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 FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 170700476

 

TYPE: POOLING

 

ORDER NO. 407-2140

REPORT OF THE COMMISSION

 

The Commission heard this matter on July 24, 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 six approximate 480-acre and one approximate 560-acre designated horizontal wellbore spacing units established for portions of Sections 5 and 6, Township 2 North, Range 65 West, 6th P.M., and Sections 19, 20, 29, 30, 31 and 32, Township 3 North, Range 65 West, 6th P.M., for the drilling of RW 30N-29HZ Well, the RW 29N-29HZ Well, the RW 28N-29HZ Well, the RW 28C-5HZ Well, the RW 2N-5HZ Well, the RW 38N-31HZ Well, and the RW 34N-32HZ 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 5 and 6, Township 2 North, Range 65 West, 6th P.M., and Sections 19, 20, 29, 30, 31 and 32, Township 3 North, Range 65 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 5 and 6, Township 2 North, Range 65 West, 6th P.M., and Sections 19, 20, 29, 30, 31 and 32, Township 3 North, Range 65 West, 6th P.M., are subject to this Order for the Niobrara and Codell Formations.

 

6.         On May 25, 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 six approximate 480-acre and one approximate 560-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, for the drilling of the RW 30N-29HZ Well (API No. 05-123-44621), the RW 29N-29HZ Well (API No. 05-123-44622), the RW 28N-29HZ Well (API No. 05-123-44620), the RW 28C-5HZ Well (API No. 05-123-44617), the RW 2N-5HZ Well (API No. 05-123-44619), the RW 38N-31HZ Well (API No. 05-123-44614), and the RW 34N-32HZ Well (API No. 05-123-44618) (“Wells”):

 

Township 3 North, Range 65 West, 6th P.M.
Section 19: SE¼SE¼
Section 20: SW¼SW¼
Section 29: W½W½
Section 30: E½E½
Section 31: NE¼NE¼
Section 32: NW¼NW¼

(containing 480 acres, more or less)

 

Wellbore Spacing Unit (“WSU”) No. 1

RW 30N-29HZ Well – Niobrara Formation

 

 

Township 3 North, Range 65 West, 6th P.M.
Section 20: S½SW¼
Section 29: W½
Section 32: N½NW¼

(containing 480 acres, more or less)

 

WSU No. 2

RW 29N-29HZ Well – Niobrara Formation

 

 

Township 3 North, Range 65 West, 6th P.M.
Sec 20: SE¼SW¼, SW¼SE¼
Sec 29: E½W½, W½E½
Sec 32: NE¼NW¼, NW¼NE¼

(containing 480 acres, more or less)

 

WSU No. 3

RW 28N-29HZ Well – Niobrara Formation

 

Township 3 North, Range 65 West, 6th P.M.
Sec 29: E½SW¼, W½SE¼
Sec 32: E½W½, W½E½

 

Township 2 North, Range 65 West, 6th P.M.
Sec 5: NE¼NW¼, NW¼NE¼

(Containing 560 acres, more or less)

 

WSU No. 4

RW 28C-5HZ Well – Codell Formation

 

 

Township 3 North, Range 65 West, 6th P.M.
Sec 29: SE¼SW¼, SW¼SE¼
Sec 32: E½W½, W½E½

 

Township 2 North, Range 65 West, 6th P.M.
Sec 5: NE¼NW¼, NW¼NE¼

(containing 480 acres, more or less)

 

WSU No. 5

RW 2N-5HZ Well – Niobrara Formation

 

 

Township 3 North, Range 65 West, 6th P.M.
Sec 29: SW¼SW¼
Sec 30: SE¼SE¼
Sec 31: E½E½
Sec 32: W½W½

 

Township 2 North, Range 65 West, 6th P.M.
Sec 5: NW¼NW¼
Sec 6: NE¼NE¼

(containing 480 acres, more or less)

 

WSU No. 6

RW 38N-31HZ Well – Niobrara Formation

 

WSU No. 7

RW 34N-32HZ Well – Niobrara Formation

 

7.         On July 3, 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 Will Vaughn, Senior Landman for Kerr-McGee, showed that since filing the Application, Kerr-McGee has secured voluntary pooling of all interest within the wellbore spacing units designated as WSU No. 4 and WSU No. 5 established for the RW 28C-5HZ Well (API No. 05-123-44617) and the RW 2N-5HZ Well (API No. 05-123-44619), respectively.  Given these circumstances, Kerr-McGee does not require a pooling order for these wellbore spacing units, and requested that WSU Nos. 4 and 5 be removed from the Application.

 

9.         Land testimony further showed that with regard to the remaining wells and WSUs in the Application, Kerr-McGee has been unable to effect the voluntary pooling of interests within the 480-acre designated 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.

                                                 

10.       Applicant confirmed that Commission Rules 530.b. and c. do not apply as there are no non-consenting 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.

 

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 Officer review of the Application under Rule 511., the Commission should enter an order to pool all interests in five approximate 480-acre designated horizontal wellbore spacing units established for portions of Sections 5 and 6, Township 2 North, Range 65 West, 6th P.M., and Sections 19, 20, 29, 30, 31 and 32, Township 3 North, Range 65 West, 6th P.M., for the drilling of RW 30N-29HZ Well, the RW 29N-29HZ Well, the RW 28N-29HZ Well, the RW 38N-31HZ Well, and the RW 34N-32HZ Well, 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 five approximate 480-acre designated 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 earlier of the date of the Application, or the date that any of the costs specified in §34-60-116(7)(b)(II), C.R.S., are first incurred for the drilling of the RW 30N-29HZ Well (API No. 05-123-44621), the RW 29N-29HZ Well (API No. 05-123-44622), the RW 28N-29HZ Well (API No. 05-123-44620), the RW 38N-31HZ Well (API No. 05-123-44614), and the RW 34N-32HZ Well (API No. 05-123-44618) (“Wells”):

 

Township 3 North, Range 65 West, 6th P.M.
Section 19: SE¼SE¼
Section 20: SW¼SW¼
Section 29: W½W½
Section 30: E½E½
Section 31: NE¼NE¼
Section 32: NW¼NW¼

(containing 480 acres, more or less)

 

Wellbore Spacing Unit (“WSU”) No. 1

RW 30N-29HZ Well – Niobrara Formation

 

 

Township 3 North, Range 65 West, 6th P.M.
Section 20: S½SW¼
Section 29: W½
Section 32: N½NW¼

(containing 480 acres, more or less)

 

WSU No. 2

RW 29N-29HZ Well – Niobrara Formation

 

 

Township 3 North, Range 65 West, 6th P.M.
Sec 20: SE¼SW¼, SW¼SE¼
Sec 29: E½W½, W½E½
Sec 32: NE¼NW¼, NW¼NE¼

(containing 480 acres, more or less)

 

WSU No. 3

RW 28N-29HZ Well – Niobrara Formation

 

Township 3 North, Range 65 West, 6th P.M.
Sec 29: SW¼SW¼
Sec 30: SE¼SE¼
Sec 31: E½E½
Sec 32: W½W½

 

Township 2 North, Range 65 West, 6th P.M.
Sec 5: NW¼NW¼
Sec 6: NE¼NE¼

(containing 480 acres, more or less)

 

WSU No. 6

RW 38N-31HZ Well – Niobrara Formation

 

WSU No. 7

RW 34N-32HZ Well – Niobrara Formation

 

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.

 

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 9th day of August, 2017, as of July 24, 2017.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

James P. Rouse, Acting Secretary