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 OPERATIONS FOR THE NIOBRARA FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 180400349
TYPE: POOLING
ORDER NO. 407-2469 |
REPORT OF THE COMMISSION
The Commission heard this matter on April 30, 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, CO 80203, upon application for an order to amend Order Nos. 407-1672 and 407-1752, which pooled all interests in an approximate 720-acre designated horizontal wellbore spacing unit established for portions of Sections 19, 20 and 21, Township 5 North, Range 64 West, 6th P.M., and subjected all nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., for the development and operation of the Niobrara Formation, to reflect the as-drilled acreage.
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 19, 20 and 21, Township 5 North, Range 64 West, 6th P.M. are subject to this Rule for the Niobrara formation.
5. On February 19, 1992 (amended August 20, 1993), the Commission entered Order No. 407-87 which, among other things, established 80-acre drilling and spacing units for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations underlying certain lands, with permitted well locations in accordance with the provisions of Order No. 407-1. Sections 19, 20 and 21, Township 5 North, Range 64 West, 6th P.M. are subject to this Order for the Niobrara Formation.
6. On March 14, 2016, the Commission entered Order No. 407-1652, which, among other things, pooled all nonconsenting interests in an approximate 720-acre wellbore spacing unit for the S½NE¼, N½SE¼ of Section 19, S½N½, N½S½ of Section 20, and the S½NW¼, N½SW¼, SW¼NE¼, NW¼SE¼ of Section 21, Township 5 North, Range 64 West, 6th P.M., for the Klein 19O-302 Well (API No. 05-123-40151), from the Niobrara Formation. Order No. 407-1652 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
7. On March 15, 2016, the Commission entered Order No. 407-1661, which, among other things, pooled all nonconsenting interests in an approximate 560-acre wellbore spacing unit for the NE¼SW¼, N½SE¼, S½NE¼ of Section 19, S½N½, N½S½ of Section 20, and the N½SW¼, NW¼SE¼ of Section 21, Township 5 North, Range 64 West, 6th P.M., for the Klein 19O-232 Well (API No. 05-123-40147), from the Niobrara Formation. Order No. 407-1661 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
8. Also on March 15, 2016, the Commission entered Order No. 407-1662, which, among other things, pooled all nonconsenting interests in an approximate 720-acre wellbore spacing unit for the S½NE¼, N½SE¼ of Section 19, S½N½, N½S½ of Section 20, and the S½NW¼, N½SW¼, SW¼NE¼, NW¼SE¼ of Section 21, Township 5 North, Range 64 West, 6th P.M., for the Klein 19O-212 Well (API No. 05-123-40148), from the Niobrara Formation. Order No. 407-1662 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
9. Also on March 15, 2016, the Commission entered Order No. 407-1670, which, among other things, pooled all nonconsenting interests in an approximate 360-acre wellbore spacing unit for the N½NE¼ of Section 19, N½N½ of Section 20, and the N½NW¼, NW¼NE¼ of Section 21, Township 5 North, Range 64 West, 6th P.M., for the Klein 19N-312 (API No. 05-123-40247), from the Niobrara Formation. Order No. 407-1670 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
10. Also on March 15, 2016, the Commission entered Order No. 407-1671, which, among other things, pooled all nonconsenting interests in an approximate 720-acre wellbore spacing unit for the NE¼ of Section 19, N½ of Section 20, and the NW¼, W½NE¼ of Section 21, Township 5 North, Range 64 West, 6th P.M., for the Klein 19N-302 Well (API No. 05-123-40145), from the Niobrara Formation. Order No. 407-1671 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
11. Also on March 7, 2016, the Commission entered Order No. 407-1672, which, among other things, pooled all nonconsenting interests in an approximate 720-acre wellbore spacing unit for the NE¼ of Section 19, N½ of Section 20, and the NW¼, W½NE¼ of Section 21, Township 5 North, Range 64 West, 6th P.M., for the Klein 19N-202 Well (API No. 05-123-40249), from the Niobrara Formation.
