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 NIOBRARA FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 1412-EX-04
ORDER NO. 407-1160 |
REPORT OF THE COMMISSION
The Commission heard this matter on December 15, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to modify Order No. 407-1105 to allow for 460 foot setbacks as to the northern unit boundary of Section 14, Township 7 North, Range 62 West, 6th P.M. and the southern unit boundary of Section 23, Township 7 North, Range 62 West, 6th P.M., 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 (Operator No. 8960) (“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 this Rule 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 for various lands, including Sections 14 and 23, Township 7 North, Range 62 West, 6th P.M., and approved one horizontal well within each unit with the treated interval of the wellbore to be no closer than 600 feet from the unit boundaries, without exception granted by the Director.
6. On May 29, 2012, the Commission entered Order Nos. 407-642 and 535-163 which amended Order No. 407-501 to approved up to four wells on the 640-acre drilling and spacing unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of any horizontal well to be no closer than 460 feet from the boundaries of the unit, without exception granted by the Director.
7. On July 9, 2012, the Commission entered Order No. 407-661 which approved up to four horizontal wells within the 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, with the treated interval of the wellbores to be no closer than 460 feet from the boundaries of the unit, without exception granted by the Director.
8. On July 9, 2012, the Commission entered Order No. 407-662 which approved an order to establish four approximate 640-acre drilling and spacing units for certain lands in Sections 2, 14, 28 and 34, Township 7 North, Range 62 West, 6th P.M., and approved up to four horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Codell Formation.
9. On September 15, 2014, the Commission entered Order No. 407-1105 which vacated portions of Order Nos. 407-501, 407-661, 407-662, and 407-642 only as they pertain to the Codell and Niobrara Formations underlying Sections 14 and 23, Township 7 North, Range 62 West, 6th P.M., and approved up to four wells within each unit.
10. On October 16, 2014, Bonanza, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to modify Order No. 407-1105 for the below-described lands (“Application Lands”), to allow for 460 foot setbacks as to the northern unit boundary of Section 14, Township 7 North, Range 62 West, 6th P.M. and the southern boundary of Section 23, Township 7 North, Range 62 West, 6th P.M. underlying the below-described lands, (“Application Lands”) to promote efficient drainage within the Codell and Niobrara Formations.
Township 7 North, Range 62 West, 6th P.M.
Section 14: All
Section 23: All
11. On November 24, 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.
12. 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.
13. Geologic testimony and exhibits submitted in support of the Application by Jeffrey M. Schroeder, Petroleum Geologist with Bonanza, showed the Niobrara Formation is present throughout the Application Lands, is approximately 260 to 280 feet thick, and is of uniform thickness throughout the Application Lands. Geologic testimony further showed the Codell Formation is present throughout the Application lands is approximately 7 to 8 feet thick, and is of uniform thickness throughout the Application Lands.
14. Engineering testimony and exhibits submitted in support of the Application by Edward M. Polishuk, Senior Reservoir Engineer for Bonanza, showed that the estimated drainage area for analog horizontal wells is not greater than 155 acres, and the approximate 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.
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. Bonanza 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 modify Order No. 407-1105 to allow for 460 foot setbacks as to the northern unit boundary of Section 14, Township 7 North, Range 62 West, 6th P.M. and the southern unit boundary of Section 23, Township 7 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
ORDER
IT IS HEREBY ORDERED:
1. Order No. 407-1105, is hereby modified, for the below-described lands, to allow for 460 foot setbacks as to the northern unit boundary of Section 14, Township 7 North, Range 62 West, 6th P.M. and the southern boundary of Section 23, Township 7 North, Range 62 West, 6th P.M., 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
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 7th day of January, 2015, as of December 15, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Jill Dorancy, Acting Secretary