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

) ) ) ) ) ) )

CAUSE NO. 407  DOCKET NO. 170900576 TYPE: POOLING  ORDER NO. 407-2182

REPORT OF THE COMMISSION

The Commission heard this matter on September 11, 2017, at the Durango Public Library, 1900 East Third Avenue, Durango, Colorado, upon application for an order to pool all interests in two approximate 400-acre wellbore spacing units designated for portions of Sections 3 and 4, Township 2 North, Range 68 West, and Sections 33 and 34, Township 3 North, Range 68 West, 6^th P.M., established for the Newby State 26N-33HZ well, and the Newby State 30N-34HZ well, for 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 July 13, 2017, Applicant, 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 400-acre wellbore spacing units established for the below-described lands (“Application Lands”) for the development and operation of the Niobrara Formation, for the drilling of the Newby State 26N-33HZ well (API No. 05-123-44565) and the Newby State 30N-34HZ well (API No. 05-123-44563) (“Wells”):

Township 2 North, Range 68 West, 6th P.M.
Section 3: NW¼NW¼
Section 4: NE¼NE¼

Township 3 North, Range 68 West, 6th P.M.
Section 33: E½E½
Section 34: W½W½

Wellbore Spacing Unit Nos. 1 and 2  (400-acres):
Newby State 26N-33HZ well (Niobrara Formation)
Newby State 30N-34HZ well (Niobrara Formation)

7.            On August 21, 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 Austin Brewer, Landman for Kerr-McGee showed that Kerr-McGee has been unable to unable to unable to effect the voluntary pooling of all interest within the two approximate 400-acre wellbore spacing units established for the Application lands and that based upon an examination of relevant contracts and records, all owners of an oil and gas interests 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 it is not seeking statutory cost recovery provisions of § 34-60-116(7), C.R.S. against working interest owners or unleased mineral interest owners in this Application.

10.          On August 29, 2017, Applicant and the Colorado State Board of Land Commissioners agreed that the wellbore spacing units contain State Land Board leased and/or unleased minerals.  A Communitization Agreement (CA) with the State Land Board will be required for all wells drilled under the terms of this order. A CA must be submitted prior to drilling operations for a well within the wellbore spacing units.

 

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.          Applicant 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 in the in two approximate 400-acre wellbore spacing units designated for portions of Sections 3 and 4, Township 2 North, Range 68 West, 6^th P.M. and Sections 33 and 34, Township 3 North, Range 68 West, 6^th 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 in two approximate 400-acre 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 Newby State 26N-33HZ well (API No. 05-123-44565) and the Newby State 30N-34HZ well (API No. 05-123-44563) (“Wells”):

Township 2 North, Range 68 West, 6^th P.M.
Section 3: NW¼NW¼
Section 4: NE¼NE¼

Township 3 North, Range 68 West, 6^th P.M.
Section 33: E½E½
Section 34: W½W½

Wellbore Spacing Unit Nos. 1 and 2 (400-acres):
Newby State 26N-33HZ well (Niobrara Formation)
Newby State 30N-34HZ well (Niobrara Formation)

2.            The production obtained from each 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 Well 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 unit established by the Commission for purposes of Rule 530.a.

 

5.            The wellbore spacing units contain State Land Board leased and/or unleased minerals.  A CA with the State Land Board is required for all wells drilled under the terms of this order. A CA must be submitted prior to drilling operations for a well within the wellbore spacing units.

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 22^nd day of September, 2017, as of September 11, 2017.        

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By__________________________________

James Rouse, Acting Secretary