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. 1410-SP-2141

 

ORDER NO. 407-1126

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on October 27, 2014 at the Durango Public Library, 1900 E. 3rd Avenue, Durango, CO  81301, upon application for an order to establish an approximate 640-acre drilling and spacing unit for Section 18, Township 4 North, Range 62 West, 6th P.M., and approve up to five 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”) 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 18, Township 4 North, Range 62 West, 6th P.M. is subject to this Rule for the Codell and Niobrara Formations.

 

5.         On August 28, 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 five 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 4 North, Range 62 West, 6th P.M.
Section 18:      All

 

Applicant also requested that all proposed wells be drilled from one well pad per quarter section, subject to Rule 318A.

 

6.         On October 10, 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 Jeffery Schroeder, Petroleum Geologist for Bonanza, showed that the Niobrara Formation is present throughout the Application Lands, ranges from approximately 260 feet to 270 feet thick, and is generally of uniform thickness throughout the Application Lands.  Testimony further showed that the Codell Formation is present throughout the Application Lands, ranges from approximately 10 feet to 12 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 drainage area for analog horizontal Codell and Niobrara Formations wells are estimated at 73 acres for the Niobrara Formation and 162 acres for the Codell Formation, and a 640-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

 

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 18, Township 4 North, Range 62 West, 6th P.M. and to approve up to five 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 a total of up to five 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 4 North, Range 62 West, 6th P.M.
Section 18:      All

 

 2.        The proposed wells shall be drilled from 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 18th day of November, 2014, as of October 27, 2014.        

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By__________________________________

Robert J. Frick, Secretary