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 NIOBRARA FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 150400246

 

ORDER NO. 407-1302

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on April 13, 2015, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-703 for Section 14, Township 5 North, Range 61 West, 6th P.M.; 2) vacate Order No. 407-917 which approved up to 10 horizontal wells within an approximate 640-acre drilling and spacing unit established for Section 14, Township 5 North, Range 61 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; and 3) establish an approximate 1280-acre drilling and spacing unit for Sections 14 and 23, Township 5 North, Range 61 West, 6th P.M., and approve up to ten horizontal wells within the unit for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Bonanza Creek Energy Operating Company LLC (“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.         Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that, on unspaced lands, wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply.  Section 23, Township 5 North, Range 61 West, 6th P.M. is subject to Rule 318.a. for the Niobrara Formation.

5.         On April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule.

6.         On August 20, 2012, the Commission entered Order No. 407-703, which among other things, established an approximate 640-acre drilling and spacing unit for Section 14, Township 5 North, Range 61 West, 6th P.M., and approved one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

7.         On January 27, 2014, the Commission entered Order No. 407-917, which among other things, approved a total of up to ten horizontal wells within an approximate 640-acre drilling and spacing unit established for Section 14, Township 5 North, Range 61 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. 

8.         On February 12, 2015, Bonanza, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-703 for Section 14, Township 5 North, Range 61 West, 6th P.M.; 2) vacate Order No. 407-917 which approved up to 10 horizontal wells within an approximate 640-acre drilling and spacing unit established for Section 14, Township 5 North, Range 61 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; and 3) establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to ten horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the 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:

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Township 5 North, Range 61 West, 6th P.M.

Section 14:      All

Section 23:      All

 

Applicant states that the proposed wells will be drilled from no more than eight wellpads within the unit, subject to Rule 318A.

 

9.         On March 23, 2015, 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.

 

10.       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 entirely in fee, and that Bonanza owns a partial undivided leasehold ownership interest in the Application Lands.

 

11.       Geoscience testimony and exhibits submitted in support of the Application by Jeffrey Schroeder, Development Geologist for Bonanza, showed the Niobrara Formation is present throughout the Application Lands, and is approximately 280 feet thick.

 

12.       Engineering testimony and exhibits submitted in support of the Application by Joel Dill, Production Engineer for Bonanza, demonstrated that the drainage area for analogue horizontal wells in the Niobrara formation of the Application Lands is not greater than 65 acres per 640 acres, and that the proposed 1280 acre drilling and spacing unit, with the requested setbacks, and with the requested number of horizontal wells in the Niobrara formation in the Application Lands, will promote efficient drainage, protect correlative rights, and prevent waste.

 

13.       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.

 

14.       Bonanza agreed to be bound by oral order of the Commission. 

 

15.       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 vacate Order Nos. 407-703 and 407-917, and establish an approximate 1280-acre drilling and spacing unit and approve up to ten horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 640-acre drilling and spacing unit established by Order No. 407-703 for Section 14, Township 5 North, Range 61 West, 6th P.M., is hereby vacated, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation;

 

2.         Order No. 407-917 which approved up to 10 horizontal wells within an approximate 640-acre drilling and spacing unit established for Section 14, Township 5 North, Range 61 West, 6th P.M., is hereby vacated, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation;.

 

3.         An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and up to ten horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation,

 

Township 5 North, Range 61 West, 6th P.M.

Section 14:      All

Section 23:      All

 

4.         The treated interval of the wellbores shall be located no closer than 460 feet from the unit boundaries, and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director.

 

5.         The proposed wells shall be drilled from no more than eight wellpads within the unit, 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 30 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 23rd day of April, 2015, as of April 13, 2015.            

           

OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

By: ____________________________________     

     Julie Murphy, Secretary