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. 150300086
ORDER NO. 407-1278 |
REPORT OF THE COMMISSION
The Commission heard this matter on May 18, 2015, at the Aims Community College, Platte Building, 260 College Avenue, Fort Lupton, Colorado, upon application for an order to: 1) vacate Order No. 407-87 as it applies to Section 2, Township 1 North, Range 64 West, 6th P.M.; 2) establish an approximate 640-acre drilling and spacing unit for Section 2, Township 1 North, Range 64 West, 6th P.M.; and 3) approve up to 16 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 (“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.
5. On February 19, 1992 (amended August 20, 1993), Order No. 407-87 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.
6. On December 22, 2014, Verdad, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to vacate Order No. 407-87, establish an approximate 640-acre drilling and spacing unit for the below-described lands (“Application Lands”), and to approve up to 16 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with surface locations for the wells to be anywhere within the unit but no more than one (1) surface location per quarter-quarter section, unless an exception is granted by the Director, or as otherwise approved by a surface owner, 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 64 West, 6th P.M.
Section 2: All
7. On February 13, 2015, Ms. Paula Farner and Mr. Larry Smith filed a Protest to the Application. On February 24, 2015, Verdad filed its motion to dismiss the Protest. On March 16, 2015, Steven M. Pastelak filed a Protest to the Application. On March 23, 2015, Verdad filed its Response Brief in Opposition of Mr. Steve M. Pastelak’s Late Filing of Protest alleging that the protest was filed late and that Steve M. Pastelak was not an “owner” as defined in the Commission’s 100-Series Rules. On March 27, 2015, the Hearing Officer entered orders dismissing both Protests. The dismissed Protestants all filed exceptions to the dismissals.
8. On April 27, 2015, 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.
9. Land testimony and exhibits submitted in support of the Application by Phillip W. Davis, Landman for Verdad, showed that Verdad holds oil and gas leasehold interests and has a right to drill in the Application Lands. Verdad provided copies of the oil and gas leases from Paula Farner and Steven M. Pastelak.
10. Geologic testimony and exhibits submitted in support of the Application by Steven M. Goolsby, Senior Exploration Geologist for Foreland Resources, an affiliate of Verdad, showed that the Codell and Niobrara Formations are present throughout the Application Lands, the Niobrara Formation ranges from approximately 287 feet to 375 feet thick, the Codell Formation ranges from approximately 13 feet to 20 feet thick, and are generally of uniform thickness throughout the Application Lands.
11. 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 estimated at 158 acres and that the average drainage area for analog horizontal Niobrara Formations wells is estimated at 53 acres, and an approximate 640-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by the proposed horizontal wells producing oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
12. 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.
13. Verdad agreed to be bound by oral order of the Commission.
14. Based on the facts stated in the verified Application, any Protests having been properly dismissed, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to: 1) vacate Order No. 407-87 as it applies to Section 2, Township 1 North, Range 64 West, 6th P.M.; 2) establish an approximate 640-acre drilling and spacing unit, and 3) approve up to 16 horizontal wells within the unit, unless an exception is granted by the Director, or as otherwise approved by a surface owner, and 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, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
ORDER
IT IS HEREBY ORDERED:
1. Order No. 407-87 is vacated in so far as it applies to the Section 2, Township 1 North, Range 64 West, 6th P.M.
2. An approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 16 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 64 West, 6th P.M.
Section 2: All
3. 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.
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 _____ day of May, 2015, as of May 18, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Julie Murphy, Secretary