HomeMy WebLinkAbout20152681.tiff O O -
BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION ) CAUSE NO. 407
AND ESTABLISHMENT OF FIELD RULES TO
GOVERN OPERATIONS FOR THE CODELL ) DOCKET NO. 150700359
AND NIOBRARA FORMATIONS,
WATTENBERG FIELD, WELD COUNTY, ) TYPE: POOLING
COLORADO
NOTICE OF HEARING
RECEIVED
TO ALL INTERESTED PARTIES AND TO WHOM IT MAY CONCERN:
JUN 19 2015
APPLICATION LANDS
WELD COUNTY
{ Township 5 North, Ranee 65 West, 6th P.M. COMMISSIONERS
Section 19: S'/2
Section 20: SW%
APPLICATION
On May 5, 2015 (Amended June 4, 2015), Extraction Oil & Gas LLC (Operator No.
10459) ("Extraction" or "Applicant") filed a verified application pursuant to §34-60-116, C.R.S.,
for an order to:
1) Vacate six approximate 80-acre drilling and spacing units established by Order
No. 407-87 for the Application Lands;
2) Establish an approximate 480-acre drilling and spacing unit for the Application
Lands for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara
Formations;
3) Approve up to eight horizontal wells within the unit;
- 4j — Require that the productive interval of the wellbore to 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;
5) Pool all interests in the approximate 480-acre drilling and spacing unit
established for the Application Lands for the development and operation of the Codell and
Niobrara Formations; and
6) Subject any 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 GP-
Dairy 1-20-19 Well (API No. 05-123-04328); GP-Dairy 2-20-19 Well (API No. 05-123-41146); •
GP-Dairy 3-20-19 Well (API No. 05-123-40314); GP-Dairy 4-20-19 Well (API No. 05-123-
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2015-2681
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41138); GP-Dairy 5-20-19 Well (API No. 05-123-41140); GP-Dairy C6-20-19 (No API number);
GP-Dairy C7-20-19 (No API number); and the GP-Dairy C8-20-19 (No API number).
7) Applicant agrees that the proposed wells shall be drilled from a total of no more
than eight locations within the proposed drilling and spacing unit.
APPLICABLE RULES AND ORDERS
(available online at: http://cogcc.state.co.us, under"ORDERS")
• On April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area
Special Well Location, Spacing and Unit Designation Rule.
• On February 19, 1992, Order No. 407-87 established six approximate 80-acre drilling
and units for the Application Lands for the production of oil, gas, and associated
hydrocarbons from the Codell and Niobrara formations.
NOTICE IS HEREBY GIVEN, pursuant to: 1) the general jurisdiction granted to the Oil
and Gas Conservation Commission of the State of Colorado under §34-60-105 C.R.S.; 2)
specific powers granted pursuant to §34-60-106 C.R.S.; 3) the State Administrative Procedures
Act at §24-4-105 C.R.S.; and 4) the Commission's Series 500 Rules at 2 CCR 404-1, that the
Commission has scheduled the above-entitled matter for hearing on:
Date: Monday, July 20, 2015
Tuesday, July 21, 2015
Time: 9:00 a.m.
Place: Colorado Oil and Gas Conservation Commission
1120 Lincoln Street, Suite 801
Denver, CO 80203
In accordance with the Americans with Disabilities Act, if any party requires special
accommodations as a result of a disability for this hearing, please contact Margaret Humecki at
(303) 894-2100 ext. 5139, prior to the hearing and arrangements will be made.
At hearing, the Commission will consider the Application and enter an order pursuant to
its authority under the statute. Any interested party desiring to protest or intervene should file
with the Commission a written protest or intervention in accordance with Rule 509., no later than
July 6, 2015. Such interested party shall, at the same time, serve a copy of the protest or
intervention to the person filing the application. One electronic
(cogcc.hearings_unit@state.co.us), one original and two copies shall be filed with the
Commission. Anyone who files a protest or intervention must be able to participate in a
prehearing conference during the week of July 6, 2015. Pursuant to Rule 511., if the matter is
uncontested, it may be approved without a hearing.•I '
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(150700359)
Q
OIL AND GAS CO VATION COMMISSION
OF TH TATE O OLORADO
By
Q J 1' Murphy, Secretary
Dated: June?, 2015
Colorado Oil and Gas Conservation Commission Attorneys for Applicant:
1120 Lincoln Street, Suite 801 Thomas J. Kimmel
Denver, Colorado 80203 Zarlengo & Kimmell, P.C.
Website: http://cogcc.state.co.us 700 N. Colorado Blvd., Suite 598
Phone: (303) 894-2100 Denver, Colorado 80206
Fax: (303) 894-2109 (303) 832-6204
Kimmell01@aol.com
Lease in Place : YES NO Q
Lease u LED
Acres 91
' Keep for Hearing Outcome/Minutes
File=No Action Needede
3
(150700359)
® Q
BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE AMENDED APPLICATION OF CAUSE NO. 407
EXTRACTION OIL AND GAS, LLC. FOR AN ORDER
POOLING INTERESTS IN THE NIOBRARA AND CODELL
FORMATIONS FOR HORIZONTAL WELLS DOCKET NO. 150700359
LOCATED IN A PORTION OF THE
WATTENBERG FIELD AND FOR THE
ESTABLISHMENT OF THE SIZE OF THE RECEIVED
DRILLING AND SPACING HORIZONTAL UNIT •
FOR THE PRODUCTION OF OIL AND GAS FROM JUN 19 2015
THE NIOBRARA AND CODELL FORMATIONS
IN WELD COUNTY, COLORADO WELD COUNTY
COMMISSIONERS
COMES NOW Extraction Oil and Gas, LLC, ("Applicant") by and through its
attorney, Thomas J. Kimmell and for its AMENDED application for an order for the
involuntary pooling of certain interests in production from the Niobrara and Codell
formations in the lands described below pursuant to CRS § 34-60-116 and for an order
establishing the size of a horizontal drilling and spacing unit implemented pursuant to
Cause No. 407-87 and Rule 318A(I)(a)(4)(D), states and alleges as follows:
1. Applicant is duly authorized to conduct business in the State of Colorado, HAS
AN OPERATOR IDENTIFICATION NUMBER OF 10459, and owns an interest in
and operates oil and gas leases and mineral interests covering portions of certain
lands located in Weld County, Colorado described as follows:
T5N, R65W, 61h P.M., Weld County, Colorado
Section 19: S2
Section 20: SW4
2. 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 dr recomplete,a well and to commingle..anv 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. Sections 19 and 20, Township 5
North, Range 65 West, and 6th P.M. are subject to Rule 318A for the Niobrara
and Codell Formations.
3. The above-described lands are included within the area governed by the Greater
Wattenberg Area Special Well Location Rule, Rule 318A (I) of the Commission
rules and the Wattenberg spaced area for the production of oil and gas from the
O 0 d
Niobrara and Codell formations (See Order No. 407-87 for the Niobrara and
Codell formations).
4. Pursuant to Rule 318A(I)(a)(4)(D), where a drilling and spacing unit does not
exist for a horizontal well, as in the present case, a horizontal wellbore spacing
unit shall be designated by the operator for each proposed horizontal well. The
horizontal wellbore spacing unit shall be comprised of the governmental quarter-
quarter sections in which the wellbore lateral penetrates the productive formation
as well as any governmental quarter-quarter sections that are located less than
four hundred sixty (460) feet from the portion of the wellbore lateral that
penetrates the productive zone regardless of section or quarter section lines. In •
the present case, the laterals of the proposed horizontal wells will either
penetrate or be located within 460 feet of twelve quarter quarter sections
comprising in total Section 19: S2 and Section 20: SW4. APPLICANT
PROPOSES HEREIN THE ESTABLISHMENT OF A HORIZONTAL WELL
'DRILLING AND SPACING UNIT AND UPON APPROVAL OF SUCH DRILLING
AND SPACING UNIT,'WILL FILE A SUNDRY NOTICE TO VACATE THE
WELLBORE SPACING UNITS ESTABLISHED BY THE FILING OF
APPLICATIONS FOR PERMITS TO DRILL AS TO THE WELLS DESIGNATED
IN PARAGRAPH 7 BELOW.
5. Applicant is FURTHER REQUESTING THAT THE
any established 80-acre drilling and spacing units er*she establis d dam+ „
of proceeds from any existing FOR vertical Niobrara AND CODELL formation
wells BE VACATED. Applicant will allocate and distribute proceeds from the
horizontal wells on a 480-acre basis.
6. Consistent with the findings in the rulemaking that resulted in the adapted Rule
318/41)(a)(4)(D) and in order to protect the correlative rights of the owners of the
landowners' and overriding royalty interests in and to production from the
Niobrara and Codell formations in and under the lands above described and to
ensure that each such owner has the opportunity to recover his or her just and
equitable share of the oil, gas and associated hydrocarbons produced and to be
produced from the Niobrara and Codell formations and to enable the drilling
parties to develop these formations and lands, it is necessary to designate the
one 480-acre drilling and spacing unit consisting of the S2 of Section 19 and the
SW4 of Section 20 described above. Pursuant to designation of this 480-acre
drilling and spacing unit, Applicant is entitled to conduct all operations reasonably
necessary on such spacing unit to produce the oil and gas reserves described
above, including, without limitation, drilling, completion, hydraulic fracturing, and
conducting geophysical surveys.
7. Due to the costs and risks associated with the proposed horizontal wells, the
creation of one 480-acre drilling and spacing unit is necessary to ensure that
each such owner has the opportunity to recover his, her or its just and equitable
share of the oil, gas and other associated hydrocarbons produced and to be
produced from the Niobrara and Codell formations in and under the S2 of Section
19 and the SW4 of Section 20 above described. In particular, Applicant proposes
®
to drill, complete and operate the wells described below on such drilling and
spacing unit; GP-Dairy 1-20-19, GP-Dairy C6-20-19, GP-Dairy 2-20-19, GP-Dairy
3-20-19, GP-Dairy C7-20-19, GP-Dairy 4-20-19, GP-Dairy 5-20-19, GP-Dairy C8-
20-19 (referred to as the "Initial Wells"). As of the date of submittal of this
application, Applicant has completed the drilling of the GP-Dairy 1-20-19 Well.
APPLICATIONS FOR PERMITS TO DRILL HAVE BEEN SUBMITTED AND
APPROVED FOR AND API NUMBERS HAVE BEEN ASSIGNED TO FIVE OF
THE ABOVE WELLS, AS FOLLOWS: GP-DAIRY 1-20-19 WELL, API
NUMBER 05-123-04328; GP-DAIRY 2-20-19 WELL, API NUMBER 05-123-
41146; GP-DAIRY 3-20-19 WELL, API NUMBER 05-123-40314; GP-DAIRY 4 •
-
20-19 WELL, API NUMBER 05-123-41138; GP-DAIRY 5-20-19 WELL, API
NUMBER 05-123-41140.
8. Applicant owns and operates oil and gas leases and controls mineral interests in
the S2 of Section 19 and the SW4 of Section 20 above-described. A plat of the
Spacing Unit is attached hereto as Exhibit A.
9. According to the title work completed by Applicant, the interested parties in the
S2 of Section 19 and the SW4 of Section 20 are identified on Exhibit B attached
hereto
10. More than 305 days prior to the date this matter will be heard, by letters sent to
the persons described in Exhibit B. whose interests are unleased, Applicant
offered to lease the interests in the oil and gas owned by those parties in the
Spacing Unit. The letters included a proposed lease. A representative sample of
the letter and the oil and gas lease is attached hereto as Exhibit C.
11. The offer to lease was made pursuant to C.R.S. § 34-60-116(7) c and Rule 530
of the rules of the Commission and the terms thereof comply with the
requirements of the statute and rule.
12. In addition, in the letter containing the offer to lease described in paragraph 10,
Applicant included the opportunity for each owner identified on Exhibit B,whose
interests are unleased, to bear his, her of its proportionate share of the costs and
risks of the drilling and operating the five Initial Wells currently planned for each
Spacing Unit. The letters included the following information as required by Rule
530 of the Commission's rules:
The location and objective depths of the eight (8) Initial Wells to be drilled
in the Spacing Unit,
The estimated drilling and completion costs of the eight (8) Initial Wells to
be drilled in the Spacing Unit,
The estimated spud dates for the Initial Wells to be drilled in the Spacing
Unit or range of time within which the spudding is to occur and
O 0
An AFE prepared by the Applicant and containing the information
described above.
