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. 180900649

 

TYPE: POOLING

 

ORDER NO. 407-2601

REPORT OF THE COMMISSION

 

The Commission heard this matter on September 17, 2018, at the Garfield County Sheriff's Annex – Rifle, 106 County Road 333-A, Rifle, Colorado, upon application for an order to pool all interests in two approximate 400-acre designated horizontal wellbore spacing units and in four approximate 800-acre designated horizontal wellbore spacing units established for portions of Sections 11, 12, 13, and 14, Township 1 North, Range 67 West, 6th P.M. and portions of Sections 7, 8, 17, and 18, Township 1 North, Range 66 West, 6th P.M., for the drilling of the MPM Fed 13N-8HZ Well, the MPM Fed 33N-8HZ Well, the MPM Fed 13C-8HZ Well, the MPM Fed 34N-8HZ Well, the MPM Fed 34C-8HZ Well, and the MPM Fed 12N-8HZ Well for the development and operation of the Niobrara and Codell Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Kerr-McGee Oil & Gas Onshore LP (Operator No. 47120) (“Kerr-McGee” or “Applicant”) 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 11, 12, 13, and 14, Township 1 North, Range 67 West, 6th P.M. and Sections 7, 8, 17, and 18, Township 1 North, Range 66 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.

 

5.         On February 19, 1992 (amended August 20, 1993), the Commission entered Order No. 407-87 which established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, with the permitted well locations in accordance with the provisions of Order No. 407-1. Sections 11, 12, 13, and 14, Township 1 North, Range 67 West, 6th P.M., and Sections 7, 8, 17, and 18, Township 1 North, Range 66 West, 6th P.M., are subject to Order No. 407-87 for the Niobrara and Codell Formations.

 

6.         On July 11, 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 two approximate 400-acre designated horizontal wellbore spacing units and in four approximate 800-acre designated horizontal wellbore spacing units established for the below-described lands (“Application Lands”), for the development and operation of the Niobrara and Codell Formations for the drilling of the MPM Fed 13N-8HZ Well (API No. 05-123-46233), the MPM Fed 33N-8HZ Well (API No. 05-123-46804), the MPM Fed 13C-8HZ Well (API No. 05-123-46805), the MPM Fed 34N-8HZ Well (API No. 05-123-46232), the MPM Fed 34C-8HZ Well (API No. 05-123-46234), and the MPM Fed 12N-8HZ Well (API No. 05-123-46807) (“Wells”):

 

Township 1 North, Range 67 West, 6th P.M.
Section 11: E½SE¼
Section 12: S½

 

Township 1 North, Range 66 West, 6th P.M.
Section 7: S½
Section 8: W½SW¼

(containing 800 acres, more or less)

 

Wellbore Spacing Unit (“WSU”) No. 1

MPM Fed 13N-8HZ Well – Niobrara Formation

 

WSU No. 2

MPM Fed 33N-8HZ Well – Niobrara Formation

 

WSU No. 3

MPM Fed 13C-8HZ Well – Codell Formation

 

Township 1 North, Range 67 West, 6th P.M.
Section 11: SE¼SE¼
Section 12: S½S½
Section 13: N½N½
Section 14: NE¼NE¼

 

Township 1 North, Range 66 West, 6th P.M.
Section 7: S½S½
Section 8: SW¼SW¼
Section 17: NW¼NW¼
Section 18: N½N½

(containing 800 acres, more or less)

 

WSU No. 4

MPM Fed 34N-8HZ Well – Niobrara Formation

 

Township 1 North, Range 67 West, 6th P.M.
Section 11:    SE¼SE¼
Section 12:    S½S½

 

Township 1 North, Range 66 West, 6th P.M.
Section 7:      S½S½
Section 8:      SW¼SW¼

(containing 400 acres, more or less)

 

WSU No. 5

MPM Fed 34C-8HZ Well – Codell Formation

 

Township 1 North, Range 67 West, 6th P.M.
Section 11:    NE¼SE¼
Section 12:    N½S½

