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. 190100152

 

TYPE: POOLING

 

ORDER NO. 407-2917

REPORT OF THE COMMISSION

 

The Commission heard this matter on September 25, 2019, at the Margaret Carpenter Recreation Center, 11151 Colorado Blvd, Thornton, Colorado, upon application for an order to pool all interests in three approximate 640-acre designated horizontal wellbore spacing units established for the below-described lands (“Application Lands”), for the drilling of the Reese 21-4HZ Well (API No. 05-123-47869), the Reese 21-5HZ Well (API No. 05-123-47870), and the Reese 21-6HZ Well (API No. 05-123-47871) (“Wells”), for the development and operation of the Niobrara and Codell Formations:   

 

Township 2 North, Range 67 West, 6th P.M.

Section 9:        S½SW¼

Section 16:      W½

Section 21:      N½SW¼; NW¼

 

Wellbore Spacing Unit (“WSU”) No. 1

Reese 21-4HZ Well – Codell Formation

 

WSU No. 2

Reese 21-5HZ Well – Niobrara Formation

 

WSU No. 3

Reese 21-6HZ Well – 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. The Application Lands are subject to this Rule for the Niobrara and Codell Formations.

 

5.            On November 29, 2018, which was at least 90 days before the Commission heard this matter, Kerr-McGee filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to pool all interests in certain designated horizontal wellbore spacing units established for the Application Lands, for the development and operation of the Niobrara and Codell Formations for the drilling of the Wells.

 

6.            The Applicant filed with the Commission a written request to approve the Application based on the merits of the Application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the Application.

 

7.            On December 7, 2018, Kerr-McGee, by its attorneys, and the Colorado State Board of Land Commissioners (“State Land Board”) agreed that the Application Lands contain minerals owned by the State of Colorado. As such, Kerr-McGee agrees to submit an individual Communitization Agreement to the State Land Board that will coincide with each wellbore spacing unit if such unit contains state minerals prior to the date of drilling for any well drilled within the proposed wellbore spacing unit.

 

8.            Land testimony and exhibits submitted in support of the Application by Justin Shoulders, Staff Landman for Kerr-McGee, show that in each designated horizontal wellbore spacing unit the Applicant owns, or has secured the consent of the owners of, more than 45% of the mineral interests to be pooled. In addition, the land testimony and exhibits show that any unleased owners within the designated horizontal wellbore spacing units received a reasonable offer to lease, made in good faith, at least 90 days before the hearing date.  

 

9.            The cost recovery provisions in Rule 530 and §34-60-116(7), C.R.S., do not apply because the Applicant is not seeking to recover costs for the Wells.

 

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

 

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 the designated horizontal wellbore spacing units 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 the designated horizontal wellbore spacing units established for the Application Lands are hereby pooled, for the development and operation of the Niobrara and Codell Formations, effective as the date the Application was filed.

 

2.         The production obtained from each 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 the owner’s share of the production of the Well located on the designated horizontal wellbore spacing unit applicable to owner’s interest in the designated horizontal wellbore 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 designated horizontal wellbore spacing units.

 

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. Any conflict that may arise shall be resolved in favor of the statute.

 

6.         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.

 

7.         Kerr-McGee, or its successor operator, will submit a Communitization Agreement to the State Land Board that will coincide with each wellbore spacing unit if such unit contains state minerals prior to the date of drilling for any well drilled within the proposed wellbore spacing unit.

 

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 23rd day of October, 2019, as of September 25, 2019

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

Mimi C. Larsen, Secretary