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 FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407 DOCKET NO. 170300162 TYPE: POOLING ORDER NO. 407-1924 |
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 two approximate 200-acre, two approximate 280-acre, five approximate 400-acre and three approximate 560-acre horizontal wellbore spacing units, established for certain portions of Sections 22, 23, 25, 26, 27, and 34, Township 3 North, Range 68 West, 6th P.M. for the development and operation of the Niobrara Formation.
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 Formation, 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 200-acre, two approximate 280-acre, five approximate 400-acre and three approximate 560-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, for the drilling of the Hilgers 12N-22HZ well (API No. 05-123-43261), the Hilgers 33N1-22HZ well (API No. 05-123-43262), the Hilgers 33N2-22HZ well (API No. 05-123-43309), the Hilgers 32N-22HZ well (API No. 05-123-43260), the Hilgers 13N-22HZ well (API No. 05-123-43311), the Hilgers 34N-22HZ well (API No. 05-123-43312), the Hilgers 7N-34HZ well (API No. 05-123-43307),the Hilgers 41N-26HZ well (API No. 05-123-43305), the Hilgers 8N3-34HZ well (API No. 05-123-43310), the Hilgers 17N-34HZ well (API No. 05-123-43308), the Hilgers 8N2-34HZ well (API No. 05-123-43306), and the Hilgers 8N-34HZ well (API No. 05-123-43304) (“Wells”):
Township 3 North, Range 68 West, 6th P.M.
Section
22: N½S½
Section 23: NW¼SW¼
Wellbore
Spacing Unit (“WSU”) No. 1 – 200-acres
Hilgers 12N-22HZ
well (Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: S½
Section 23: W½SW¼
WSU
Nos. 2 thru 3 – 400-acres
Hilgers 33N1-22HZwell
(Niobrara Formation)
Hilgers 33N2-22HZwell (Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: S½N½, N½S½
Section 23: SW¼NW¼, NW¼SW¼
WSU
No. 4 – 400-acres
Hilgers 32N-22HZ well
(Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: S½S½
Section 23: SW¼SW¼
WSU
No. 5 – 200-acres
Hilgers
13N-22HZwell (Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: S½S½
Section 23: SW¼SW¼
Section 26: NW¼NW¼
Section 27: N½N½
WSU
No. 6 – 400-acres
Hilgers 34N-22HZ
well (Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: S½SE¼
Section 27: E½
Section 34: NE¼
WSU
Nos. 7 thru 9– 560-acres
Hilgers 17N-34HZ well
(Niobrara Formation)
Hilgers 8N2-34HZ well (Niobrara Formation)
Hilgers 8N-34HZ well (Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: SE¼SE¼
Section 23: S½SW¼, SW¼SE¼
Section 25: NW¼NW¼
Section 26: N½N½
Section 27: NE¼NE¼
WSU
No. 10 – 400-acres
Hilgers 41N-26HZ well
(Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: SE¼SE¼
Section 27: E½E½
Section 34: E½NE¼
WSU
No. 11 – 280-acres
Hilgers 8N3-34HZ well
(Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: SW¼SE¼
Section 27: W½E½
Section 34: W½NE¼
WSU
No. 12 – 280-acres
Hilgers 7N-34HZ well
(Niobrara 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 Will Vaughan, Landman for Applicant, showed that Kerr-McGee has been unable to effect the voluntary pooling of interests within two approximate 200-acre, two approximate 280-acre, five approximate 400-acre and three approximate 560-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. 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. Kerr-McGee 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 two approximate 200-acre, two approximate 280-acre, five approximate 400-acre and three approximate 560-acre horizontal wellbore spacing units, established for certain portions of Sections 22, 23, 25, 26, 27, and 34, Township 3 North, Range 68 West, 6th P.M. 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 two approximate 200-acre, two approximate 280-acre, five approximate 400-acre and three approximate 560-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, for the drilling of the Hilgers 12N-22HZ well (API No. 05-123-43261), the Hilgers 33N1-22HZ well (API No. 05-123-43262), the Hilgers 33N2-22HZ well (API No. 05-123-43309), the Hilgers 32N-22HZ well (API No. 05-123-43260), the Hilgers 13N-22HZ well (API No. 05-123-43311), the Hilgers 34N-22HZ well (API No. 05-123-43312), the Hilgers 7N-34HZ well (API No. 05-123-43307),the Hilgers 41N-26HZ well (API No. 05-123-43305), the Hilgers 8N3-34HZ well (API No. 05-123-43310), the Hilgers 17N-34HZ well (API No. 05-123-43308), the Hilgers 8N2-34HZ well (API No. 05-123-43306), and the Hilgers 8N-34HZ well (API No. 05-123-43304) (“Wells”):
Township 3 North, Range 68 West, 6th P.M.
Section
22: N½S½
Section 23: NW¼SW¼
Wellbore
Spacing Unit (“WSU”) No. 1 – 200-acres
Hilgers 12N-22HZ
well (Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: S½
Section 23: W½SW¼
WSU
Nos. 2 thru 3 – 400-acres
Hilgers 33N1-22HZwell
(Niobrara Formation)
Hilgers 33N2-22HZwell (Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: S½N½, N½S½
Section 23: SW¼NW¼, NW¼SW¼
WSU
No. 4 – 400-acres
Hilgers 32N-22HZ well
(Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: S½S½
Section 23: SW¼SW¼
WSU
No. 5 – 200-acres
Hilgers
13N-22HZwell (Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: S½S½
Section 23: SW¼SW¼
Section 26: NW¼NW¼
Section 27: N½N½
WSU
No. 6 – 400-acres
Hilgers 34N-22HZ
well (Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: S½SE¼
Section 27: E½
Section 34: NE¼
WSU
Nos. 7 thru 9– 560-acres
Hilgers 17N-34HZ well
(Niobrara Formation)
Hilgers 8N2-34HZ well (Niobrara Formation)
Hilgers 8N-34HZ well (Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: SE¼SE¼
Section 23: S½SW¼, SW¼SE¼
Section 25: NW¼NW¼
Section 26: N½N½
Section 27: NE¼NE¼
WSU
No. 10 – 400-acres
Hilgers 41N-26HZ well
(Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: SE¼SE¼
Section 27: E½E½
Section 34: E½NE¼
WSU
No. 11 – 280-acres
Hilgers 8N3-34HZ well
(Niobrara Formation)
Township 3 North, Range 68 West, 6th P.M.
Section
22: SW¼SE¼
Section 27: W½E½
Section 34: W½NE¼
WSU
No. 12 – 280-acres
Hilgers 7N-34HZ 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 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 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