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. 150100045
ORDER NO. 407-1217 |
REPORT OF THE COMMISSION
The Commission heard this matter on January 26, 2015 at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) maintain an approximate 640-acre drilling and spacing unit established for Section 4, Township 6 North, Range 62 West, 6th P.M., for the existing production of gas and associated hydrocarbons from the Niobrara Formation, 2) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-37, 3) vacate Order No. 535-67, and 4) establish an approximate 1280-acre drilling and spacing unit for Sections 4 and 9, Township 6 North, Range 62 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. Bonanza Creek Energy operating Company LLC (Operator No. 8960) (“Bonanza Creek” 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. Sections 4 and 9, Township 6 North, Range 62 West, 6th P.M. are subject to Rule 318A for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.
9. On November 17, 2014, Bonanza Creek, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to: 1) maintain an approximate 640-acre drilling and spacing unit established by Order No. 535-12 for Section 9, Township 6 North, Range 62 West, 6th P.M., for the existing production of gas and associated hydrocarbons from the Niobrara Formation, 2) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-37 for Section 4, Township 6 North, Range 62 West, 6th P.M., for the production of gas and associated hydrocarbons from the Niobrara Formation; 3) vacate Order No. 535-67, which pooled all non-consenting interests in an approximate 640-acre drilling and spacing unit established for Section 4, Township 6 North, Range 62 West, 6th P.M., for the development and operation of the Niobrara Formation; and 4) establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”) 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, 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 62 West, 6th P.M.
Section 4: All
Section 9: All
10. On January 5, 2015, Bonanza Creek, 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.
11. On January 15, 2015, the Bureau of Land Management (“BLM”) and Bonanza Creek reached an agreement wherein Bonanza Creek agreed to submit a Communitization Agreement (CA) to the BLM for any existing wells within 60 days of the entry of this order. Bonanza Creek also agreed to submit a CA to the BLM within 90 days of the date of first production (as defined by in the COGCC Rules) from the initial well within the drilling and spacing unit. The Application Lands contain leased minerals managed by BLM.
12. Land testimony and exhibits submitted in support of the Application by Steve McPherson, Landman for Bonanza Creek, showed that Bonanza Creek 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 Jeffrey Schroeder, Development Geologist for Bonanza Creek, showed that the Codell and Niobrara Formations are present throughout the Application Lands, the Niobrara Formation is approximately 260 to 280 feet thick, and the Codell Formation is approximately 7 to 8 feet thick, and is generally 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 Creek, showed that the drainage area for analog horizontal Codell and Niobrara Formation wells are estimated at 73 acres, and an appropriate 1280-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 Creek 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 an approximate 640-acre drilling and spacing unit established for Section 4, Township 6 North, Range 62 West, 6th P.M., for the existing production of gas and associated hydrocarbons from the Niobrara Formation, 2) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-37, 3) vacate Order No. 535-67, and 4) establish an approximate 1280-acre drilling and spacing unit for Sections 4 and 9, Township 6 North, Range 62 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. An approximate 640-acre drilling and spacing unit established by Order No. 535-12 for Section 9, Township 6 North, Range 62 West, 6th P.M., is hereby maintained, for the existing production of gas and associated hydrocarbons from the Niobrara Formation.
2. An approximate 640-acre drilling and spacing unit established by Order No. 535-37 for Section 4, Township 6 North, Range 62 West, 6th P.M., is hereby vacated, for the production of gas and associated hydrocarbons from the Niobrara Formation.
3. Order No. 535-67, which pooled all non-consenting interests in an approximate 640-acre drilling and spacing unit established for Section 4, Township 6 North, Range 62 West, 6th P.M., is hereby vacated, for the development and operation of the Niobrara Formation.
4. An approximate 1280-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 6 North, Range 62 West, 6th P.M.
Section 4: All
Section 9: All
5. 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.
6. The proposed wells shall be located on no more than four wellpads within the unit, subject to Rule 318A.a., without exception granted by the Director.
7. Bonanza Creek shall submit a Communitization Agreement (CA) to the BLM for any existing wells within 60 days of the entry of this order. Bonanza Creek shall also submit a CA to the BLM within 90 days of the date of first production (as defined by in the COGCC Rules) from the initial well 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 12th day of February, 2015, as of January 26, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Jill Dorancy, Acting Secretary