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. 170700494
TYPE: POOLING
ORDER NO. 407-2212
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REPORT OF THE COMMISSION
The Commission heard this matter on October 30, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 South Lincoln, Denver, Colorado, upon application for an order to pool all interests in two approximate 480-acre designated horizontal wellbore spacing units established for portions of Sections 8, 9, 16, 17, 20, and 21, Township 1 North, Range 66 West, 6th P.M., for the drilling of the Burough 26N-17HZ Well and the Burough 26C-17HZ Well, 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 Wells Location, Spacing, and Units Designation Rule. Sections 8, 9, 16, 17, 20, and 21, Township 1 North, Range 66 West, 6th P.M., are subject to this Rule for the Codell and Niobrara Formations.
5. On May 25, 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 two approximate 480-acre designated horizontal wellbore spacing units 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 Burough 26N-17HZ Well (API No. 05-123-45228) (WSU No. 1) and the Burough 26C-17HZ Well (API No. 05-123-45231) (WSU No. 2) (“Wells”):
Township 1 North, Range 66 West, 6th P.M.
Section 8: SE¼SE¼
Section 9: SW¼SW¼
Section 16: W½W½
Section 17: E½E½
Section 20: NE¼NE¼
Section 21: NW¼NW
Wellbore Spacing Unit (“WSU”) Nos. 1-2
Burough 26N-17HZ Well (Niobrara Formation)
Burough 26C-17HZ Well (Codell Formation)
6. On July 3, 2017 (Supplemented on September 13, 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 Joseph Kmetz, Landman for Kerr-McGee, showed that all nonconsenting interest owners were notified of the Application and received an offer to lease their minerals, an offer to participate in the Wells, and an Authority for Expenditure ("AFE"). Further testimony concluded that the terms of the lease offer were fair and reasonable, and that the AFE sent by the Applicant to the interest owners were fair and reasonable estimates of the costs of the proposed drilling operation and was received at least 35 days prior to the October 30, 2017 hearing date.
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 Wells.
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. Kerr-McGee 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 two approximate 480-acre designated horizontal wellbore spacing units established for portions of Sections 8, 9, 16, 17, 20, and 21, Township 1 North, Range 66 West, 6th P.M., for the drilling of the Burough 26N-17HZ Well and the Burough 26C-17HZ Well, 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 two approximate 480-acre designated horizontal wellbore spacing units established for the below-described lands are hereby pooled, for the development and operation of the Codell and Niobrara Formations, 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., were first incurred for the drilling of the Burough 26N-17HZ Well (API No. 05-123-45228) (WSU No. 1) and the Burough 26C-17HZ Well (API No. 05-123-45231) (WSU No. 2) (“Wells”):
Township 1 North, Range 66 West, 6th P.M.
Section 8: SE¼SE¼
Section 9: SW¼SW¼
Section 16: W½W½
Section 17: E½E½
Section 20: NE¼NE¼
Section 21: NW¼NW¼
Wellbore Spacing Unit (“WSU”) Nos. 1-2
Burough 26N-17HZ Well (Niobrara Formation)
Burough 26C-17HZ Well (Codell Formation)
2. The production obtained from the designated horizontal 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 designated horizontal wellbore spacing units; each owner of an interest in the designated horizontal wellbore spacing units shall be entitled to receive its share of the production of the Wells located on the designated horizontal wellbore spacing units applicable to its interest in the designated horizontal 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 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 29th day of November, 2017, as of October 30, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By_______________________________________
Julie Spence Prine, Secretary