BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE APPLICATION OF BONANZA CREEK ENERGY OPERATING COMPANY LLC
FOR AN ORDER TO VACATE AN APPROXIMATE 640-ACRE DRILLING AND SPACING UNIT
ESTABLISHED BY ORDER NOS. 407-380, 407-633, AND 407-711 AS THEY APPLY TO SECTION
15, TOWNSHIP 5 NORTH, RANGE 62 WEST, 6TH P.M., FOR THE NIOBRARA
FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 1303-SP-37
ORDER NO. 407-767 |
REPORT OF THE COMMISSION
The Commission heard this matter on March 25, 2013, at the offices of the
Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver,
Colorado, upon application for an order to vacate an approximate 640-acre
drilling and spacing unit established by Order No. 407-380 for Section 15,
Township 5 North, Range 62 West, 6th P.M., and vacate Order Nos.
407-633 and 407-711 as they apply to Section 15, Township 5 North, Range 62
West, 6th P.M., for the production of oil, gas and associated
hydrocarbons from the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1.
Bonanza Creek Energy Operating Company LLC ("Bonanza" 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 November 29, 2010, the Commission entered Order No. 407-380 which,
among other things, established 15 approximate 640-acre drilling and spacing
units, and approved one horizontal well within each unit, for the production of
oil, gas and associated hydrocarbons from the Niobrara Formation. Section 15, Township 5 North, Range
62 West, 6th P.M. is subject to this Order for the Niobrara
Formation.
5.
On May 29, 2012, the Commission entered Order No. 407-633 which, among
other things, approved one or more additional horizontal wells within each of
fifteen approximate 640-acre drilling and spacing units, for the production of
oil, gas and associated hydrocarbons from the Niobrara Formation. Section 15,
Township 5 North, Range 62 West, 6th P.M. is subject to this Order
for the Niobrara Formation.
6.
On October 1, 2012, the Commission entered Order No. 407-711 which, among
other things, affirmed Order Nos. 407-380 and 407-633 which established fifteen
approximate 640-acre wellbore drilling and spacing units, and established field
rules consistent with Order 407-633, for the production of oil, gas and
associated hydrocarbons from horizontal wells to the Niobrara Formation. Section 15, Township 5 North, Range
62 West, 6th P.M. is subject to this Order for the Niobrara
Formation.
7.
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, among other things, to 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 15,
Township 5 North, Range 62 West, 6th P.M. is subject to Rule 318A for
the Niobrara Formation.
8.
On January 21, 2013, Bonanza, by its attorneys, filed with the Commission
pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an
order to: 1) vacate an approximate 640-acre drilling and spacing unit
established by Order No. 407-380 for the below-described lands (“Application
Lands”); 2) vacate Order No. 407-633 as to the Application Lands; and 3) and
vacate Order No. 407-711 as to the Application Lands, for the production of oil,
gas and associated hydrocarbons from the Niobrara Formation.
Township
5 North, Range 62 West, 6th P.M.
Section 15:
All
Applicant further requested that
upon vacating the approximate 640-acre drilling and spacing unit established by
Order No. 407-380, the Application Lands will no longer be subject to a spacing
order, and will revert to Rule 318A.
9.
On March 12, 2013, Bonanza, 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.
10.
Land testimony and exhibits submitted in support of the Application by Jared
Rush, Landman for Bonanza, showed that Bonanza holds oil and gas leasehold
interests in the Niobrara Formation in the Application Lands, and Bonanza has
operated the State Antelope 41-15HZ well (API No. 05-123-33361) (“Well”) on the
Application Lands to the Niobrara Formation, on a 640-acre drilling and spacing
unit established by Commission Order No. 407-380.
The testimony further showed that Bonanza has discovered that as to the
Application Lands certain interested parties were omitted from the notice lists
in the Commission proceedings which led to entry of Orders 407-633 and 407-711.
The testimony also showed that the wellbore of the Well is located entirely on
State surface and mineral property and is not within 460 feet of the boundaries
of the leasehold. All royalty proceeds from the Well have been paid solely to
the State of Colorado.
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.
Bonanza agreed 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 vacate an approximate 640-acre
drilling and spacing unit established by Order No. 407-380 for Section 15,
Township 5 North, Range 62 West, 6th P.M., and vacate Order Nos.
407-633 and 407-711 as they apply to Section 15, Township 5 North, Range 62
West, 6th 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 established by Order No. 407-380 for the below-described lands, is hereby
vacated, and Order Nos. 407-633 and 407-711 as they apply to the below-described
lands, are hereby vacated, for the production of oil, gas and associated
hydrocarbons from the Niobrara Formation,
without exception being granted by the
Director:
Township 5 North, Range 62 West, 6th P.M.
Section 15: All
IT IS FURTHER ORDERED,
the Rule 318A setbacks are hereby re-established for the Application Lands.
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 5th day
of April, 2013, as of March 25, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary