BEFORE THE OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 1404-SP-2037
ORDER NO. 407-1005 |
REPORT OF THE COMMISSION
The Commission heard this matter on April 28, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to establish an approximate 640-acre drilling and spacing unit for Sections 8 and 9, Township 6 North, Range 67 West, 6th P.M., and to approve up to nine horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
FINDINGS
The Commission finds as follows:
1. Extraction Oil and Gas, LLC (“Extraction” 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 19, 1992, Order No. 407-87 (amended August 20, 1993) established 80-acre drilling and spacing units for the Codell and Niobrara Formations, with the permitted well locations in accordance with the provision of Order No. 407-1. Sections 8 and 9, Township 6 North, Range 67 West, 6th P.M. are subject to this Order for the Codell and Niobrara Formations.
5. On April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Sections 8 and 9, Township 6 North, Range 67 West, 6th P.M. are subject to this Rule for the Codell and Niobrara Formations.
6. On February 27, 2014, Extraction, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S. for an order to establish an approximate 640-acre drilling and spacing unit for the below-described lands (“Application Lands”), and to approve up to nine horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with 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:
Township 6 North, Range 67 West, 6th P.M.
Section 8: N½
Section 9: N½
7. On April 15, 2014, Extraction, 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.
8. Land testimony and exhibits submitted in support of the Application by Allyson Vistica, Senior Landman for Extraction, showed the surface of the Application Lands is owned in fee, the minerals in the Application Lands are owned in fee, and that Extraction owns or has the right to acquire 100% of the leasehold ownership in the Application Lands. Testimony further showed that all of the interested parties received notice of the Application.
9. Geologic testimony and exhibits submitted in support of the Application by Matt Owens, the President of Extraction, showed the Codell and Niobrara Formations are present throughout the Application Lands and are a common source of supply. Testimony further showed the total thickness of the Codell Formation underlying the Application Lands ranges from 22 to 26 feet and the total thickness of the Niobrara Formation underlying the Application Lands ranges from 275 to 300 feet.
10. Engineering testimony and exhibits submitted in support of the Application by John Tonello, the Production Manager for Extraction, estimated that the ultimate recovery factor of hydrocarbons under the Application Lands using horizontal drilling technology would be approximately 12.43% in the Codell Formation and 4.41% in the Niobrara Formation with an average ultimate recovery (“EUR”) of 500 MBOE from each horizontal well. Testimony further showed the proposed unit would efficiently and economically maximize reservoir drainage.
11. Applicant stated in its Rule 511 testimony that after the Application Lands were surveyed, Extraction determined that the unit would accommodate only eight horizontal wells, rather than the nine wells which were originally planned.
12. The Commission finds Applicant may use its existing surface blanket bond to locate the wellpad for the proposed horizontal wells at a surface location outside the applicable GWA drilling window, within the unit. Applicant identified the 800-foot window established pursuant to Rule 318.a.(1) located in the center of the NE¼ of Section 8, Township 6 North, Range 67 West, 6th P.M., to be forfeited.
13. 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.
14. Extraction agreed to be bound by oral order of the Commission.
15. 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 establish an approximate 640-acre drilling and spacing unit for Sections 8 and 9, Township 6 North, Range 67 West, 6th P.M., and to approve up to eight horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established, and up to eight horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with 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:
Township 6 North, Range 67 West, 6th P.M.
Section 8: N½
Section 9: N½
3. Applicant may use its existing surface blanket bond to locate the wellpad for the proposed horizontal wells at a surface location outside the applicable GWA drilling window, within the unit. The 800-foot drilling window established pursuant to Rule 318A.a.(1) located in the center of the NE¼ of Section 8, Township 6 North, Range 67 West, 6th P.M., is hereby forfeited.
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 23rd day of May, 2014, as of April 28, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary