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. 1412-SP-2215

 

ORDER NO. 407-1161

 

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, CO, upon application for an order to: 1) vacate four approximate 80-acre drilling and spacing units established by Order No. 407-87 for Section 26, Township 1 North, Range 65 West, 6th P.M.; and 2) establish an approximate 640-acre drilling and spacing unit for Section 26, Township 1 North, Range 65 West, 6th P.M., and approve up to eight 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.         Verdad Oil & Gas Corporation (Operator No. 10485) (“Verdad” 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 26, Township 1 North, Range 65 West, 6th P.M. is subject to this Rule for the Codell and Niobrara Formations.

 

5.         On February 19, 1992 (amended August 20, 1993), the Commission entered Order No. 407-87 which established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the permitted well locations in accordance with the provisions of Order No. 407-1. Section 26, Township 1 North, Range 65 West, 6th P.M. is subject to this Rule for the Codell and Niobrara Formations.

 

6.         On October 16, 2014, Verdad, 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 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 1 North, Range 65 West, 6th P.M.

       Section 26:           All

 

6.         Applicant requests that the proposed wells will be located on no more than one per quarter quarter section within the unit.

 

7.         On November 24, 2014, Verdad, 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 Philip W. Davis, Landman for Verdad, showed that Verdad 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 Steve Goolsby, Senior Exploration Geologist for Verdad, showed that the Codell Formation is present throughout the Application Lands, is approximately 14-15 feet in thickness, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Niobrara Formation is also present throughout the Application Lands, is approximately 350 to 420 feet in thickness, and is generally of uniform thickness throughout the Application Lands

 

9.         Engineering testimony and exhibits submitted in support of the Application by L. Arthur Beecherl, IV, Vice-President of Operations for Verdad, showed that the average drainage area for analog horizontal Codell Formation wells is 180 acres and the average drainage area for Niobrara Formation wells is estimated at 80 acres, and an appropriate 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 Formation.

 

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.       Verdad 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 four approximate 80-acre drilling and spacing units established by Order No. 407-87 for Section 26, Township 1 North, Range 65 West, 6th P.M.; and 2) establish an approximate 640-acre drilling and spacing unit for Section 26, Township 1 North, Range 65 West, 6th P.M., and approve up to eight 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.         One approximate 640-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 Codell and Niobrara Formations:

 

Township 1 North, Range 65 West, 6th P.M.

      Section 26:            All

 

2.         The productive interval of the wellbore will 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.

 

3.         The proposed wells shall be located on no more than four wellpad within the drilling and spacing unit.

 

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 8th day of January, 2015, as of December 15, 2014.          

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By__________________________________

Jill Dorancy, Acting Secretary