

6.         On October 11, 2016, 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 Tom Yaley, Landman for Applicant, showed that Kerr-McGee has been unable to effect the voluntary pooling of interests within three approximate 556.47-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 does not apply as there are no nonparticipating 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. for the Wells.

 

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 three approximate 556.47-acre horizontal wellbore spacing units established for certain portions of Sections 4 and 9, Township 1 North, Range 66 West, 6th P.M. and Section 33, Township 2 North, Range 66 West, 6th P.M., for the development and operation of the Codell and Niobrara Formations.

 

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 three approximate 556.47-acre horizontal wellbore spacing unit established for the below-described lands are hereby pooled, for the development and operation of the Codell and Niobrara Formations:

 

Township 1 North, Range 66 West, 6th P.M.

Section 4:        E½ 

Section 9:        NE¼ 

 

Township 2 North, Range 66 West, 6th P.M.

Section 33:      S½SE¼  

 

Wellbore Spacing Unit (WSU No. 1, 2, and 3)

Highlands 27C-33HZ Well (API No. 05-123-42620) (Codell)

Highlands 27N-33HZ Well (API No. 05-123-42612) (Niobrara)

Highlands 2N-33HZ Well (API No. 05-123-42609) (Niobrara)

 

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 unit applicable to its interest in the wellbore spacing units.

 

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.         The designated horizontal 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 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 November, 2016, as of October 24, 2016.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

Julie Murphy, Secretary