12. Also on March 15, 2016, the Commission entered Order No. 407-1674, which, among other things, pooled all nonconsenting interests in an approximate 720-acre wellbore spacing unit for the S½SW¼, SW¼SE¼ of Section 16, S½S½ of Section 17, S½SE¼ of Section 18, N½NE¼ of Section 19, N½N½ of Section 20, and the N½NW¼ NW¼NE¼ of Section 21, Township 5 North, Range 64 West, 6th P.M., for the Klein 19M-232 Well (API No. 05-123-40250), from the Niobrara Formation. Order No. 407-1674 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
13. On June 20, 2016, the Commission entered Order No. 407-1723, which, among other things, pooled all nonconsenting interests in two approximate 400-acre wellbore spacing units for the S½S½ of Section 17, SE¼SE¼ of Section 18, NE¼NE¼ of Section 19, and the N½N½ of Section 20, Township 5 North, Range 64 West, 6th P.M., for the Gillham 18Y-312 Well (API No. 05-123-42863) and the Gillham 18Y-202 Well (API No. 05-123-42862), from the Niobrara Formation. Order No. 407-1723 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
14. On July 22, 2016, the Commission entered Order No. 407-1750, which, among other things, pooled all nonconsenting interests in an approximate 720-acre wellbore spacing unit for the S½SW¼, SW¼SE¼ of Section 16, S½S½ of Section 17, S½SE¼ of Section 18, N½NE¼ of Section 19, N½N½ of Section 20, and the N½NW¼, NW¼NE¼ of Section 21, Township 5 North, Range 64 West, 6th P.M. for the Klein 19M-232 Well (API No. 05-23-40250), from the Niobrara Formation. Order No. 407-1750 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
15. Also on July 22, 2016, the Commission entered Order No. 407-1751, which, among other things, pooled all nonconsenting interests in an approximate 720-acre wellbore spacing unit for the S½SW¼, SW¼SE¼ of Section 16, S½S½ of Section 17, S½SE¼ of Section 18, N½NE¼ of Section 19, N½N½ of Section 20, and the N½NW¼, NW¼NE¼ of Section 21, Township 5 North, Range 64 West, 6th P.M. for the Klein 19M-402 Well (API No. 05-23-40248), from the Niobrara Formation. Order No. 407-1751 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
16. On July 19, 2016, the Commission entered Order No. 407-1752, which, among other things, pooled all nonconsenting interests in an approximate 720-acre wellbore spacing unit for the NE¼ of Section 19, N½ of Section 20, and the NW¼, W½NE¼ of Section 21, Township 5 North, Range 64 West, 6th P.M., for the Klein 19N-202 Well (API No. 05-123-40249), from the Niobrara Formation.
17. Also on July 22, 2016, the Commission entered Order No. 407-1753, which, among other things, pooled all nonconsenting interests in an approximate 720-acre wellbore spacing unit for the NE¼ of Section 19, N½ of Section 20, and the NW¼, W½NE¼ of Section 21, Township 5 North, Range 64 West, 6th P.M., for the Klein 19N-302 Well (API No. 05-123-40145), from the Niobrara Formation. Order No. 407-1753 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
18. Also on July 22, 2016, the Commission entered Order No. 407-1754, which, among other things, pooled all nonconsenting interests in an approximate 360-acre wellbore spacing unit for the N½NE¼ of Section 19, N½N½ of Section 20, and the N½NW¼, NW¼NE¼ of Section 21, Township 5 North, Range 64 West, 6th P.M., for the Klein 19N-312 Well (API No. 05-123-40247), from the Niobrara Formation. Order No. 407-1754 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
20. On August 10, 2017, the Commission entered Order No. 407-2162, which, among other things, pooled all nonconsenting interests in an approximate 720-acre wellbore spacing unit for the W½W½ of Section 7, W½W½ of Section 18, and the NW¼NW¼ of Section 19, Township 5 North, Range 64 West, 6th P.M., and the E½E½ of Section 12, E½E½ of Section 13, and the NE¼NE¼ of Section 24, Township 5 North, Range 65 West, 6th P.M., for the Sandin 24V-341 Well (API No. 05-123-44662), from the Niobrara Formation. Order No. 407-2162 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
21. On August 21, 2017, the Commission entered Order No. 407-2135, which, among other things, pooled all nonconsenting interests in an approximate 480-acre wellbore spacing unit for the SW¼NE¼, S½NW¼, NW¼SE¼, N½SW¼ of Section 19, Township 5 North, Range 64 West, 6th P.M., and the SE¼NW¼, S½NE¼, NE¼SW¼, N½SE¼ of Section 24, Township 5 North, Range 65 West, 6th P.M., for the Josephine 19O-204 Well (API No. 05-123-44681), from the Niobrara Formation. Order No. 407-2135 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
22. Also on August 21, 2017, the Commission entered Order No. 407-2136, which, among other things, pooled all nonconsenting interests in an approximate 440-acre wellbore spacing unit for the SW¼NE¼, S½NW¼, N½SW¼ of Section 19, Township 5 North, Range 64 West, 6th P.M., and the SE¼NW¼, S½NE¼, NE¼SW¼, N½SE¼ of Section 24, Township 5 North, Range 65 West, 6th P.M., for the Josephine 19O-314 Well (API No. 05-123-44680), from the Niobrara Formation. Order No. 407-2136 is not affected by PDC’s Application, and proceeds from any shared lands will be accounted for in the production of the Well.