13. More than 3O5 days prior to the date this matter will be heard, the parties listed
on Exhibit B, whose interests are unleased, who have not elected to bear his, her
or its proportionate share of the costs and risks of drilling and operating the Initial
Wells to be drilled in the Spacing Unit, have become non-consenting owners as
defined by C.R.S. § 34-60-116(7) and Rule 530 of the rules of the Commission.
14. In order to prevent waste, protect correlative rights and in the best interests of •
conservation and to foster, encourage and promote the development, production
and utilization of the oil and gas natural resources, all the unleased interests in
the Spacing Unit in the Niobrara and Codell formations owned by the parties
listed on Exhibit B should be pooled in accordance with the provisions of C.R.S.
§ 34-60-116.
15. For purposes of pooling and cost recovery pursuant to C.R.S. §§ 34-60-116(6),
(7), Applicant requests the Commission to order that
a. Each nonconsenting owner be subject to the cost recovery provisions
of C.R.S. § 34-60-116(7) to each of the Initial Wells that Applicant (or a
successor in interest) drills within two years of the date of this Order,
and
b. Applicant shall re-comply with Rule 530 and allow each nonconsenting
owner to make a new election to participate or be pooled by statute in
each Initial Well, if any, that is not drilled to total depth within two years
of the date of this Order; and
c. Applicant shall re-comply with Rule 530 and allow each interest owner
who is not pooled voluntarily to make an election to participate or be
pooled by statute in any subsequently approved well(s) within the
drilling and spacing unit.
16. Applicant states that it will attempt to begin drilling the Initial Wells within one
year from the date of entry of this Order, by obtaining the necessary approvals
and permits to drill.
WHEREFORE, Applicant respectfully requests that this matter be set for hearing,
that notice thereof be given as required by law and that upon such hearing, this
Commission enter its order:
a. That the S2 of Section 19 and the SW4 of Section 20 above described be
designated as the drilling and spacing unit for production of oil, gas and
associated hydrocarbons from the Niobrara and Codell formations from the
Initial Wells and conduct of oil and gas operations reasonably necessary for
such production.
b. That the unleased interests in the 480-acre drilling and spacing unit consisting
of the S2 of Section 19 and the SW4 of Section 20 described above in the
Niobrara and Codell formations owned by the parties listed on Exhibit B who
are "non-consenting owners" as defined by Rule 530 of the rules of the
Commission be pooled and that such owners be treated as non-consenting
owners under C.R.S. § 34-60-116,
c. Authorizing the production of oil, gas and associated hydrocarbons from the
Niobrara and Codell formations from locations that are permitted by Rule •
318A, and
d. For such other and further relief as this Commission deems just and proper.
Dated this 4th Day of MayJUNE, 2015.
Respectfully Submitted,
By: 4eiv 7/41,
Thomas J. Kimmell,
Its Attorney
Zarlengo & Kimmell, PC
• 700 N. Colorado Blvd., #598
---— - -- --- -- —Denver, CO 80206
---- -- -- - --
Phone: 303-832-6204
Email: Kimmell0l@aol.com
•
•
U
STATE OF COLORADO )
) ss.
COUNTY OF WELD
Logan Richardson,as Vice President of Mineral Resources, Inc.which acts as
Agent for Extraction Oil and Gas,LLC,being of lawful age,being first duly sworn upon •
oath,deposes and says that he is employed by Applicant,that he has read the
foregoing AMENDED Application and that the matters therein contained are true to the
best of his knowledge,information and belief. .
Logan Richardson
Subscribed and sworn to before me this ) day of t_jrj r•k__. ,2015
Witness my hand and official seal.
My commission expires: I I I' 11 I`,
Notary Publid _-
MARY J METZGER
NOTARY PUBLIC
ETAT O
E F COI.ORAOO
NOTARY ID Y 2O,Fa09yr y
'!_,COMMISSION+EXFIFES NOVEUOEI,0 2D,
Exhibit"A"
Spaeifig 44hi-E-Riat
EXHIBITS
ALL EXHIBITS ATTACHED TO THE ORIGINAL APPLICATION ARE ADOPTED
AND INCORPORATED BY REFERENCE HEREIN.
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