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. 180300219

 

TYPE: POOLING

 

ORDER NO. 407-2400

REPORT OF THE COMMISSION

 

The Commission heard this matter on March 19, 2018, 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 two approximate 320-acre designated horizontal wellbore spacing units established for portions of Sections 9, 10, and 11, Township 5 North, Range 65 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 Fern 11U-434 Well and the Fern 11U-334 Well, for the development and operation of the Niobrara and Codell Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         PDC Energy, Inc. (Operator No. 69175) (“PDC” 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 9, 10, and 11, Township 5 North, Range 65 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.

 

5.         On February 19, 1992, the Commission entered Order No. 407-87 (amended August 20, 1993) which, among other things, established 80-acre drilling and spacing units for the production of oil, gas, and associated hydrocarbons from the Codell-Niobrara Formations, the Codell Formation, and the Niobrara Formation underlying certain lands, including Sections 9, 10, and 11, Township 5 North, Range 65 West, 6th P.M., with the permitted well locations in accordance with the provisions of Order 407-1.

 

6.         On January 26, 2012, the Commission entered Order No. 407-552, which, among other things, pooled all nonconsenting interests in an approximate 160-acre designated horizontal wellbore spacing unit for the S½SW¼ of Section 3 and N½NW¼ of Section 10, Township 5 North, Range 65 West, 6th P.M., for the Winters 35-3 Well (API No. 05-123-31655), for the development and operation of the Niobrara and Codell Formations.

 

7.         On December 15, 2015, the Commission entered Order No. 407-1587, which, among other things, pooled all nonconsenting interests in two approximate 639.179-acre designated horizontal wellbore spacing units for the W½E½, E½W½ of Section 4 and E½W½, W½E½ of Section 9, Township 5 North, Range 65 West, 6th P.M., for the Sherley I-4-9HN Well (API No. 05-123-40932) and the Sherley J-4-9HC Well (API No. 05-123-40899), for the development and operation of the Niobrara and Codell Formations.

 

8.         On December 15, 2015, the Commission entered Order No. 407-1589, which, among other things, pooled all nonconsenting interests in four approximate 648.4015-acre designated horizontal wellbore spacing units for the W½ of Section 4 and W½ of Section 9, Township 5 North, Range 65 West, 6th P.m., for the Sherley E-4-9HN Well (API No. 05-123-40966), Sherley F-4-9HN Well (API No. 05-123-40897), Sherley G-4-9HC Well (API No. 05-123-40896), and the Sherley H-4-9HN Well (API No. 05-123-40900), for the development and operation of the Niobrara and Codell Formations.

 

9.         On January 18, 2018, PDC, 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 320-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 Fern 11U-434 Well (API No. 05-123-44579) and the Fern 11U-334 Well (API No. 05-123-44580) (“Wells”):

 

Township 5 North, Range 65 West, 6th P.M.

Section   9:  N½NE¼, NE¼NW¼

Section 10:  N½N½

Section 11:  NW¼NW¼

 

Wellbore Spacing Unit (“WSU”) No. 1

Fern 11U-434 Well - Codell

 

WSU No. 2

Fern 11U-334 Well - Niobrara

 

10.       On February 19, 2018, 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.

 

11.       Land testimony and exhibits submitted in support of the Application by Daniel R. McCoy, Regional Landman for PDC, showed that PDC has been unable to effect the voluntary pooling of interests within the 320-acre designated 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 PDC) received timely notice of the Application.

                                                 

12.       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.

 

13.       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.

 

14.       PDC agreed to be bound by oral order of the Commission.

 

15.       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 320-acre designated horizontal wellbore spacing units established for portions of Sections 9, 10, and 11, Township 5 North, Range 65 West, 6th P.M., for the drilling of the Fern 11U-434 Well and the Fern 11U-334 Well, 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 two approximate 320-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 date of the Application, for the drilling of the Fern 11U-434 Well (API No. 05-123-44579) and the Fern 11U-334 Well (API No. 05-123-44580) (“Wells”):

 

Township 5 North, Range 65 West, 6th P.M.

Section 9:  N½NE¼, NE¼NW¼

Section 10:  N½N½

Section 11:  NW¼NW¼

 

Wellbore Spacing Unit (“WSU”) No. 1

Fern 11U-434 Well - Codell

 

WSU No. 2

Fern 11U-334 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.

 

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 4th day of April, 2018, as of March 19, 2018.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

  Julie Spence Prine, Secretary