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 AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 1409-SP-2107

 

ORDER NO. 407-1103

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on September 15, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln St., Suite 801, Denver, CO, upon application for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-539 for Section 20, Township 7 North, Range 62 West, 6th P.M.; and 2) establish an  approximate 1280-acre drilling and spacing unit for Sections 20 and 21, Township 7 North, Range 62 West, 6th P.M., and approve up to four 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.         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. Sections 20 and 21, Township 7 North, Range 62 West, 6th P.M. are subject to Rule 318A for the Codell and Niobrara Formations.

 

            5.         On January 23, 2012, the Commission entered Order No. 407-539 which established an approximate 640-acre drilling and spacing unit for Section 20, Township 7 North, Range 62 West, 6th P.M., and approved up to two horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.  Section 20, Township 7 North, Range 62 West, 6th P.M. is subject to this Order for the Niobrara Formation.

 

6.         On July 17, 2014, Bonanza, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to: 1) vacate Order No. 407-539; and 2) establish an  approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve up to four 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 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 7 North, Range 62 West, 6th P.M.
Section 20:      All
Section 21:      All

 

Applicant also requested that all proposed wells be located on no more than one well pad per quarter section, subject to Rule 318A.

 

6.         On September 2, 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 Steve McPherson, Landman for Bonanza, showed that Bonanza holds oil and gas leasehold interests and has a right to drill in the Application Lands.            

 

8.         Geologic testimony and exhibits submitted in support of the Application by Jeffrey Schroeder, Development Geologist for Bonanza, showed that the Codell and Niobrara Formations is are present throughout the Application Lands, with the average thickness of the Niobrara Formation being approximately 250 to 270 feet thick, and the average thickness of the Codell Formation being approximately 7 to 9 feet thick.

 

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 analog horizontal Codell and Niobrara Formations wells is estimated at 155 acres. Further testimony showed that horizontally drilling and completing four wells in the Codell and Niobrara Formations in a 1280-acre drilling and spacing unit will result in the potential successful development of the resource.

 

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: 1) vacate Order No. 407-539; and 2) establish an  approximate 1280-acre drilling and spacing unit for Sections 20 and 21, Township 7 North, Range 62 West, 6th P.M., and approve up to four horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 640-acre drilling and spacing unit established by Order No. 407-539 for Section 20, Township 7 North, Range 62 West, 6th P.M. is hereby vacated.

 

2.         An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to four horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:

 

Township 7 North, Range 62 West, 6th P.M.
Section 20:      All
Section 21:      All

 

3.     The productive interval of the wellbore shall 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.

 

4.         The proposed wells shall be located on no more than one well pad per quarter section, subject to Rule 318A.

 

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  22nd day of September, 2014, as of September 15, 2014.            

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary