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

 

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE CODELL FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO

)

)

)

)

)

CAUSE NO. 407

 

DOCKET NO. 1407-SP-2078

 

ORDER NO. 407-1086

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on July 28, 2014, at the Weld County Administration Building - Events Center, 1150 “O” Street, Greeley, CO upon application for an order to establish an approximate 640-acre drilling and spacing unit for Section 2, Township 4 North, Range 63 West, 6th P.M., and approve up to eight horizontal wells within the unit, for the production of oil, gas, and related hydrocarbons from the Codell Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Bonanza Creek Energy LLC (“Bonanza” 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 2, Township 4 North, Range 63 West, 6th P.M. is subject to Rule 318A for the Codell Formation.

 

5.         On May 29, 2014 (amended July 1, 2014), Bonanza, 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 eight horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:

 

                        Township 4 North, Range 63 West, 6th P.M.

                        Section 2:        All

 

Applicant stated that all horizontal wells will be located on no more than one well pad per quarter section within the unit.

 

6.         On July 15, 2014, Bonanza 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.

 

7.         Land Testimony and exhibits submitted in support of the Application by Caroline Heuring, Landman for Bonanza, showed that both the surface and the mineral interest in the Application Lands is owned in fee, and that Bonanza owns a partial undivided leasehold ownership interest in the Application Lands.

 

8.         Geologic Testimony and exhibits submitted in support of the Application by Dana D. Strunk, Project Execution Manager for Bonanza, showed the Codell Formation is present throughout the Application Lands, is approximately 11-14 feet thick, and is generally of uniform thickness throughout the Application Lands.

 

9.         Engineering Testimony and exhibits submitted in support of the Application by Edward M. Polishuk, Project Development Manager and Senior Reservoir Engineer for Bonanza, showed that the average drainage area for analogous horizontal Codell wells is not greater than 155 acres.   Horizontally drilling and completing four wells in the Codell Formation in the 640 acre drilling and spacing units composed of the Application Lands will result in the potential successful development of this economic resource.  The drilling of the requested infill wells in the Application Lands will prevent or assist in preventing waste by ensuring the pool as a whole may be efficiently and economically developed, without prejudice to the rights of other leasehold or mineral owners.

 

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.       Bonanza 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 establish an approximate 640-acre drilling and spacing unit for Section 2, Township 4 North, Range 63 West, 6th P.M., and approve up to eight horizontal wells within the unit, for the production of oil, gas, and related hydrocarbons from the Codell Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to eight horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell Formation, with the productive interval of the wellbore will be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, and with the proposed wells located on no more than one well pad per quarter section within the unit, without exception being granted by the Director:

 

                        Township 4 North, Range 63 West, 6th P.M.

                        Section 2:        All

 

2.         All horizontal wells shall be drilled from no more than one well pad per quarter section within the unit.

 

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 13th day of August, 2014, as of July 28, 2014.        

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary