BEFORE THE OIL AND GAS
CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE NIOBRARA AND CODELL FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407 DOCKET NO. 170300161 TYPE: POOLING ORDER NO. 407-1923 |
REPORT OF THE COMMISSION
The Commission heard this matter on March 20, 2017, at the Larimer County Conference Center at The Ranch, First National Bank Building, 5280 Arena Circle, Loveland, Colorado, upon application for an order to pool all interests within one approximate 240-acre horizontal wellbore spacing unit and four approximate 480-acre horizontal wellbore spacing units, established for certain portions of Sections 2, 3, 10, and 11, Township 1 North, Range 67 West, and Sections 34 and 35, Township 2 North, Range 67 West, 6th P.M., for the development and operation of the Niobrara and Codell 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 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 and Codell Formations, with the permitted well locations in accordance with the provisions of Order No. 407-1.
6. On January 19, 2017, Kerr-McGee, 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 240-acre horizontal wellbore spacing units and five approximate 480-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 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, for the drilling of the Camenisch 29C-35HZ well (API No. 05-123-43338), the Camenisch 29N-35HZwell (API No. 05-123-43342), the Camenisch 4N-35HZwell (API No. 05-123-43340), the Camenisch 30N-35HZ well (API No. 05-123-43343), the Camenisch 3C-35HZwell (API No. 05-123-43339), the Camenisch 3N-35HZ well (API No. 05-123-43341), and the Camenisch 4C-35HZwell (API No. 05-123-43344)(“Wells”):
Township 1 North, Range 67 West, 6th P.M.
Section 2: W½
Section 11: N½NW¼
Township 2 North, Range 67 West, 6th P.M.
Section 35: S½SW¼
Wellbore
Spacing Unit (“WSU”) Nos. 1 thru 3 – 480-acres
Camenisch
29C-35HZ well (Codell Formation)
Camenisch 29N-35HZwell (Niobrara Formation)
Camenisch 4N-35HZwell (Niobrara Formation)
Township 1 North, Range 67 West, 6th P.M.
Section
2: W½W½
Section 3: E½E½
Section 10: NE¼NE¼
Section 11: NW¼NW¼
Township 2 North, Range 67 West, 6th P.M.
Section
34: SE¼SE¼
Section 35: SW¼SW¼
WSU No. 4 – 480-acres
Camenisch
30N-35HZ well (Niobrara Formation)
Township 1 North, Range 67 West, 6th P.M.
Section 2: E½W½,
W½E½
Section 11: NE¼NW¼, NW¼NE¼
Township 2 North, Range 67 West, 6th P.M.
Section 35: SE¼SW¼, SW¼SE¼
WSU
No. 5 – 480-acres
Camenisch
3C-35HZwell (Codell Formation)
Township 1 North, Range 67 West, 6th P.M.
Section 2: E½W½
Section 11: NE¼NW¼
Township 2 North, Range 67 West, 6th P.M.
Section 35: SE¼SW¼
WSU
No. 6 – 240-acres
Camenisch
3N-35HZ well (Niobrara Formation)
Township 1 North, Range 67 West, 6th P.M.
Section 2: W½W½
Section 11: NW¼NW¼
Township 2 North, Range 67 West, 6th P.M.
Section 35: SW¼SW¼
WSU
No. 7– 240-acres
Camenisch
4C-35HZwell (Codell Formation)
7. On February 27, 2017, Kerr-McGee, 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. Testimony and exhibits submitted in support of the Application by Joseph Kmetz, Landman for Applicant, showed that Kerr-McGee has been unable to effect the voluntary pooling of interests within one approximate 240-acre horizontal wellbore spacing unit and four approximate 480-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.
9. 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.
10. Applicant also confirmed that since filing the Application, it had secured voluntary pooling of all interest within the wellbore spacing units designated as WSU No. 4 and WSU No. 7 established for the Camenisch 30N-35HZ well (API No. 05-123-43343), and the Camenisch 4C-35HZwell (API No. 05-123-43344) respectively and requested that WSU Nos. 4 & 7 be removed from the Application.
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. Kerr-McGee 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 Unit review of the Application under Rule 511., the Commission should enter an order to pool all interests within one approximate 240-acre horizontal wellbore spacing unit and four approximate 480-acre horizontal wellbore spacing units, established for certain portions of Sections 2, 3, 10, and 11, Township 1 North, Range 67 West, and Sections 34 and 35, Township 2 North, Range 67 West, 6th P.M., for the development and operation of the Niobrara and Codell 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 one approximate 240-acre horizontal wellbore spacing unit and four approximate 480-acre horizontal wellbore spacing units, established for the below-described lands, are hereby pooled, for the development and operation of the Niobrara and Codell Formations, effective as of the date of the Application, for the drilling of the for the Camenisch 29C-35HZ well (API No. 05-123-43338), the Camenisch 29N-35HZwell (API No. 05-123-43342), the Camenisch 4N-35HZwell (API No. 05-123-43340), the Camenisch 3C-35HZwell (API No. 05-123-43339), and the Camenisch 3N-35HZ well (API No. 05-123-43341) (“Wells”):
Township 1 North, Range 67 West, 6th P.M.
Section 2: W½
Section 11: N½NW¼
Township 2 North, Range 67 West, 6th P.M.
Section 35: S½SW¼
Wellbore
Spacing Unit (“WSU”) Nos. 1 thru 3 – 480-acres
Camenisch
29C-35HZ well (Codell Formation)
Camenisch 29N-35HZwell (Niobrara Formation)
Camenisch 4N-35HZwell (Niobrara Formation)
Township 1 North, Range 67 West, 6th P.M.
Section
2: W½W½
Section 3: E½E½
Section 10: NE¼NE¼
Section 11: NW¼NW¼
Township 2 North, Range 67 West, 6th P.M.
Section
34: SE¼SE¼
Section 35: SW¼SW¼
WSU
No. 5 – 480-acres
Camenisch
3C-35HZwell (Codell Formation)
Township 1 North, Range 67 West, 6th P.M.
Section 2: E½W½
Section 11: NE¼NW¼
Township 2 North, Range 67 West, 6th P.M.
Section 35: SE¼SW¼
WSU
No. 6 – 240-acres
Camenisch
3N-35HZ well (Niobrara Formation)
2. The production obtained from each the 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 wellbore 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 within the wellbore spacing unit applicable to its interest in the 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 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 27th day of March, 2017, as of March 20, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Peter Gowen, Acting Secretary