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. 190500490

 

TYPE: POOLING

 

ORDER NO. 407-2848

REPORT OF THE COMMISSION

 

The Commission heard this matter on May 21, 2019, 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 1,424.69-acre drilling and spacing unit established for the below-described lands (“Application Lands”), for the development and operation of the Niobrara and Codell Formations:

 

Township 6 North, Range 66 West, 6th P.M.
Section 4:        W½

Section 5:        All

Section 6:        N½

 

Township 6 North, Range 67 West, 6th P.M.

Section 1:        NE¼

 

FINDINGS

 

The Commission finds as follows:

 

1.         SRC Energy Inc., Operator No. 10311 (“SRC” 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. The Application Lands are subject to this Rule for the Niobrara and Codell Formations.

 

5.         On March 11, 2019, the Commission entered Order No. 407-2778 which, among other things, established an approximate 1,424.69-acre drilling and spacing unit for the Application Lands, and authorized the drilling of up to 36 horizontal wells for production from the Niobrara and Codell Formations.

 

6.         On April 10, 2019, SRC, by its attorneys, filed a verified Application (“Application”) pursuant to §34-60-116, C.R.S., for an order to pool all interests in Application Lands, for the development and operation of the Niobrara and Codell Formations.

 

7.         On April 10, 2019, Applicant requested and was granted a variance per Rule 502.b.(1) so that the Commission could hear the Application at the May 20, 2019, hearing, even though the Application was not noticed 60 days in advance of the hearing. 

 

8.         On April 28, 2019, Patrick Bollinger and Alexis Mortensen each filed a protest to SRC’s Application. On May 16, 2019, SRC confirmed and agreed it would not seek non-consenting party status for Patrick Bollinger and Alexis Mortensen pursuant to §34-60-116(7), C.R.S., and Rule 530. SRC further confirmed that at the time the Application was heard, each protesting party was subject to a lease (Patrick Bollinger had a valid and existing Oil and Gas Lease dated January 1, 2012, and recorded on February 6, 2012, at Reception No. 3822996 in the real property records of the Clerk and Recorder of Weld County, Colorado, and Alexis Mortensen had a valid and existing Oil and Gas Lease dated January 1, 2012, and recorded on February 10, 2012, at Reception No. 3837887 in the real property records of the Clerk and Recorder of Weld County, Colorado). On May 19, 2019, Patrick Bollinger and Alexis Mortensen withdrew their respective protest.

 

9.         Land testimony and exhibits submitted in support of the Application by Kaitlyn Cass, Landman for SRC, show that SRC has been unable to effect the voluntary pooling of interests within the approximate 1,424.69-acre drilling and spacing unit established for the Application Lands. The land testimony further shows that the Applicant owns, or has secured the consent of the owners of, more than 45% of the mineral interest to be pooled and that the Applicant provided a reasonable lease offer, made in good faith, to all unleased mineral owners at least 60 days in advance of the May 20, 2019, hearing.

 

10.       Land testimony avers that Rule 530 does not apply because the Applicant is not seeking cost recovery pursuant to § 34-60-116(7), C.R.S.

 

11.       Granting the Application is consistent with the protection of public health, safety, welfare, the environment, and wildlife resources.

 

12.       SRC agreed to be bound by oral order of the Commission.

 

13.       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 1,424.69-acre drilling and spacing unit established for the Application Lands 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., all interests in an approximate 1,424.69-acre drilling and spacing unit established for the Application Lands are hereby pooled, for the development and operation of the Niobrara and Codell Formations, effective as of the date the Application was filed with the Commission.

 

2.         The production obtained from the drilling and 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 drilling and spacing unit; each owner of an interest in the drilling and spacing unit shall be entitled to receive its share of the production of the wells located on the drilling and spacing unit applicable to its interest in the drilling and spacing unit.

 

3.         A nonconsenting owner is immune from liability for costs arising from spills, releases, damage, or injury resulting from oil and gas operations on the drilling and spacing unit.

 

4.         The operator shall not use the surface owned by a nonconsenting owner without the nonconsenting owner’s permission.

 

5.         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.

 

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 5th day of June, 2019, as of May 21, 2019. 

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

Mimi C. Larsen, Secretary