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 OPERATION FOR THE CODELL FORMATION, WATTENBERG FIELD, WELD COUNTY,      COLORADO 

 

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CAUSE NO. 407

 

DOCKET NO. 170600396

 

ORDER NO. 407-2207

REPORT OF THE COMMISSION

The Commission heard this matter on October 30, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, 80203, upon application for an order to pool all interests in an approximate 400-acre designated horizontal wellbore spacing unit established for portions of Sections 23, 26, 27 and 35, Township 1 North, Range 67 West, 6th P.M., for the development and operation of the Codell 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.  Sections 23, 26, 27 and 35, Township 1 North, Range 67 West, 6th P.M., are subject to this Rule for the Codell Formation.

 

5.         On December 12, 2016, the Commission entered Order No. 407-1854 which, among other things, pooled all interests in two approximate 360-acre horizontal wellbore spacing units and one approximate 240-acre horizontal wellbore spacing unit, for the below described lands, for the development and operation of the Sussex, Codell and Niobrara Formations:

 

Township 1 North, Range 67 West, 6th P.M.

Section 23:      SW¼SW¼

Section 26:      W½W½

Section 35:      NW¼NW¼

 

Wellbore Spacing Unit (“WSU”) No. 1

Puma Fed 5S-35HZ Well - Sussex Formation

 

 

Township 1 North, Range 67 West, 6th P.M.

Section 23:      SW¼SW¼

Section 26:      W½W½

Section 35:      W½W½

 

WSU No. 2

Puma Fed 13N-35HZWell - Niobrara Formation

 

WSU No. 3

Puma Fed 34C-35HZWell - Codell Formation

 

(These lands are hereinafter referred to as the “Original Lands”)

 

6.         WSU No. 3 was designated to cover only the Original Lands (described below), based on a plan for the Puma Fed 34C-35HZ Well.  As drilled, a portion of the productive interval of the Puma Fed 34C-35HZ Well is located less than 460 feet from the NE¼NE¼ of Section 27, Township 1 North, Range 67 West, 6th P.M.

 

7.         Pursuant to the horizontal wellbore spacing requirements under Rule 318A.a.(4)D., WSU No. 3 has been resized to include the Additional Lands (described below).

 

8.         On April 13, 2017, Amended August 17, 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 amend Pooling Order No. 407-1854 to account for an adjustment to WSU No. 3, thereby pooling all interests in the Additional Land (described below) as well as the Original lands (described below), being an approximate 400-acre horizontal wellbore spacing unit established for the below-described lands (“Application Lands”), for the development and operation of the Codell Formation, for the drilling of the Puma Fed 34C-35HZ Well (API No. 05-123-42570) Well (“Subject Well”):

 

Township 1 North, Range 67 West, 6th P.M.

Section 27:      NE¼NE¼

 

(These lands are hereinafter referred to as the “Additional Lands”)

 

Township 1 North, Range 67 West, 6th P.M.

Section 23:      SW¼SW¼

Section 26:      W½W½

Section 35:      W½W½

 

(These lands are hereinafter referred to as the “Original Lands”)

 

Collectively, these lands total approximately 400 acres, and are hereinafter collectively referred to as the “Application Lands”.

 

9.         On September 14, 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. 

 

10.       Testimony and exhibits submitted in support of the Application by Rocky Kimball, Landman for Applicant, showed that Kerr-McGee has been unable to effect the voluntary pooling of interests within an approximate 400-acre designated 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 received timely notice of the Application.

 

11.       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) for the Subject Well.

 

12.       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.

 

13.       Applicant agreed to be bound by oral order of the Commission.

 

14.       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 amend Pooling Order No. 407-1854 to account for the adjustment to WSU No. 3, and thereby pool the interests in the Additional Lands as well as the original lands, being an approximate 400-acre wellbore spacing unit covering Sections 23, 26, 27 and 35, Township 1 North, Range 67 West, 6th P.M., for development and operation of the Codell Formation, effective as of the earlier of the date of Pooling Order No. 407-1854, or the date the costs specific in §34-60-116(7)(b), C.R.S., are first incurred for the drilling of the Puma Fed 34C-35HZ Well.

 

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, Pooling Order No. 407-1854 is hereby amended to account for the adjustment to WSU No. 3, and all interests in an approximate 400-acre designated horizontal wellbore spacing unit established for the below described lands are hereby pooled for development and operation of the Codell Formation, effective as of the earlier of the date of Pooling Order No. 407-1854, or the date the costs specific in §34-60-116(7)(b), C.R.S., were first incurred for the drilling of the Puma Fed 34C-35HZ Well (API No. 05-123-42570):

 

Township 1 North, Range 67 West, 6th P.M.

Section 27:      NE¼NE¼

 

(These lands are referred to as the “Additional Lands”)

 

Township 1 North, Range 67 West, 6th P.M.

Section 23:      SW¼SW¼

Section 26:      W½W½

Section 35:      W½W½

 

(These lands are referred to as the “Original Lands”)

 

Collectively, these lands total approximately 400 acres, and are collectively

referred to as the “Application Lands”

 

2.         The production obtained from 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 wellbore spacing unit shall be entitled to receive its share of the production of the Subject Well located on 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 14th day of November, 2017, as of October 30, 2017.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

Julie Spence Prine, Secretary