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

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CAUSE NO. 407

 

DOCKET NO. 161000444

 

TYPE: POOLING

 

ORDER NO. 407-1823

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 to pool all interests in an approximate 640-acre designated horizontal wellbore spacing units established for portions of Sections 7, 8, 17 and 18, Township 5 North, Range 64 West, 6th P.M., and to subject all nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., for the drilling of the HOP 18E-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”), 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 7, 8, 17 and 18, Township 5 North, Range 64 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.

 

5.         On February 19, 1992 (amended August 20, 1993), the Commission entered Order No. 407-87 which established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the permitted well locations in accordance with the provisions of Order No. 407-1.  Sections 7, 8, 17 and 18, Township 5 North, Range 64 West, 6th P.M., are subject to this Order for the Niobrara and Codell Formations.

 

6.         On August 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 two approximate 640-acre horizontal wellbore spacing units established for the below-described lands (“Application Lands”), for the development and operation of the Niobrara and Codell Formations, and subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., for the drilling of the HOP 18E-402 Well (API No. 05-123-43159) and the HOP 18E-232 Well (API No. 05-123-43160) (“Wells”):

 

Township 5 North, Range 64 West, 6th P.M.

Section 7:        S½S½
Section 8:        S½S½
Section 17:      N½N½
Section 18:      N½N½

 

Wellbore Spacing Unit (“WSU”) No. 1
HOP 18E-402 Well (Codell Formation)

 

WSU No. 2
HOP 18E-232 Well (Niobrara Formation)

 

7.         On September 30, 2016, PDC removed the HOP 18E-402 Well from the Application.

 

8.         On October 3, 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.

 

9.         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 Expenditures ("AFEs") and offer to participate in the HOP 18E-232 Well. Further testimony concluded that the AFEs sent by the Applicant to the interest owners were fair and reasonable estimates of the costs of the proposed drilling operations and were received at least 35 days prior to the October 24, 2016 hearing date.

                                                 

10.       Applicant confirmed that Commission Rules 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.

 

11.       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.

 

12.       PDC 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 640-acre designated horizontal wellbore spacing units established for portions of Sections 7, 8, 17 and 18, Township 5 North, Range 64 West, 6th P.M., for the drilling of the HOP 18E-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 an approximate 640-acre designated horizontal wellbore spacing unit established for the below-described lands are hereby pooled, for the development and operation of the Niobrara Formation, 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)(II), C.R.S., are first incurred for the drilling of the HOP 18E-232 Well (API No. 05-123-43160) (“Well”):

 

Township 5 North, Range 64 West, 6th P.M.

Section 7:        S½S½
Section 8:        S½S½
Section 17:      N½N½
Section 18:      N½N½

 

2.         The production obtained from the designated horizontal 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 designated horizontal wellbore spacing unit; each owner of an interest in the designated horizontal wellbore spacing unit shall be entitled to receive its share of the production of the Well located on the designated horizontal wellbore spacing unit applicable to its interest in the designated horizontal 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.         The designated horizontal wellbore spacing unit described above shall be considered a 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 8th day of November, 2016, as of October 24, 2016.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

Julie Murphy, Secretary