BEFORE THE OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
REPORT OF THE COMMISSION
The Commission heard this matter on March 17, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to: 1) vacate two approximate 640-acre drilling and spacing units established by Order 535-4 for Sections 19 and 20, Township 5 North, Range 61 West, 6th P.M.; 2) vacate Order Nos. 407-897 and 407-898; and 3) establish an approximate 1,280-acre drilling and spacing unit and approve a total of up to 16 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 22, 2011 (Corrected April 4, 2013), the Commission entered Order Nos. 407-779 and 535-4 which, among other things, established 74 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. Sections 19 and 20, Township 5 North, Range 61 West, 6th P.M. are subject to this Order for the Niobrara Formation.
5. On December 17, 2013, the Commission entered Order No. 407-897 which, among other things, approved an additional 15 horizontal wells, for a total of up to 16 horizontal wells, within the approximate 640-acre drilling and spacing unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Section 20, Township 5 North, Range 61 West, 6th P.M. is subject to this Order for the Niobrara Formation.
6. On December 17, 2013, the Commission entered Order No. 407-898 which, among other things, approved an additional 15 horizontal wells, for a total of up to 16 horizontal wells, within the approximate 640-acre drilling and spacing unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Section 19, Township 5 North, Range 61 West, 6th P.M. is subject to this Order for the Niobrara Formation.
7. On January 16, 2014, BBC, 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 two approximate 640-acre drilling and spacing units established for Sections 19 and 20, Township 5 North, Range 61 West, 6th P.M., for the production of oil, gas and associated hydrocarbons produced from the Niobrara Formation; 2) vacate Order Nos. 407-897 and 407-898; and 3) establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve a total of up to 16 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore will be located no closer than 460 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit producing from the Niobrara Formation, without exception being granted by the Director:
Township 5 North, Range 61 West, 6th P.M.
Section 19: ALL
Section 20: ALL
Applicant stated that all permitted wells will be drilled from no more than five multi-well pads within the unit, subject to Rule 318A, or on adjacent lands with consent of the surface owner.
8. On March 4, 2014, 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.
9. Land testimony and exhibits submitted in support of the Application by Colleen Kennedy, Land Manager for BBC, showed that BBC owns substantial leasehold interests in the Application Lands.
10. Geologic testimony and exhibits submitted in support of the Application by Charles W. Campbell, Senior Geologist Advisor for BBC, showed that the Niobrara Formation underlies the entirety of the Application Lands and ranges from approximately 261 to 263 feet thick. Further testimony showed the Niobrara Formation is a sequence of chalks, marls and limestones and is a common source of supply.
11. Engineering testimony and exhibits submitted in support of the Application by Kevin Bittel, Senior Reservoir Engineer for BBC, showed that drilling and completing horizontal wells within the Niobrara Formation underlying the Application Lands is the most efficient and economic method of developing the resource. Testimony concluded a 1,280-acre unit would accommodate up to sixteen horizontal Niobrara wells, while protecting correlative rights of adjacent mineral owners.
12. 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.
13. BBC agreed to be bound by oral order of the Commission.
14. 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) vacate two approximate 640-acre drilling and spacing units established by Order 535-4 for Sections 19 and 20, Township 5 North, Range 61 West, 6th P.M.; 2) vacate Order Nos. 407-897 and 407-898; and 3) establish an approximate 1,280-acre drilling and spacing unit and approve a total of up to 16 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. Two approximate 640-acre drilling and spacing units established by Order No. 535-4 (407-779) for Sections 19 and 20, Township 5 North, Range 61 West, 6th P.M., are hereby vacated.
2. Order Nos. 407-897 and 407-898, are hereby vacated.
3. An approximate 1,280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 16 horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore will be located no closer than 460 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:
Township 5 North, Range 61 West, 6th P.M.
Section 19: ALL
Section 20: ALL
4. All permitted wells will be drilled from no more than five multi-well pads within the unit, subject to Rule 318A, or on adjacent lands with consent of the surface owner.
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 11th day of April, 2014, as of March 17, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary