Source: http://cogcc.state.co.us/orders/orders/407/730.html
Timestamp: 2019-02-22 23:05:14
Document Index: 642142522

Matched Legal Cases: ['§ 34', '§ 34', '§ 34', '§34', '§34', '§34', '§34', '§34']

IN THE MATTER OF THE APPLICATION OF PDC ENERGY, INC. FOR AN ORDER POOLING ALL INTERESTS IN AN APPROXIMATE 160-ACRE DESIGNATED WELLBORE SPACING UNIT LOCATED IN SECTIONS 21 AND 28, TOWNSHIP 4 NORTH, RANGE 67 WEST, 6TH P.M. FOR THE CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO
ORDER NO. 407-730
DOCKET NO. 1211-UP-263
The Commission heard this matter on November 15, 2012, at the office of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to pool all interests in an approximate 160-acre designated wellbore spacing unit established for Sections 21 and 28, Township 4 North, Range 67 West, 6th P.M., to accommodate the Walters 21 LDU Well, for the development and operation of the Codell and Niobrara Formations.
1. PDC Energy, Inc. (“PDC” or “Applicant”), as applicant herein, is an interested party in the subject matter of the above-referenced hearing.
4. On December 19, 1983, the Commission issued Order No. 407-1 (amended on March 29, 2000 in accordance with Order No. 407-17, entered November 18, 1985) which, among other things, established 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Codell Formation underlying certain lands, with the drilling and spacing unit to be designated by the operator drilling the first well in the quarter section (or the Director, if the operator fails to designate). The permitted well shall be located in the center of either 40-acre tract within the drilling and spacing unit with a tolerance of 200 feet in any direction. The operator shall have the option to drill an additional well on the undrilled 40-acre tract in each 80-acre drilling and spacing unit. Sections 21 and 28, Township 4 North, Range 67 West, 6th P.M. is subject to this Order for the Codell Formation.
5. On February 19, 1992, the Commission issued 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 and Niobrara Formations, with the permitted well locations in accordance with the provisions of Order No. 407-1. Order Nos. 407-655 and 407-692 include portions of the Application Lands but do not apply, and do not affect, the Application described below. Sections 21 and 28, Township 4 North, Range 67 West, 6th P.M. is subject to this Order for the Codell and Niobrara Formations.
6. 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 or recomplete a well and to commingle any 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 21 and 28, Township 4 North, Range 67 West, 6th P.M. is subject to Rule 318A for the Codell and Niobrara Formations.
7. On September 14, 2012, PDC, by its attorneys, filed with the Commission pursuant to § 34-60-116 C.R.S., a verified application (“Application”) for an order to pool all interests 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 and Niobrara Formations, effective as of the earlier of the date of the Application, or the date that any of the costs specified in C.R.S. § 34-60-116(7)(b)(II) were first incurred for the drilling of the Walters 21 LDU Well (API No. 05-123-31998), and to subject any nonconsenting interests to the cost recovery provisions of C.R.S. § 34-60-116(7):
Township 4 North, Range 67 West, 6th P.M.
Section 21: S½ SW¼
Section 28: N½ NW¼ (approximately 160-acres)
8. On November 1, 2012, PDC, 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 John Krattenmaker, Senior Regional Landman for PDC, showed that all nonconsenting interest owners were notified of the Application and received and 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 November 15, 2012 hearing date.
10. 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.
11. PDC agreed to be bound by oral order of the Commission.
12. 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 pool all interests in an approximate 160-acre designated wellbore spacing unit established for Sections 21 and 28, Township 4 North, Range 67 West, 6th P.M., to accommodate the Walters 21 LDU Well, for the development and operation of the Codell and Niobrara Formations.
1. Pursuant to the provisions of §34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act, all interests in the approximate 160-acre designated wellbore spacing unit established for the below-described lands, are hereby pooled, for the development and operation of the Codell and Niobrara Formations, effective as of the earlier of the date of the Application, or the date that the costs specified in C.R.S. §34-60-116(7)(b)(II) are first incurred for the drilling of Walters 21 LDU Well:
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.
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.
IT IS FURTHER ORDERED, that the wellbore spacing unit described above, shall be considered a drilling and spacing unit established by the Commission for purposes of Rule 530.a.
ENTERED this 26th day of November, 2012, as of November 15, 2012.