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.: 150500286
ORDER NO. 407-1316 |
REPORT OF THE COMMISSION
The Commission heard this matter on May 18, 2015, at the Aims Community College, Fort Lupton Campus, 260 College Avenue, Fort Lupton, Colorado, 80621, upon application for an order to: 1) maintain the approximate 80-acre drilling and spacing units established for the Application Lands for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations; 2) maintain the approximate 320-acre drilling and spacing units established for the Application Lands, for the production of oil, gas, and associated hydrocarbons from wells producing from or completed to the Codell and Niobrara Formations commingled or dually-completed to the Dakota or “J” Sand Formations; and 3) establish an approximate 320-acre drilling and spacing unit for the Application Lands, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.
FINDINGS
The Commission finds as follows:
1. Carrizo Oil & Gas, Inc. (“Carrizo” 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.
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.
6. On November 16, 1992, the Commission entered Order No. 499-15 which established 320-acre drilling and spacing units for certain lands, including Section 34, Township 1 North, Range 66 West, 6th P.M., for production of gas and associated hydrocarbons from the Dakota, "J" Sand, Codell, Niobrara, Sussex and Shannon Formations, where the production is commingled or dually completed with the Dakota and "J" Sand Formations.
7. On March 19, 2015, Carrizo, by its attorney, filed with the Commission pursuant to § 34-60-116 C.R.S., a verified application (“Application”) for an order to: 1) maintain the approximate 80-acre drilling and spacing units established for in Section 34, Township 1 North, Range 66 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations; 2) maintain the approximate 320-acre drilling and spacing unit established for the N˝ of Section 34, Township 1 North, Range 66 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from wells producing from or completed to the Codell and Niobrara Formations commingled or dually-completed to the Dakota or “J” Sand Formations; 3) establish an approximate 320-acre drilling and spacing unit, for horizontal well development only, for the below-described lands (“Application Lands”); and 4) approve up to eight horizontal wells, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of each 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 66 West, 6th P.M.
Section 34: N˝
Applicant states that all proposed wells shall be located on no more than two wellpads within the unit, subject to Rule 318A.
8. Applicant stated that, since the Application is specifically related to horizontal development, it did not seek to vacate the 80-acre drilling and spacing units established by Order No. 407-87 for production from the Codell and Niobrara Formations for the Application Lands.
9. On April 27, 2015, Carrizo, 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 Craig Wiest, Land Manager – Western U.S., showed that Carrizo is an owner with the right to drill wells and produce from the Application Lands by virtue of its leasehold interests and that interested parties received notice of the Application.
11. Geologic Testimony and exhibits submitted in support of the Application by Paul Fears, DJ Basin Geologist for Carrizo, showed that the Niobrara and Codell Formations are present and represent a common source of supply throughout the Application Lands, is fairly uniform in thickness, is contiguous. The Codell Formation underlying the Application Lands averages approximately 15 feet in thickness and the Niobrara Formation underlying the Application Lands ranges approximately 380 feet in thickness.
12. Engineering Testimony and exhibits submitted in support of the Application by Andrew R. Agosto, Vice President of Business Development for Carrizo, showed that, based on leak-off tests, rate-pressure transient analyses, and adjusted calculations using example wells in the area, the proposed wells should exhibit Estimated Ultimate Recoveries (EUR) of approximately 120-278 thousand oilfield barrels of oil (MBE), plus associated gas and processed natural gas liquids (NGLs).
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. Carrizo 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’s review of the Application under Rule 511, the Commission should enter an order to: 1) maintain the approximate 80-acre drilling and spacing units established by Order No. 407-87 for the N˝ of Section 34, Township 1 North, Range 66 West, 6th P.M.; 2) maintain the approximate 320-acre drilling and spacing unit established by Order No. 499-15 for the Application Lands, 3) establish an approximate 320-acre drilling and spacing unit for the Application Lands; and 4) 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) The approximate 80-acre drilling and spacing units established by Order No. 407-87 for Section 34, Township 1 North, Range 66 West, 6th P.M., are hereby maintained, for vertical and directional development only, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.
2) The approximate 320-acre laydown drilling and spacing units established for the Section 34, Township 1 North, Range 66 West, 6th P.M., are hereby maintained, for vertical and directional development only, for the production of oil, gas, and associated hydrocarbons from wells producing from (or completed to) the Codell and Niobrara Formations commingled or dually completed with the Dakota or “J” Sand Formation.
3) An approximate 320-acre drilling and spacing unit for the below-described lands, is hereby established, and eight horizontal wells within the unit, are hereby approved, for horizontal development only, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of the wellbores 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:
Township 1 North, Range 66 West, 6th P.M.
Section 34: N˝
4) All proposed wells shall be located on no more than two 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 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 1st day of June, 2015, as of May 18, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By:
Julie Murphy, Secretary