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

REPORT OF THE COMMISSION

The Commission heard this matter on May 6, 2013, at the Weld County Southwest Services Complex, 4209 Weld County Road 24 ½, Longmont, Colorado, upon application for an order to: 1) maintain the approximate 80-acre drilling and spacing units established by Order No. 407-87 for Section 9, Township 6 North, Range 66 West, 6^th P.M.; and 2) establish an approximate 640-acre drilling and spacing unit for Section 9, Township 6 North, Range 66 West, 6^th P.M., and approve up to 20 horizontal wells 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 February 19, 1992, the Commission issued Order No. 407-87 (amended August 20, 1993) which, among other things, established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the permitted well locations in accordance with the provisions of Order No. 407-1. Section 9, Township 6 North, Range 66 West, 6^th P.M. is subject to this Order for the Niobrara Formation.

5.         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 9, Township 6 North, Range 66 West, 6^th P.M. is subject to Rule 318A for the Niobrara Formation.

            6.         On January 24, 2013, Bill Barrett Corporation (“BBC” or “Applicant”), by its attorneys, filed with the Commission pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an order to: 1) maintain the approximate 80-acre drilling and spacing units established by Order No. 407-87 for Section 9, Township 6 North, Range 66 West, 6^th P.M.; and 2) establish an approximate 640-acre drilling and spacing unit for the below-listed lands (“Application Lands”), and approve up to 20 horizontal wells 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 460 feet from the boundaries of the proposed unit and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

                                    Township 6 North, Range 66 West, 6^th P.M.

                                    Section 9:        All

Applicant operates 14 wells which are capable of producing from the Niobrara Formation and spaced under Order No. 407-87.  BBC requested the spacing established by Order No. 407-87 be maintained, and stated the distribution of proceeds shall continue to be allocated on an 80-acre basis.

Applicant stated it will make good faith efforts to utilize existing well pads if economically feasible and technically practical.

7.         On March 11, 2013, Dale and Theresa Sanders filed a Rule 510 statement stating their concerns regarding possible increase in traffic to access oil facilities and bright lights and noise due to the proximity of oil rigs.

8.         On March 11, 2013, Barbara Ernst filed a Rule 510 statement alleging that the application did not address the wellpad location and expressing concern that her ability to ranch could be affected by the well location.

9.         On March 11, 2013, Gene Oblander (“Oblander” or “Intervenor”) filed a request to Intervene pursuant to Rule 509.a.(2)C.

10.       On March 12, 2013, BBC, 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.

11.       On April 2, 2013, BBC, by its attorneys, filed a Motion to Dismiss Permissive Intervention filed by Gene Oblander.

12.       On April 2, 2013, a Prehearing Conference was held at the offices of the COGCC.  Department of Natural Resources, Assistant Attorney General Mari Deminski was present to receive information, and provide guidance to the Hearing Officer, regarding Mr. Oblander’s concerns about nesting owls near the Application Lands.

13.       On April 2, 2013, Oblander withdrew his request to intervene in the Application.  His statement was recast as a Rule 510 statement.

14.       Land testimony and exhibits submitted in support of the Application by Brian Wert, Senior Landman for BBC, showed that BBC holds a mineral leasehold interest in the Application Lands.

15.       Geologic testimony and exhibits submitted in support of the Application by Jason F. Brand, Senior Geological Associate for BBC, showed that the Niobrara Formation exists under all of the Application Lands. Additional testimony showed that the total thickness of the Niobrara Formation under the Application Lands ranges from approximately 250 feet to 270 feet thick.

16.       Engineering testimony and exhibits submitted in support of the Application by Mark Stouffer, Reservoir Engineering Advisor for BBC, showed the calculated drainage areas for average horizontal Niobrara wells range from 22 to 57 acres. Further testimony showed that placing 16 horizontal Niobrara wells would drain a total of 624 acres, will not adversely impact correlative rights and will avoid waste.  Estimated ultimate recovery from horizontal wells in the within the Application Lands is 271 MBO per well.  Testimony concluded the economics of the project are sound.

17.       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.

18.       BBC agreed to be bound by oral order of the Commission.  

19.       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: 1) maintain the approximate 80-acre drilling and spacing units established by Order No. 407-87 for Section 9, Township 6 North, Range 66 West, 6^th P.M.; and 2) establish an approximate 640-acre drilling and spacing unit for Section 9, Township 6 North, Range 66 West, 6^th P.M., and approve up to 20 horizontal wells within the unit, 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. 407-87 for Section 9, Township 6 North, Range 66 West, 6^th P.M., is hereby vacated.

            IT IS FURTHER ORDERED, that an approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established, and up to 20 horizontal wells within the unit, are 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 460 feet from the boundaries of the proposed unit and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

                                    Township 6 North, Range 66 West, 6^th P.M.

                                    Section 9:        All

IT IS FURTHER ORDERED, that the 80-acre drilling and spacing units previously established by Order No. 407-87 for Section 9, Township 6 North, Range 66 North, 6^th P.M., are hereby maintained, for any existing well capable of producing oil, gas and associated hydrocarbons from the Niobrara Formation.

IT IS FURTHER ORDERED, that horizontal wells drilled under this Order shall be drilled from no more than two multi-well pads on the surface of the drilling unit, or on adjacent lands, without exception being granted by the Director.

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 Procedures 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 May, 2013, as of May 6, 2013.

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

By: ____________________________________     

            Robert J. Frick, Secretary