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

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on December 8, 2015, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado,, upon application for an order to subject additional parties to Order No. 407-835, and  to subject all nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., for the drilling of the H-Y 20-54 Well, within an approximate 160-acre designated wellbore spacing unit established for portions of Section 20, Township 6 North, Range 67 West, 6^th P.M., for the development and operation of the Codell-Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Great Western Operating Company, LLC. (Operator No. 10110) (“Great Western” 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 April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule.  Section 20, Township 6 North, Range 67 West, 6^th P.M. is subject to this Rule for the production of oil, gas, and associated hydrocarbons from the Codell-Niobrara Formation.

 

5.         On February 19, 1992, the Commission entered 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-Niobrara Formations, the Codell Formation, and the Niobrara Formation underlying certain lands, with the permitted well locations in accordance with the provisions of Order No. 407-1. Section 20, Township 6 North, Range 67 West, 6^th P.M. is subject to this Rule for the production of oil, gas, and associated hydrocarbons from the Codell-Niobrara Formation.

 

6.         On July 29, 2013, the Commission entered Order No. 407-835, which among other things, approved the request for an order to pool all interests in an approximate 160-acre designated wellbore spacing unit established for certain lands in Section 20, Township 6 North, range 76 West, 6^th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell-Niobrara Formation.

 

7.         On August 27, 2015, Great Western, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S. for an order to subject additional parties to Order No. 407-835, and to subject all nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., effective as of the earlier of the date of the Application, or the date that any of the costs specified in §34-60-116(7)(b), C.R.S. were first incurred for the drilling of the H-Y 20-54 Well (API No. 05-123-35429) in an approximate 160-acre designated wellbore spacing unit established for the below-described lands (“Application Lands”) for the development and operation of the Codell-Niobrara Formation:

 

Township 6 North, Range 67 West, 6^th P.M.

Section 20:      SE¼

 

9.         On November 13, 2015 (amended November 20, 2015), Great Western, 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 Hal Writer, Land Manage for Great Western, showed that the interests of the persons set out in Appendix A hereto were not previously subject to the provisions of Order No. 407-835 and that said interests should now be made subject to Order No. 407-835, and 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 35 days prior to the December 8, 2015 hearing date.

 

11.       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 H-Y 20-54 Well, but did not provide testimony for any subsequent wells.

 

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.       Great Western 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 making the interests of the persons set out in Appendix A hereto subject to Order No. 407-835, and to subject all nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., for the drilling of the H-Y 20-54 Well, within an approximate 160-acre designated wellbore spacing unit established for portions of Section 20, Township 6 North, Range 67 West, 6^th P.M., 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, the interests of the persons set out in Appendix A hereto are hereby made subject to Order No. 407-835, and all nonconsenting interests are hereby subjected to the cost recovery provisions of §34-60-116(7), C.R.S., effective as of the earlier of the date of the Application, or the date that any of the costs specified in §34-60-116(7)(b), C.R.S. are first incurred for the drilling of the H-Y 20-54 Well (API No. 05-123-35429) in an approximate 160-acre designated wellbore spacing unit established for the below-described lands for the development and operation of the Codell-Niobrara Formation:

 

Township 6 North, Range 67 West, 6^th P.M.

Section 20:      SE¼

 

2.         The production obtained from the drilling and 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 drilling and spacing unit; each owner of an interest in the drilling and spacing unit shall be entitled to receive its share of the production of the Well located on the drilling and spacing unit applicable to its interest in the drilling and 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 drilling and 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 drilling and 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 drilling and 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 designated wellbore spacing unit described above shall be considered a drilling and spacing unit established by the Commission for purposes of Rule 530.a.

 

IT IS FURTHER ORDERED:

 

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 December, 2015, as of December 8, 2015.     

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By___________________________________

Julie Murphy, Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

APPENDIX “A”

 

*Alan M Rogers, Donna J. Rogers

919 Conifer Court

Windsor, CO 80550

 

*Areef Moin and Sofia Ula,

joint tenants

7120 Sedgwick Drive

Fort Collins, CO 80525

 

Brian D. Dizmang and

Jessica Fisher, joint tenants

1205 Crescent Drive

Winsor, CO 80550

 

Charles E. Eichorn

9738 Milwaukee Court

Thornton, CO 80228

 

Charles W. Rohrer Sr. and

Geraldine M. Rohrer, joint tenants

909 Conifer Ct #4

Windsor, CO 80550

 

Christopher Chavis and

Dedra L. Chavis, joint tenants

1017 Pinyon Drive

Windsor, CO 80550

 

Clifton E. Godfrey and

Clifton Westley Godfrey,

tenants in common

900 Jupiter Drive

Windsor, CO 80550

 

Connie S. Spelts

1013 Larch Drive

Windsor, CO 80550

 

Craig Anthony Ramey

3420 Terry Point Dr.

Fort Collins, CO 80524

 

*Cristina Garcia

161 Marianna Street

Lynn, MA 01902

 

 

 

Daniel J. Bisceglia and

Brittany Biseglia, join tenants

1110 Hemlock Drive

Windsor, CO 80550

 

David B. Nicholl a/k/a

David Bret Nicholl, and

Amy L. Nicholl a/k/a

Amy Louise Nicholl, joint tenants

381 Buffalo Drive # E

Windsor, CO 80550

 

Derrick V. Goossens and

Alicia D. Childress, joint tenants

7124 Silvermoon Lane

Fort Collins, CO 80525-8814

 

Wyendolyn R. Houser a/k/a

Wendy R. Houser a/k/a

Wyendolyn R. Carroll as

remainderman with Harland T.