 

Township 1 North, Range 66 West, 6th P.M.
Section 7:      N½S½
Section 8:      NW¼SW¼

(containing 400 acres, more or less)

 

WSU No. 6

MPM Fed 12N-8HZ Well – Niobrara Formation

 

7.         On August 23, 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.

 

8.         Land testimony and exhibits submitted in support of the Application by Kirsten Galvan, Senior Landman for Kerr-McGee, showed that Kerr-McGee has been unable to effect the voluntary pooling of interests within the two approximate 400-acre designated horizontal wellbore spacing units and the four approximate 800-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 Kerr-McGee) received timely notice of the Application.

           

9.         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.

 

10.       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.

 

11.       Kerr-McGee agreed to be bound by oral order of the Commission.

 

12.       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 400-acre designated horizontal wellbore spacing units and in four approximate 800-acre designated horizontal wellbore spacing units established for portions of Sections 11, 12, 13, and 14, Township 1 North, Range 67 West, 6th P.M. and portions of Sections 7, 8, 17, and 18, Township 1 North, Range 66 West, 6th P.M., for the drilling of the MPM Fed 13N-8HZ Well, the MPM Fed 33N-8HZ Well, the MPM Fed 13C-8HZ Well, the MPM Fed 34N-8HZ Well, the MPM Fed 34C-8HZ Well, and the MPM Fed 12N-8HZ 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 400-acre designated horizontal wellbore spacing units and in four approximate 800-acre designated horizontal wellbore spacing units established for the below-described lands are hereby pooled, for the development and operation of the Niobrara and Codell Formations effective as of the date of the Application, for the drilling of the MPM Fed 13N-8HZ Well (API No. 05-123-46233), the MPM Fed 33N-8HZ Well (API No. 05-123-46804), the MPM Fed 13C-8HZ Well (API No. 05-123-46805), the MPM Fed 34N-8HZ Well (API No. 05-123-46232), the MPM Fed 34C-8HZ Well (API No. 05-123-46234), and the MPM Fed 12N-8HZ Well (API No. 05-123-46807) (“Wells”):

 

Township 1 North, Range 67 West, 6th P.M.
Section 11: E½SE¼
Section 12: S½

 

Township 1 North, Range 66 West, 6th P.M.
Section 7: S½
Section 8: W½SW¼

(containing 800 acres, more or less)

 

Wellbore Spacing Unit (“WSU”) No. 1

MPM Fed 13N-8HZ Well – Niobrara Formation

 

WSU No. 2

MPM Fed 33N-8HZ Well – Niobrara Formation

 

WSU No. 3

MPM Fed 13C-8HZ Well – Codell Formation

 

Township 1 North, Range 67 West, 6th P.M.
Section 11: SE¼SE¼
Section 12: S½S½
Section 13: N½N½
Section 14: NE¼NE¼

 

Township 1 North, Range 66 West, 6th P.M.
Section 7: S½S½
Section 8: SW¼SW¼
Section 17: NW¼NW¼
Section 18: N½N½

(containing 800 acres, more or less)

 

WSU No. 4

MPM Fed 34N-8HZ Well – Niobrara Formation

 

Township 1 North, Range 67 West, 6th P.M.
Section 11:    SE¼SE¼
Section 12:    S½S½

 

Township 1 North, Range 66 West, 6th P.M.
Section 7:      S½S½
Section 8:      SW¼SW¼

(containing 400 acres, more or less)

 

WSU No. 5

MPM Fed 34C-8HZ Well – Codell Formation

 

Township 1 North, Range 67 West, 6th P.M.
Section 11:    NE¼SE¼
Section 12:    N½S½

 

Township 1 North, Range 66 West, 6th P.M.
Section 7:      N½S½
Section 8:      NW¼SW¼

(containing 400 acres, more or less)

 

WSU No. 6

MPM Fed 12N-8HZ Well – Niobrara Formation

 

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 2nd day of October, 2018, as of September 17, 2018. 

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

Julie Spence Prine, Secretary