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. 150700436 TYPE: SPACING
ORDER NO. 407-1398 |
REPORT OF THE COMMISSION
The Commission heard this matter on July 20, 2015, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) vacate two approximate 640-acre drilling and spacing units established by Order No. 407-1283 for Sections 3 and 10, Township 6 North, Range 61 West, 6th P.M.; 2) vacate Order Nos. 407-374 and 407-743 as they apply to Section 10, Township 6 North, Range 61 West, 6th P.M.; and 3) establish one approximate 1280-acre drilling and spacing unit for Sections 3 and 10, Township 6 North, Range 61 West, 6th P.M. and approve up to twenty-eight horizontal wells within the unit, with twenty-four horizontal wells to be drilled to the Niobrara Formation and four horizontal wells to be drilled to the Codell Formation, for the production of oil, gas, and associated hydrocarbons of the Codell and Niobrara Formations.
FINDINGS
The Commission finds as follows:
1. Caerus WashCo LLC (“Caerus” 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 July 8, 2010, the Commission entered Order 407-374 which, among other things, established eleven 640-acre drilling and spacing units for certain lands, including Sections 3 and 10, Township 6 North, Range 61 West, 6th P.M, and approved up to two horizontal wells in each unit, for the production of oil and gas and associated hydrocarbons from the Niobrara Formation.
6. On January 7, 2013, the Commission entered Order 407-743 which, among other things, pooled all interests in the approximate 640-acre drilling and spacing unit established for Section 10, Township 6 North, Range 61 West, 6th P.M.
7. On April 13, 2015 the Commission entered Order 407-1283 which, among other things, amended Order No. 407-374 as it applies to Section 3, Township 6 North, Range 61 West, 6th P.M. to include the Codell Formation and approved up to 24 horizontal wells in the Niobrara Formation and four horizontal wells in the Codell Formation within the unit, for the production of oil and gas and associated hydrocarbons from the Niobrara and Codell Formations.
8. On May 21, 2015, Caerus, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S. for an order to: 1) vacate two approximate 640-acre drilling and spacing units established by Order No. 407-1283 for Sections 3 and 10, Township 6 North, Range 61 West, 6th P.M.; 2) vacate Order Nos. 407-374 and 407-743 as they apply to Sections 3 and 10, Township 6 North, Range 61 West, 6th P.M.; and 3) establish one approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of the wellbore to be no closer than 460 feet from the unit boundaries and no closer than 100 feet from the productive interval of any other wellbore producing from the Niobrara and Codell Formations, without exception being granted by the Director:
Township 6 North, Range 61 West, 6th P.M.
Section
3: All
Section 10: All
Applicant also requests that the proposed wells be located on no more than four wellpads within the unit or on adjacent lands, without exception granted by the Director.
9. On June 29, 2015, Caerus, 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 Jeff Grisham, Landman for Caerus showed that Caerus owns a substantial leasehold interest and is an owner with the right to drill wells in the Application Lands.
11. Geologic testimony and exhibits submitted in support of the Application by Lisa Gusek, Petroleum Geologist for Caerus, showed the Niobrara and Codell Formations are present, uniform, and are a common source of supply throughout the Application Lands. Testimony further showed that the Niobrara Formation has an average thickness of 292 - 302 feet and the Codell Formation has an average thickness of 10 feet across the Application Lands.
12. Engineering testimony and exhibits submitted in support of the Application by Jeffery Baldauf, Reservoir Engineering Manager for Caerus, showed that the estimated drainage area for eight wells located in each of the A, B and C benches of the Niobrara Formation would be approximately 52 acres. Testimony concluded the drilling, completion, and production of horizontal Niobrara and Codell wells requested in the Application for the Application Lands, will increase recovery from the reservoir and thereby prevent waste, will protect correlative rights, and can be done economically and efficiently.
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. Caerus 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 enter an order to: 1) vacate two approximate 640-acre drilling and spacing unit established by Order No. 407-1283 for Sections 3 and 10, Township 6 North, Range 61 West, 6th P.M.; 2) vacate Order Nos. 407-374 and 407-743 as they apply to Sections 3 and 10, Township 6 North, Range 61 West, 6th P.M.; and 3) establish one approximate 1280-acre drilling and spacing unit for Sections 3 and 10, Township 6 North, Range 61 West, 6th P.M. and approve up to twenty-eight horizontal wells within the unit, with twenty-four horizontal wells to be drilled to the Niobrara Formation and four horizontal wells to be drilled to the Codell Formation, for the production of oil, gas, and associated hydrocarbons of the Codell and Niobrara Formations.
ORDER
IT IS HEREBY ORDERED:
1. Two approximate 640-acre drilling and spacing unit established by Order No. 407-1283 for Sections 3 and 10, Township 6 North, Range 61 West, 6th P.M., is hereby vacated.
2. Order Nos 407-374 and 407-743 as they apply to the Sections 3 and 10, Township 6 North, Range 61 West, 6th P.M., are hereby vacated.
3. One approximate 1280-acre drilling and spacing unit, is hereby established, for the below-described lands and up to twenty-eight horizontal wells within the unit, with twenty-four horizontal wells to be drilled to the Niobrara Formation and four horizontal wells to be drilled to the Codell Formation, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations:
Township 6 North, Range 61 West, 6th P.M.
Section
3: All
Section 10: All
3. The productive interval of any wellbore shall be located no closer than 460 feet from no unit boundaries and no closer than 100 feet from any other wellbore producing from the Niobrara and Codell Formations, without exception being granted by the Director.
4. The proposed wells shall be located be located on no more than four wellpads within the unit or on adjacent lands, without exception granted by the Director.
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 4th day of August, 2015, as of July 20, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Julie Murphy, Secretary