Houser of the Emma R. Houser

life estate

PO Box 6997

Mesa, AZ 85216

 

Harland T. Houser, as remainderman

with Wyendolyn R. Houser a/k/a

Wendy R. Houser a/k/a

Wyendolyn R. Carroll of the

Emma R. Houser llife estate

W9660 County Road TT,

Hortonville, WI 54944-8532

 

*END-IRA, Inc. FBO Larry D. Peterson IRA

1070 W Century Dr., Suite 101

Louisville, CO, 80027-165

Esperanza Jaramillo

503 Spuce Mountain Court

Windsor, CO 80550-4901

 

Gary Mauch

1626 34 Ave

Greeley, CO 80634

 

Grove Park Homeowners Association

907 Conifer Court

Windsor, CO 80550

 

GSK Properties, LLC

4457 Firehawk Court

Windsor, CO 80550

 

Hilda Craig

916 Conifer Court

Windsor, CO 80550

 

Howard W. Doudna and

Kim B. Doudna, joint tenants

810 Storm Mountain Court

Windsor, CO 80550

 

Jason Rothe

1221 28th Avenue

Greeley, CO 80534

 

Jean Keenan

PO Box 3427

Arizona City, AZ 85123

 

Jeremy Lutz

1073 Larch Drive

Windsor, CO 80550

 

Jo Ann Hall

1001 Hemlock Drive

Windsor, CO 80550-4936

 

*Joanna M. Capron and

June Capron, joint tenants

917 Conifer Court #3

Windsor, CO 80550

*Joel J. Woltjen and

Kimberly L. Woltjen, joint tenants

PO Box 75

Windsor, CO 80550

 

John L Garcia and

Patricia L. Garcia, joint tenants

1129 Hemlock Drive

Windsor, CO 80550

 

Johns Linzey

& Brenda Linzey, joint tenants

921 Conifer Court #4

Windsor, CO 80550

 

 

Jordan and Hilary Beck

1042 Pinyon Court

Windsor, CO 80550

 

*Joshua Westra and

Emilie Westra, joint tenants

12660 County Road 74

Eaton, CO 80615

 

Justin T. Matney

1000 Juniper Drive

Windsor, CO 80550

 

*Kelly Malama and

Kawika Malama, joint tenants

806 Stone Mountain Drive, Unit 104

Windsor, CO 80550

 

*Laura R. Sizemore-Williams and

Daniel K. Williams, joint tenants

3310 Merlot Street

Evans, CO 80634

 

Lois A. Deraadt

59 Pajaro Way

Greeley, CO 80634

 

*Michal Lynn McGinnis and

Joyce L. Haas, joint tenants

2010 7th Ave

Greeley, CO 80631

 

Nina Flohr

1018 Pinyon Drive

Windsor, CO 80550

 

Osage – Longmont, LLC

8029 South Country Club Parkway

Aurora, CO 80016

 

Rebecca L. Schwab

917 Palomino Way

Windsor, CO 80550

 

Richard E. Smith and

Jennifer J. Dizmang-Smith,

joint tenants

1101 Hemlock Drive

Windsor, CO 80550-4937

 

Richard H. Dumm, Jr.

352 North Shores Circle

Windsor, CO 80550

 

Ricky L. Maynard II and

Rebecca D. Carleson, joint tenants

812 Storm Mountain Court

Windsor, CO 80550

 

 *Rudolph J. Mazur and

Judith B. Mazur, joint tenants

1308 Pleasant Acres Drive

Evans, CO 80620-1423

 

Ryan D. Shaklee and

Tiffany J. Shaklee, joint tenants

1240 Aspen Court

Eaton, CO 80615

 

Scott E. Wenzel

816 Iron Mountain Court

Windsor, Co 80550

 

Simona A. Wilkerson and

Jason Wilkerson, joint tenants

909 Conifer Court, Apt #6

Windsor, CO 80550

 

Siriporn McDaniel

6731 Flagler Road

Fort Collins, CO 80525

 

Steven H. Meyer and

Janet K. Meyer, joint tenants

1390 Logan Street

Denver, CO 90203

 

Steven M. Prater

PO Box 192

Windsor, CO 80550

 

Stonegate Apartments, Ltd.

Liability Co.

706 South College Avenue

Fort Collins, CO 80524

 

TGIF Investments, LLC

9721 Tall Grass Circle

Lone Tree, CO 80163

 

Rex D. Dizmang and

Twila J. Dizmang

1078 Pinyon Drive

Windsor, Co 80550

 

Jonathan Craig Greenacre and

Addie Marie Clark Greenacre,

as Joint Tenants

818 Iron Mountain Court

Windsor, CO 80550

 

Tyler M. Hays and

Katee L. Hays, joint tenants

8II Table Mountain Court

Windsor, CO 80550

 

Vicki L. Baier

1049 Juniper Drive

Windsor, CO 80550

Walter F. Morrison III

811 Elm Street

Windsor, CO 80550

 

William G. Schoeffler

823 Elm Street

Windsor, CO 80550

 

William J. O'hare and

Barbara L. O'hare, joint tenants

911 Conifer Ct

Windsor, CO 80550

 

Grizzly Petroleum Company, LLC
1801 Broadway, Suite 500
Denver, CO 80202

 

Extraction Oil & Gas Company, LLC

370 17^th St, Suite 5300

Denver, CO 80202

 

Kerr McGee Oil & Gas Onshore LP

1099 18^th Street, Suite 1800

Denver, CO 80202

 

*Kelly Malama and

Kawika Malama, joint tenants

3224 NE 58^th Avenue

Portland, Oregon 97213

 

 

*Michal Lynn McGinnis and

Joyce L. Haas, joint tenants

919 Conifer Court, Unit 13

Windsor, CO 80550

 

Stonegate Apartments,

Ltd. Liability Co.

5 Old Town Square, Suite 216

Fort Collins, CO 80524