BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

REPORT OF THE COMMISSION

The Commission heard this matter on August 20, 2012, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to establish an approximate 640-acre drilling and spacing unit for Section 13, Township 5 North, Range 61 West, 6^th P.M., and approve one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

FINDINGS

The Commission finds as follows:

1.         Bill Barrett Corporation (“BBC” 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, 1988, the Commission adopted Rule 318A which, among other things, allowed certain drilling locations to be utilized to drill or twin a well, deepen a well or recomplete a well and to commingle any or all Cretaceous Age Formations from the base of the Dakota Formation to the surface. Rule 318A supersedes all prior Commission drilling and spacing orders affecting well location and density requirements of Greater Wattenberg Area wells.  On December 5, 2005, Rule 318A was amended to, among other things, allow interior infill and boundary wells to be drilled and wellbore spacing units to be established.  On August 8, 2011, Rule 318A was again amended, among other things, to address drilling of horizontal wells.  Section 13, Township 5 North, Range 61 West, 6^th P.M. is subject to Rule 318A for the Niobrara Formation.

5.         On June 21, 2012, EOG Resources, Inc. (“EOG”), by its attorneys, filed with the Commission pursuant to § 34-60-116 C.R.S., a verified application (“Application”) for an order to establish an approximate 640-acre drilling and spacing unit for the below-described lands (“Application Lands”), and to approve one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 1,200 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

Township 5 North, Range 61 West, 6^th P.M.

                        Section 13:  All

6.         On August 10, 2012, BBC, by its attorney, submitted a written letter informing the Commission that it had obtained its leasehold interest in the Application Lands from EOG.

7.         On August 9, 2012, BBC, by its attorney, 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 Colleen Kennedy, Senior Landman for BBC, showed BBC is a mineral leaseholder for the Application Lands.

9.         Geologic testimony and exhibits submitted in support of the Application by James F. Brand, Petroleum Geologist for BBC, showed that the Niobrara Formation underlies the entirety of the Application lands and has an approximate total thickness that ranges from 262 to 267 feet.  Additional testimony showed that the Niobrara Formation is a common source of supply for the Application Lands.

10.       Testimony and exhibits submitted in support of the Application by Eric Bridgford, Reservoir Engineer for EOG, showed analogous horizontal wells drilled by EOG and completed in the Niobrara Formation have an estimated ultimate recovery of between 30,000 to 890,000 barrels (“BBL”) of oil, with the estimated original oil-in-place varying between 600,000 to 18,000,000 BBL.  Drainage area of these same EOG wells range from 21 to 618 acres, and are smaller than the requested 640-acre spacing unit.  Engineering testimony and exhibits support approval of an approximate 640-acre drilling and spacing unit for the Niobrara Formation underlying the Application Lands to efficient and economically drain the reservoir while protecting correlative rights and avoiding waste of the resource.

11.       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.

12.       BBC agrees to be bound by oral order of the Commission. 

13.       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 establish an approximate 640-acre drilling and spacing unit, and approve one horizontal well within the unit, for Section 13, Township 5 North, Range 61 West, 6^th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

ORDER

NOW, THEREFORE IT IS ORDERED, that an approximate 640-acre drilling and spacing unit, for the below-described lands, is hereby established, and one horizontal well within the unit, is hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries and no closer than 1,200 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

            Township 5 North, Range 61 West, 6^th P.M.

            Section 13:      All

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.

IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 30 days after the date this Order is mailed by the Commission.

IT IS FURTHER ORDERED, that 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, 2012, as of August 20, 2012.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary

Dated:  August 24, 2012