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 NIOBRARA FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 1409-SP-2134

 

ORDER NO. 407-1106

 

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) maintain two approximate 640-acre drilling and spacing units established for Sections 18 and 19, Township 6 North, Range 61 West, 6th P.M.; 2) vacate Order Nos. 407-825 and 535-385; 3) vacate Order Nos. 407-824 and 535-384; and 4) establish an approximate 1,280-acre drilling and spacing unit for Sections 18 and 19, Township 6 North, Range 61 West, 6th P.M., and approve a total of up to eight horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Bill Barrett Corporation (“BBC” 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 18 and 19, Township 6 North, Range 61 West, 6th P.M. are subject to Rule 318A for the Niobrara Formation.

 

            5.         On February 22, 2011 (corrected on April 4, 2013), the Commission entered Order Nos. 407-779 and 535-4 which established 74 approximate 640-acre drilling and spacing units for Townships 4, 5 and 6 North, Ranges 61 and 62, 6th P.M., and approved one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Sections 18 and 19, Township 6 North, Range 61 West, 6th P.M. are subject to this Order for the Niobrara Formation.

 

            6.         On July 29, 2013, the Commission entered Order Nos. 407-825 and 535-385 which approved an additional seven horizontal wells, for up to eight horizontal wells, for the approximate 640-acre drilling and spacing unit established for Section 18, Township 6 North, Range 61 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

            7.         On July 29, 2013, the Commission entered Order Nos. 407-824 and 535-384 which approved an additional seven horizontal wells, for up to eight horizontal wells, for the approximate 640-acre drilling and spacing unit established for Section 19, Township 6 North, Range 61 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

            8.         On October 28, 2013, the Commission entered Order No. 407-872 which pooled all interests in an approximate 640-acre drilling and spacing unit established for Section 19, Township 6 North, Range 61 West, 6th P.M., for the operation and development of the Niobrara Formation.          

 

            9.         On October 28, 2013, the Commission entered Order No. 407-873 which pooled all interests in an approximate 640-acre drilling and spacing unit established for Section 18, Township 6 North, Range 61 West, 6th P.M., for the operation and development of the Niobrara Formation.

 

10.       On July 17, 2014, BBC, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to: 1) maintain two approximate 640-acre drilling and spacing units established for Sections 18 and 19, Township 6 North, Range 61 West, 6th P.M.; 2) vacate Order Nos. 407-825 and 535-385; 3) vacate Order Nos. 407-824 and 535-384; and 4) establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”); and approve up to eight horizontal wells, for a total of up to 10 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, 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, without exception being granted by the Director:

 

Township 6 North, Range 61 West, 6th P.M.
Section 18:      All
Section 19:      All

 

Applicant also requested that all proposed wells be drilled from no more than four multi-well pads within the unit, subject to Rule 318A.

 

11.       On August 25, 2014, BBC, 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.

 

            12.       Land testimony and exhibits submitted in support of the Application by Colleen Kennedy, Land Manager for BBC, showed that BBC holds oil and gas leasehold interests and has a right to drill in the Application Lands.            

 

13.       Geologic testimony and exhibits submitted in support of the Application by Charles W. Campbell, Senior Geologist Advisor for BBC, showed that the Niobrara Formation underlies the entirety of the Application Lands and ranges from 256 to 266 feet thick. Testimony further showed that the Niobrara Formation is a sequence of chalks, marls, and limestones and is a common source of supply.  

 

14.       Engineering testimony and exhibits submitted in support of the Application by Kevin Bittel, Senior Reservoir Engineer for BBC, showed that drilling and completing horizontal wells within the Niobrara Formation underlying the Application Lands is the most efficient and economic method of developing the resource. Testimony further showed that the well drainage area for 1,280-acre laterals would accommodate up to eight horizontal Niobrara wells, while protecting correlative rights of adjacent mineral owners.

 

15.       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.

 

16.       BBC agreed to be bound by oral order of the Commission.

 

17.       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) maintain two approximate 640-acre drilling and spacing units established for Sections 18 and 19, Township 6 North, Range 61 West, 6th P.M.; 2) vacate Order Nos. 407-825 and 535-385; 3) vacate Order Nos. 407-824 and 535-384; and 4) establish an approximate 1,280-acre drilling and spacing unit for Sections 18 and 19, Township 6 North, Range 61 West, 6th P.M., and approve a total of up to eight horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Two approximate 640-acre drilling and spacing units established for Sections 18 and 19, Township 6 North, Range 61 West, 6th P.M., are hereby maintained.

 

2.         Order Nos. 407-825 and 535-385 are hereby vacated.

 

3.         Order Nos. 407-824 and 535-384 are hereby vacated.

 

4.         An approximate 1,280-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 Niobrara Formation:

 

Township 6 North, Range 61 West, 6th P.M.
Section 18:      All
Section 19:      All

 

5.         The productive interval of the wellbore shall 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, without exception being granted by the Director.

 

6.         The proposed wells shall be drilled from no more than four multi-well pads within the unit, 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 18th day of September, 2014, as of September 15, 2014.  

 

 

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________                                                                                                       Robert J. Frick, Secretary