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. 1409-SP-2120
ORDER NO. 407-1105 |
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 two approximate 640-acre drilling and spacing units established by Order No. 407-501 for Sections 14 and 23, Township 7 North, Range 62 West, 6th P.M. for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate Order Nos. 407-642 and 535-163, 407-661, and 407-662, as they apply to Section 23, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.; 3) vacate Order No. 407-661 as it applies to Section 14, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 4) vacate Order No. 407-662 as it applies to Section 14, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell Formation; and 5) establish an approximate 1,280-acre drilling and spacing unit for the Application Lands, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations 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 14 and 23, Township 7 North, Range 62 West, 6th P.M. are subject to Rule 318A for the Codell and Niobrara Formations.
5. On October 31, 2011, the Commission entered Order No. 407-501 which established 12 approximate 640-acre drilling and spacing units established for various lands in Townships 6 and 7 North, Ranges 61 and 62 West, 6th P.M., and approved one horizontal well within each unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
6. On May 29, 2012, the Commission entered Order Nos. 407-642 and 535-163 which approved up to four wells within an approximate 640-acre drilling and spacing unit established for Section 23, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
7. On July 9, 2012, the Commission entered Order No. 407-661 which approved up to four horizontal wells within an 640-acre drilling and spacing unit established for Section 14, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
8. On July 9, 2012, the Commission entered Order No. 407-662 which approved up to four horizontal wells within an 640-acre drilling and spacing unit established for Section 14, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell Formation.
9. 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 two approximate 640-acre drilling and spacing units established by Order No. 407-501 for Sections 14 and 23, Township 7 North, Range 62 West, 6th P.M. for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate Order Nos. 407-642 and 535-163, 407-661, and 407-662, as they apply to Section 23, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.; 3) vacate Order No. 407-661 as it applies to Section 14, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 4) vacate Order No. 407-662 as it applies to Section 14, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell Formation; and 5) establish an approximate 1,280-acre drilling and spacing unit for the Application Lands, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations 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.
Township 7
North, Range 62 West, 6th P.M.
Section 14: All
Section 23: All
Applicant also requested that all proposed wells be located on no more than one surface location 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 Caroline Heuring, 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 are present throughout the Application Lands, with the average thickness of the Niobrara Formation being approximately 260 to 280 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 two approximate 640-acre drilling and spacing units established by Order No. 407-501 for Sections 14 and 23, Township 7 North, Range 62 West, 6th P.M. for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate Order Nos. 407-642 and 535-163, 407-661, and 407-662, as they apply to Section 23, Township 7 North, Range 62 West, 6th P.M. for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.; 3) vacate Order No. 407-661 as it applies to Section 14, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 4) vacate Order No. 407-662 as it applies to Section 14, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell Formation; 5) establish an approximate 1,280-acre drilling and spacing unit for the Application Lands, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations; and 6) approve up to four 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. Two approximate 640-acre drilling and spacing units established by Order No. 407-501 for Sections 14 and 23, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, are hereby vacated.
2. Order Nos. 407-642 and 535-163, 407-661, and 407-662, as they apply to Section 23, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, are hereby vacated.
3. Order No. 407-661 as it applies to Section 14, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, is hereby vacated.
4. Order No. 407-662 as it applies to Section 14, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell Formation, is hereby vacated.
5. An approximate 1,280-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 Codell and Niobrara Formations, 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, without exception being granted by the Director:
Township 7
North, Range 62 West, 6th P.M.
Section 14: All
Section 23: All
6. The proposed wells shall be located on no more than one surface location 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