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 OPERATION FOR THE CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 170500263
TYPE: POOLING
ORDER NO. 407-1989 |
REPORT OF THE COMMISSION
The Commission heard this matter on May 1, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to pool all interests in one approximate 240-acre horizontal wellbore spacing unit and one approximate 480-acre horizontal wellbore spacing unit established for certain portions of Sections 5 and 8, Township 1 North, Range 66 West, 6th P.M. and Section 32, 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 March 2, 2017, 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 one approximate 240-acre horizontal wellbore spacing unit and one approximate 480-acre horizontal wellbore spacing unit 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 §34-60-116(7), C.R.S., for the drilling of the King 27C-5HZ Well (API No. 05-123-44231) (WSU #1) and King 1N-5HZ Well (API No. 05-123-44229) (WSU #2) (“Wells”):
Township 1 North, Range 66 West, 6th P.M.
Section 5: E½
Section 8: N½NE¼
Township 2 North, Range 66 West, 6th P.M.
Section 32: S½SE¼
Wellbore Spacing Unit (“WSU”) No. 1
King 27C-5HZ Well (Codell Formation)
Township 1 North, Range 66 West, 6th P.M.
Section 5: E½E½
Section 8: NE¼NE¼
Township 2 North, Range 66 West, 6th P.M.
Section 32: SE¼SE¼
Wellbore Spacing Unit (“WSU”) No. 2
King 1N-5HZ Well (Niobrara Formation)
6. On April 10, 2017, 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 Geoffrey Storm, 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 one approximate 480-acre horizontal wellbore spacing unit 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 King 27C-5HZ Well and King 1N-5HZ Well.
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 one approximate 240-acre horizontal wellbore spacing unit and one approximate 480-acre horizontal wellbore spacing unit established for certain portions of Sections 5 and 8, Township 1 North, Range 66 West, 6th P.M. and Section 32, 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 one approximate 240-acre horizontal wellbore spacing unit and one approximate 480-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, for the drilling of the King 27C-5HZ Well (API No. 05-123-44231) (WSU #1) and King 1N-5HZ Well (API No. 05-123-44229) (WSU #2) (“Wells”):
Township 1 North, Range 66 West, 6th P.M.
Section 5: E½
Section 8: N½NE¼
Township 2 North, Range 66 West, 6th P.M.
Section 32: S½SE¼
Wellbore Spacing Unit (“WSU”) No. 1
King 27C-5HZ Well (Codell Formation)
Township 1 North, Range 66 West, 6th P.M.
Section 5: E½E½
Section 8: NE¼NE¼
Township 2 North, Range 66 West, 6th P.M.
Section 32: SE¼SE¼
Wellbore Spacing Unit (“WSU”) No. 2
King 1N-5HZ Well (Niobrara Formation)
2. The production obtained from the wellbore spacing units shall be allocated to each owner in the units 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 units 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 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 12th day of May, 2017, as of May 1, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Peter Gowen, Acting Secretary