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-NIOBRARA FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 170100018

 

TYPE: SPACING

 

ORDER NO. 407-1873

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on January 30, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to deny objections to three approximate 320-acre horizontal wellbore spacing units proposed for Sections 5 and 8, Township 3 North, Range 68 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Cub Creek Energy, LLC (Operator No. 10459) (“Cub Creek” 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 5 and 8, Township 3 North, Range 68 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.

 

5.         On November 28, 2016, Cub Creek, by its attorneys, filed a verified application/request for hearing (“Application”) pursuant to Rule 318A, for an order dismissing the objections of Mr. John A. Hall (“Mr. Hall”) to three proposed approximate 320-acre horizontal wellbore spacing units proposed for the below-described lands (“Application Lands”) for the production of oil, gas and associated hydrocarbons from the Niobrara-Codell Formation, and for Commission establishment of the proposed horizontal wellbore spacing units:

 

Township 3 North, Range 68 West, 6th P.M.

Section 5: S½S½

Section 8: N½N½

 

6.         Mr. Hall is an interested party in the above referenced hearing by virtue of his claimed  ownership of allegedly unleased minerals under lands contained within the proposed horizontal wellbore spacing units, and by virtue of his having previously filed objections to the proposed horizontal wellbore spacing units.

 

7.         Pursuant to Rule 318A.e.(5)C., Mr. Hall has the burden of proof to show, in this case, that the proposed horizontal wellbore spacing units will either create waste or adversely affect his correlative rights, as he claimed in his objections.

 

8.         On December 20, 2016, the Hearing Officer issued a Scheduling Order with the following dates:

 

File written presentation for case in chief – January 6, 2017

File prehearing statement – January 6, 2017

Contested prehearing conference – January 17, 2017 at 2:00 p.m.

 

9.         On January 6, 2017, Cub Creek, by its attorneys, filed with the Commission its written presentation for its case in chief and its prehearing statement.

 

10.       Mr. Hall did not file a written presentation for his case in chief or a prehearing statement. Rather, Mr. Hall’s attorney sent a letter stating that his client would not participate in the contested prehearing conference or in a Commission hearing on the Application, but would not withdraw his objection. The letter also set out Mr. Hall’s argument that the adoption of Rule 318A was unconstitutional. However, the Commission does not have jurisdiction to hear constitutional issues.

 

11.       The contested prehearing conference was held on January 17, 2017.  Neither Mr. Hall nor his attorney appeared. The Hearing Officer declared Mr. Hall to be in default.  Since Mr. Hall failed to appear at the contested prehearing conference, he failed to carry his burden of proof regarding his objection, and his objection should be dismissed. (see, Rules 318A.e.(5)C. and 527.f.)

 

            12.       The written land testimony and exhibits submitted in support of the Application by Scott B. Baily, Vice President of Land and Business Development for Cub Creek, showed that Cub Creek complied with the provisions of Rule 318A.e.(5) for proposing the three approximate 320-acre horizontal wellbore spacing units for the Application Lands for the production of oil, gas and associated hydrocarbons from the Niobrara-Codell Formation.            

 

13.       The above-referenced testimony and exhibits show that dismissing Mr. Hall’s objections will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.

 

14.       Cub Creek agreed to be bound by oral order of the Commission.

 

15.       Based on the facts stated in the verified Application, Mr. Hall having defaulted and failed to carry his burden of proof, and based on the Hearing Officer review of the written testimony filed by Cub Creek, the Commission should enter an order dismissing Mr. Hall’s objections to three approximate 320-acre horizontal wellbore spacing units proposed for Sections 5 and 8, Township 3 North, Range 68 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara-Codell Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Mr. Hall’s objections to three approximate 320-acre horizontal wellbore spacing units proposed by Cub Creek for the below-described lands, for the production of oil, gas, and associated hydrocarbons from the Niobrara-Codell Formation are hereby dismissed:

 

Township 3 North, Range 68 West, 6th P.M.

Section 5: S½S½

Section 8: N½N½

 

2.         Cub Creek may apply for permits for the three approximate 320-acre horizontal wellbore spacing units in accordance with Rule 318A.

 

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 1st day of February, 2017, as of January 30, 2017.            

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By__________________________________

Julie Murphy, Secretary