BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION ) CAUSE NO. 474
AND ESTABLISHMENT OF FIELD RULES TO )
GOVERN OPERATIONS IN THE CRAIG FIELD, ) ORDER NO. 474-4
MOFFAT COUNTY, COLORADO )
This cause came on for hearing before the Commission at 9:00 a.m. on March 31, 2008, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to establish a 320-acre drilling and spacing unit consisting of the SE¼ of Section 8 and SW¼ of Section 9, both in Township 6 North, Range 91 West, 6th P.M., for production from the Niobrara Formation and to allow an optional additional well to be drilled in said drilling and spacing unit, with a bottom hole location no closer than 660 feet to any outer boundary of the unit with no setback required to any interior quarter section line.
The Commission finds as follows:
1. Samson Resources Company (“Samson”), 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. Rule 318.a. of the Rules and Regulations of the Commission requires that wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. The SE¼ of Section 8 and the SW¼ of Section 9, both in Township 6 North, Range 91 West, 6th P.M. are subject to this Rule for the Niobrara Formation.
5. On February 11, 2008, Samson, by its attorneys, filed with the Commission a verified application for an order to establish a 320-acre drilling and spacing unit consisting of the SE¼ of Section 8 and SW¼ of Section 9, both in Township 6 North, Range 91 West, 6th P.M., for production from the Niobrara Formation and to allow an optional additional well to be drilled in said drilling and spacing unit, with a bottom hole location no closer than 660 feet to any outer boundary of the unit with no setback required to any interior quarter section line.
6. On March 18, 2008, Samson, 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.
7. Testimony and exhibits submitted in support of the application showed that Samson is the majority leasehold owner in the application lands, and that Samson owns approximately 93% working interest in the proposed drilling and spacing unit.
8. Testimony and exhibits submitted in support of the application showed that the Allen 44-8 #1 Well located in the SE¼ of Section 8 has a surface location of 660 feet FSL and 660 feet FEL, with a bottom hole location of 1,175 feet FSL and 148.3 feet FEL, and is completed in the Niobrara Formation. Additional testimony and exhibits indicated that based upon type logs, an isopach map, and cross sections, the Niobrara Formation, consisting of calcareous benches, is a common source of supply, with an average thickness of 280 feet underlying the area. Further testimony and exhibits showed that the structure underlying the application lands is asymmetric in nature, with steeper dipping strata on the southwestern flank of the anticline, indicating an area of greater fracture development, the target of oil production.
9. Testimony and exhibits submitted in support of the application showed that the estimated ultimate recovery from the Allen 44-8 #1 Well is approximately 100,000 barrels of oil, with a drainage radius of approximately 149 acres, and that the establishment of a 320-acre drilling and spacing unit will promote the economical and efficient drainage of the Niobrara Formation underlying the application lands.
10. Testimony and exhibits submitted in support of the application showed that due to the complexity of the fracture porosity of the calcareous intervals and depending upon the actual results of the Allen 44-8 #1 Well, an optional infill well may be necessary to adequately drain the Niobrara Formation reserves.
11. The above-referenced testimony and exhibits show that the proposed spacing and well density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.
12. Samson Resources Company 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.b., the Commission should enter an order to establish a 320-acre drilling and spacing unit consisting of the SE¼ of Section 8 and SW¼ of Section 9, both in Township 6 North, Range 91 West, 6th P.M., for production from the Niobrara Formation and to allow an optional additional well to be drilled in said drilling and spacing unit, with a bottom hole location no closer than 660 feet to any outer boundary of the unit with no setback required to any interior quarter section line.
ORDER
NOW, THEREFORE IT IS ORDERED, that a 320-acre drilling and spacing unit consisting of the SE¼ of Section 8 and SW¼ of Section 9, both in Township 6 North, Range 91 West, 6th P.M. is hereby established for production from the Niobrara Formation.
IT IS FURTHER ORDERED, that an optional additional well is hereby allowed to be drilled in said drilling and spacing unit, with a bottom hole location no closer than 660 feet to any outer boundary of the unit with no setback required to any interior quarter section line.
IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.
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 thirty (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 April, 2008, as of March 31, 2008.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Patricia C. Beaver, Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
April 8, 2008