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 AND CODELL FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 170600358
TYPE: POOLING
ORDER NO. 407-2070 |
REPORT OF THE COMMISSION
The Commission heard this matter on June 12, 2017, at the Rio Blanco County Courthouse, 555 Main Street, Meeker, Colorado, upon application for an order to pool all interests in three approximate 320-acre and 13 approximate 640-acre designated horizontal wellbore spacing units established for portions of Sections 2, 3, 4, 9, 10, and 11, Township 2 North, Range 67 West, 6th P.M., and Sections 33, 34, and 35, Township 3 North, Range 67 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 Butterball 24C-34HZ Well, the Butterball 24N2-34HZ Well, the Butterball 40C-34HZ Well, the Butterball 40N-34HZ Well, the Butterball 24N-34HZ Well, the Butterball 10N-34HZ Well, the Butterball 22C-34HZ Well, the Butterball 22N2-34HZ Well, the Butterball 22N-34HZ Well, the Butterball 25C-34HZ Well, the Butterball 25N-34HZ Well, the Butterball 25N2-34HZ Well, the Butterball 25C2-34HZ Well, the Butterball 40N-33HZ Well, the Butterball 32C-34HZ Well, and the Butterball 12N-34HZ Well, 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. Sections 2, 3, 4, 9, 10, and 11, Township 2 North, Range 67 West, 6th P.M., and Sections 33, 34, and 35, Township 3 North, Range 67 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 2, 3, 4, 9, 10, and 11, Township 2 North, Range 67 West, 6th P.M., and Sections 33, 34, and 35, Township 3 North, Range 67 West, 6th P.M., are subject to this Rule for the Niobrara Formation.
6. On April 13, 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 three approximate 320-acre and 13 approximate 640-acre designated 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., for the drilling of the Butterball 24C-34HZ Well (API No. 05-123-44320), the Butterball 24N2-34HZ Well (API No. 05-123-44317), the Butterball 40C-34HZ Well (API No. 05-123-44319), the Butterball 40N-34HZ Well (API No. 05-123-44316), the Butterball 24N-34HZ Well (API No. 05-123-44315), the Butterball 10N-34HZ Well (API No. 05-123-44413), the Butterball 22C-34HZ Well (API No. 05-123-44406), the Butterball 22N2-34HZ Well (API No. 05-123-44411), the Butterball 22N-34HZ Well (API No. 05-123-44518), the Butterball 25C-34HZ Well (API No. 05-123-44409), the Butterball 25N-34HZ Well (API No. 05-123-44408), the Butterball 25N2-34HZ Well (API No. 05-123-44407), the Butterball 25C2-34HZ Well (API No. 05-123-44412), the Butterball 40N-33HZ Well (API No. 05-123-44521), the Butterball 32C-34HZ Well (API No. 05-123-44519), and the Butterball 12N-34HZ Well (API No. 05-123-44520) (“Wells”):
Township 2 North, Range 67 West, 6th P.M.
Section 3: E½
Section
10: N½NE¼
Township 3 North, Range 67 West, 6th P.M.
Section 34: SE¼, S½NE¼
Wellbore Spacing Unit (“WSU”) No.
1 – 640 acres
Butterball 24C-34HZ Well - Codell
WSU No. 2 – 640 acres
Butterball 24N2-34HZ Well - Niobrara
Township 2 North, Range 67 West, 6th P.M.
Section 2: W½W½
Section 3: E½E½
Section
10: NE¼NE¼
Section 11: NW¼NW¼
Township 3 North, Range 67 West, 6th P.M.
Section
34: E½SE¼, SE¼NE¼
Section 35: W½SW¼, SW¼NW¼
WSU No. 3 – 640-acres
Butterball 40C-34HZ Well - Codell
WSU No. 4 – 640-acres
Butterball 40N-34HZ Well – Niobrara
Township 2 North, Range 67 West, 6th P.M.
Section 3: W½E½
Section
10: NW¼NE¼
Township 3 North, Range 67 West, 6th P.M.
Section 34: W½SE¼, SW¼NE¼
WSU No. 5 – 320-acres
Butterball 24N-34HZ Well - Niobrara
WSU No. 6 – 320-acres
Butterball 10N-34HZ Well - Niobrara
Township 2 North, Range 67 West, 6th P.M.
Section 3: W½
Section
10: N½NW¼
Township 3 North, Range 67 West, 6th P.M.
Section 34: SW¼, S½NW¼
WSU No. 7 – 640-acres
Butterball 22C-34HZ Well - Codell
WSU No. 8 – 640-acres
Butterball 22N2-34HZ Well - Niobrara
WSU No. 9 – 640-acres
Butterball 22N-34HZ Well - Niobrara
Township 2 North, Range 67 West, 6th P.M.
Section 3: E½W½, W½E½
Section 10: NE¼NW¼, NW¼NE¼
Township 3 North, Range 67 West, 6th P.M.
Section 34: E½SW¼, W½SE¼, SW¼NE¼, SE¼NW¼
WSU No. 10 – 640-acres
Butterball 25C-34HZ Well - Codell
WSU No. 11 – 640-acres
Butterball 25N-34HZ Well - Niobrara
WSU No. 12 – 640-acres
Butterball 25N2-34HZ Well - Niobrara
WSU No. 13
– 640-acres
Butterball 25C2-34HZ Well - Codell
Township 2 North, Range 67 West, 6th P.M.
Section 3: W½W½
Section 4: E½E½
Section 9: NE¼NE¼
Section
10: NW¼NW¼
Township 3 North, Range 67 West, 6th P.M.
Section
33: E½SE¼, SE¼NE¼
Section 34: W½SW¼, SW¼NW¼
WSU No. 14 – 640-acres
Butterball 40N-33HZ Well - Niobrara
WSU No. 15 – 640-acres
Butterball 32C-34HZ Well - Codell
Township 2 North, Range 67 West, 6th P.M.
Section 3: W½W½
Section
10: NW¼NW¼
Township 3 North, Range 67 West, 6th P.M.
Section 34: W½SW¼, SW¼NW¼
WSU No. 16 – 320-acres
Butterball 12N-34HZ Well - Niobrara
7. On May 22, 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.
8. Land testimony and exhibits submitted in support of the Application by Nancy McDonald, Senior Staff Landman for Kerr-McGee, showed that Kerr-McGee has been unable to effect the voluntary pooling of interests within the three approximate 320-acre and 13 approximate 640-acre horizontal wellbore spacing units established for the Application Lands, and that 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 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.
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 Officer review of the Application under Rule 511., the Commission should enter an order to pool all interests in three approximate 320-acre and 13 approximate 640-acre designated horizontal wellbore spacing units established for portions of Sections 2, 3, 4, 9, 10, and 11, Township 2 North, Range 67 West, 6th P.M., and Sections 33, 34, and 35, Township 3 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 three approximate 320-acre designated 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 Butterball 24C-34HZ Well (API No. 05-123-44320), the Butterball 24N2-34HZ Well (API No. 05-123-44317), the Butterball 40C-34HZ Well (API No. 05-123-44319), the Butterball 40N-34HZ Well (API No. 05-123-44316), the Butterball 24N-34HZ Well (API No. 05-123-44315), the Butterball 10N-34HZ Well (API No. 05-123-44413), the Butterball 22C-34HZ Well (API No. 05-123-44406), the Butterball 22N2-34HZ Well (API No. 05-123-44411), the Butterball 22N-34HZ Well (API No. 05-123-44518), the Butterball 25C-34HZ Well (API No. 05-123-44409), the Butterball 25N-34HZ Well (API No. 05-123-44408), the Butterball 25N2-34HZ Well (API No. 05-123-44407), the Butterball 25C2-34HZ Well (API No. 05-123-44412), the Butterball 40N-33HZ Well (API No. 05-123-44521), the Butterball 32C-34HZ Well (API No. 05-123-44519), and the Butterball 12N-34HZ Well (API No. 05-123-44520):
Township 2 North, Range 67 West, 6th P.M.
Section 3: E½
Section
10: N½NE¼
Township 3 North, Range 67 West, 6th P.M.
Section 34: SE¼, S½NE¼
Wellbore Spacing Unit (“WSU”) No.
1 – 640 acres
Butterball 24C-34HZ Well - Codell
WSU No. 2 – 640 acres
Butterball 24N2-34HZ Well - Niobrara
Township 2 North, Range 67 West, 6th P.M.
Section 2: W½W½
Section 3: E½E½
Section
10: NE¼NE¼
Section 11: NW¼NW¼
Township 3 North, Range 67 West, 6th P.M.
Section
34: E½SE¼, SE¼NE¼
Section 35: W½SW¼, SW¼NW¼
WSU No. 3 – 640-acres
Butterball 40C-34HZ Well - Codell
WSU No. 4 – 640-acres
Butterball 40N-34HZ Well - Niobrara
Township 2 North, Range 67 West, 6th P.M.
Section 3: W½E½
Section
10: NW¼NE¼
Township 3 North, Range 67 West, 6th P.M.
Section 34: W½SE¼, SW¼NE¼
WSU No. 5 – 320-acres
Butterball 24N-34HZ Well - Niobrara
WSU No. 6 – 320-acres
Butterball 10N-34HZ Well - Niobrara
Township 2 North, Range 67 West, 6th P.M.
Section 3: W½
Section
10: N½NW¼
Township 3 North, Range 67 West, 6th P.M.
Section 34: SW¼, S½NW¼
WSU No. 7 – 640-acres
Butterball 22C-34HZ Well - Codell
WSU No. 8 – 640-acres
Butterball 22N2-34HZ Well - Niobrara
WSU No. 9 – 640-acres
Butterball 22N-34HZ Well - Niobrara
Township 2 North, Range 67 West, 6th P.M.
Section 3: E½W½, W½E½
Section 10: NE¼NW¼, NW¼NE¼
Township 3 North, Range 67 West, 6th P.M.
Section 34: E½SW¼, W½SE¼, SW¼NE¼, SE¼NW¼
WSU No. 10 – 640-acres
Butterball 25C-34HZ Well - Codell
WSU No. 11 – 640-acres
Butterball 25N-34HZ Well - Niobrara
WSU No. 12 – 640-acres
Butterball 25N2-34HZ Well - Niobrara
WSU No. 13
– 640-acres
Butterball 25C2-34HZ Well - Codell
Township 2 North, Range 67 West, 6th P.M.
Section 3: W½W½
Section 4: E½E½
Section 9: NE¼NE¼
Section
10: NW¼NW¼
Township 3 North, Range 67 West, 6th P.M.
Section
33: E½SE¼, SE¼NE¼
Section 34: W½SW¼, SW¼NW¼
WSU No. 14 – 640-acres
Butterball 40N-33HZ Well - Niobrara
WSU No. 15 – 640-acres
Butterball 32C-34HZ Well - Codell
Township 2 North, Range 67 West, 6th P.M.
Section 3: W½W½
Section
10: NW¼NW¼
Township 3 North, Range 67 West, 6th P.M.
Section 34: W½SW¼, SW¼NW¼
WSU No. 16 – 320-acres
Butterball 12N-34HZ Well - Niobrara
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 units described above shall be considered drilling and spacing units established by the Commission for purposes of Rule 530.a.
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 21st day of June, 2017, as of June 12, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Peter Gowen, Acting Secretary