23. On March 1, 2018, PDC, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to amend Order Nos. 407-1672 and 407-1752 to reflect the as-drilled acreage for the Klein 19N-202ST Well (API No. 05-123-40249) (“Well”) which consists of the following lands:
Township 5 North, Range 64 West, 6th P.M.
Section 19: NE¼
Section 20: N½
Weld County, Colorado
24. On April 9, 2018, PDC, 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.
25. Land testimony and exhibits submitted in support of the Application by J. Tyler Sims, Senior Regional Landman for PDC Energy, Inc., showed that all interest owners were notified of the Application and that PDC has submitted a Sundry Notice/Form 4 to the COGCC to modify the spacing unit for the Well.
26. PDC agreed to be bound by oral order of the Commission.
27. Based on the facts stated in the verified Application, having reviewed the Supplemental Land Testimony, having received no protests, and based on the Hearing Officer’s review of the Application under Rule 511, the Commission should enter an order to amend Order Nos. 407-1672 and 407-1752 to reflect the as-drilled acreage for the Klein 19N-202ST Well (API No. 05-123-40249).
ORDER
IT IS HEREBY ORDERED:
1. Pursuant to the provisions of C.R.S. § 34-60-116, as amended, of the Oil and Gas Conservation Act, Order Nos. 407-1672 and 407-1752 are hereby amended to apply to the as-drilled acreage for the Klein 19N-202ST Well (API No. 05-123-40249) (“Well”), which consists of the following lands:
Township 5 North, Range 64 West, 6th P.M.
Section 19: NE¼
Section 20: N½
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. The nonconsenting working interest owners must reimburse the consenting working interest owners for their share of the costs and risks of drilling and operating the Well (including penalties as provided by C.R.S. § 34-60-116(7)(b)) out of production from the designated horizontal wellbore spacing unit representing the cost-bearing interests of the nonconsenting working interest owners as provided by C.R.S. § 34-60-116(7)(a).
4. Any unleased owners are hereby deemed to have elected not to participate and shall therefore be deemed to be nonconsenting as to the Well and be subject to the penalties as provided for by C.R.S. § 34-60-116(7). Any party seeking the cost recovery provisions of C.R.S. § 34-60-116(7), shall first comply with subsection (d) for any subsequent well(s).
5. Each nonconsenting unleased owner within the designated horizontal wellbore spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of its record title interest, whatever that interest may be, until such time as the consenting owners recover, only out of each nonconsenting owner's proportionate 87.5% share of production, the costs specified in C.R.S. § 34-60-116(7)(b), as amended. After recovery of such costs, each unleased nonconsenting mineral owner shall then own its proportionate 8/8ths share of the Well, surface facilities and production, and then be liable for its proportionate share of further costs incurred in connection with the Well as if it had originally agreed to the drilling.
6. The operator of the Well drilled on the above-described designated horizontal wellbore spacing unit shall furnish the nonconsenting owners with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.
7. Nothing in this order is intended to conflict with C.R.S. § 34-60-116, as amended. Any conflict that may arise shall be resolved in favor of the statute.
8. 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 22nd day of May, 2018, as of April 30, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By:
Julie Spence Prine, Secretary