BEFORE THE OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
|
IN THE MATTER OF THE APPLICATION OF NOBLE ENERGY, INC FOR AN ORDER TO AFFIRM POOLING ORDER NO. 407-734 AS TO PREVIOUSLY UNNOTICED PARTIES FOR SECTION 3, TOWNSHIP 6 NORTH, RANGE 65 WEST, 6TH P.M. FOR THE CODELL-NIOBRARA FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 1312-UP-251
ORDER NO. 407-911 |
REPORT OF THE COMMISSION
The Commission heard this matter on December 16, 2013, at the Ralph L. Carr Colorado Judicial Center, 1300 Broadway, 1st Floor, Room 1E, Denver, Colorado, upon application for an order to affirm that all interests, including interests owned by previously unnoticed parties, were pooled, in an approximate 160-acre designated wellbore spacing unit established for Section 3, Township 6 North, Range 65 West, 6th P.M. by Order No. 407-734, to accommodate the Bickling PC E03-21D Well, for the development and operation of the Codell-Niobrara Formation.
FINDINGS
The Commission finds as follows:
1. Noble Energy, Inc. (“Noble” 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 15, 2012, the Commission entered Order No. 407-734 which, among other things, pooled all interests in an approximate 160-acre designated wellbore spacing unit established for the development and operation of the Codell-Niobrara Formation, effective as the earlier date of the Application, or the date that the costs specified in C.R.S. § 34-60-116(7)(b)(II) were first incurred for the drilling of the Bickling PC E 03-21D Well. Section 3, Township 6 North, Range 65 West, 6th P.M. is subject to Order No. 407-734 for the Codell-Niobrara Formation.
5. Subsequent to the November 15, 2012 hearing, Noble, learned of additional mineral interest owners within the approximate 160-acre designated wellbore spacing unit subject to Order No. 407-734, to whom Notice of the Pooling Application, as well as an AFE and offer to lease and/or participate, had not been provided. Applicant has sent an appropriate offer to lease or participate, and an AFE containing the required information under Rule 530.a., to the previously unnoticed interested parties.
6. On October 17, 2013, Noble, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to affirm that all interests, including interests owned by previously unnoticed parties, were pooled, in an approximate 160-acre designated wellbore spacing unit established for the below-described lands (“Application Lands”) pursuant to §34-60-116(6), C.R.S. by Order No. 407-734, for the development and operation of the Codell-Niobrara Formation, effective as of the date that any of the costs specified in §34-60-116(7)(b)(II), C.R.S. were first incurred for the drilling of the Bickling PC E03-21D Well (API No. 05-123-34968) (“Well”), and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S.:
Township 6 North, Range 65 West, 6th P.M.
Section 3: NE¼ SW¼, NW¼ SE¼, SW¼ NE¼, SE¼ NW¼
7. On December 3, 2013, Noble, 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.
8. Land testimony and exhibits submitted in support of the Application by Joseph H. Lorenzo, Senior Land Manager for Noble, showed that all nonconsenting interest owners were notified of the Application and received an Authority for Expenditure ("AFE") and offer to participate in the Well. Further testimony concluded that the AFE sent by the Applicant to the interest owners was a fair and reasonable estimate of the costs of the proposed drilling operation and was received at least 30 days prior to the December 16, 2013 hearing date.
9. Land testimony showed the Applicant complied with the requirements of Rule 530, and is entitled to the cost recovery provisions pursuant to §34-60-116(7), C.R.S., for the Bickling PC E03-21D Well.
10. On December 6, 2013, Noble submitted supplemental Rule 511 testimony from P. David Padgett, Land Director for Noble, clarifying that Bayswater Exploration and Production, LLC and Bayswater Blenheim Holdings, LLC were the previously unnoticed parties subject to this Application.
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. Noble 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 affirm that all interests, including interests owned by previously unnoticed parties, were pooled, in an approximate 160-acre designated wellbore spacing unit established for Section 3, Township 6 North, Range 65 West, 6th P.M. by Order No. 407-734, to accommodate the Bickling PC E03-21D Well, for the development and operation of the Codell-Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. Pursuant to the provisions of §34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act, all interests, including interests owned by previously unnoticed parties, in an approximate 160-acre designated wellbore spacing unit established for the below-described lands, were previously pooled by Order No. 407-734, for the development and operation of the Codell-Niobrara Formation, effective as of the date that any of the costs specified in §34-60-116(7)(b)(II), C.R.S. were first incurred for the drilling of the Bickling PC E 03-21D Well:
Township 6 North, Range 65 West, 6th P.M.
Section 3: NE¼ SW¼, NW¼ SE¼, SW¼ NE¼, SE¼ NW¼
2. The production obtained from the 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 wellbore spacing unit; each owner of an interest in the wellbore spacing unit shall be entitled to receive its share of the production of the Well located on the wellbore spacing unit applicable to its interest in the wellbore spacing unit.
3. The nonconsenting leased (working interest) owners must reimburse the consenting working interest owners for their share of the costs and risks of drilling and operating the Well (including penalties as provided by §34-60-116(7)(b), C.R.S.) out of production from the wellbore spacing unit representing the cost-bearing interests of the nonconsenting working interest owners as provided by §34-60-116(7)(a), C.R.S.
4. Any unleased owners are hereby deemed to have elected not to participate and shall therefore be deemed to be nonconsenting as to the Well and be subject to the penalties as provided for by §34-60-116 (7), C.R.S. Any party seeking the cost recovery provisions of §34-60-116 (7), C.R.S., shall first comply with subsection (d) for any subsequent well(s).
5. Each nonconsenting unleased owner within the wellbore spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of its record title interest, whatever that interest may be, until such time as the consenting owners recover, only out of each nonconsenting owner's proportionate 87.5% share of production, the costs specified in §34-60-116(7)(b), C.R.S. as amended. After recovery of such costs, each unleased nonconsenting mineral owner shall then own its proportionate 8/8ths share of the Well, surface facilities and production, and then be liable for its proportionate share of further costs incurred in connection with the Well as if it had originally agreed to the drilling.
6. The operator of the well drilled on the above-described wellbore spacing unit shall furnish the nonconsenting owners with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.
7. 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.
8. The wellbore spacing unit described above, shall be considered a drilling and spacing unit established by the Commission for purposes of Rule 530.a.
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 30 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 _____ day of January, 2014, as of December 16, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary