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

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CAUSE NO. 407

 

DOCKET NO. 180400372

 

TYPE: POOLING

 

ORDER NO. 407-2543

REPORT OF THE COMMISSION

 

The Commission heard this matter on July 30, 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 an approximate 480-acre designated horizontal wellbore spacing unit established for portions of Sections 4 and 5, Township 2 North, Range 68 West, 6th P.M., and Sections 32 and 33, Township 3 North, Range 68 West, 6th P.M., for the drilling of the Hergenreder 32N-4HZ Well, for the 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. Sections 4 and 5, Township 2 North, Range 68 West, 6th P.M., and Sections 32 and 33, Township 3 North, Range 68 West, 6th P.M., are subject to this Rule for the Niobrara Formation.

 

5.         On March 1, 2018, Kerr-McGee, by its attorneys, filed a verified Application (“Application”) pursuant to §34-60-116, C.R.S., for an order to pool all interests in an approximate 480-acre designated horizontal wellbore spacing unit established for the below-described lands (“Application Lands”), for the development and operation of the Niobrara Formation, and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., for the drilling of the Hergenreder 32N-4HZ Well (API No. 05-123-45861) (“Well”):

Township 2 North, Range 68 West, 6th P.M.

Section 4:        W½NW¼

Section 5:        E½NE¼

 

Township 3 North, Range 68 West, 6th P.M.

Section 32:      E½E½

Section 33:      W½W½

 

6.         On April 9, 2018, supplemented July 10 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.

 

7.         On April 11, 2018, the City of Longmont filed a protest.  On June 12, 2018, the City of Longmont withdrew its protest.  On April 20, 2018, The Elms Community Association (“Elms”) filed a protest.  On July 5, 2018, Elms withdrew its protest.

 

7.         Land testimony and exhibits submitted in support of the Application by Steve Miller, Landman for Kerr-McGee, showed that all nonconsenting interest owners were notified of the Application and received an Authority for Expenditure ("AFE") and offer to participate in the Well.  Further testimony concluded that the AFE sent by the Applicant to the interest owners was a fair and reasonable estimate of the costs of the proposed drilling operation and was received at least 35 days prior to the July 30, 2018 hearing date.

                                                 

8.         The supplemental land testimony showed that although the Applicant complied with the requirements of Rule 530., it is no longer seeking cost recovery penalties.

 

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, all protests having been withdrawn, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order to pool all interests in an approximate 480-acre designated horizontal wellbore spacing unit established for portions of Sections 4 and 5, Township 2 North, Range 68 West, 6th P.M., and Sections 32 and 33, Township 3 North, Range 68 West, 6th P.M., for the drilling of the Hergenreder 32N-4HZ Well, 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 an approximate 480-acre designated horizontal wellbore spacing unit established for the below-described lands are hereby pooled, for the development and operation of the Niobrara Formation, 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., are first incurred for the drilling of the Hergenreder 32N-4HZ Well (API No. 05-123-45861) (“Well”):

 

 

Township 2 North, Range 68 West, 6th P.M.

Section 4:        W½NW¼

Section 5:        E½NE¼

 

Township 3 North, Range 68 West, 6th P.M.

Section 32:      E½E½

Section 33:      W½W½

 

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.         In accordance with §34-60-116(7)(a)(III), C.R.S., a nonconsenting owner is immune from liability for costs arising from spills, releases, damage, or injury resulting from oil and gas operations on the designated horizontal wellbore spacing unit.

4.         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.

 

5.         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 __ day of August, 2018, as of July 30, 2019.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

Julie Spence Prine, Secretary