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 NIOBRARA AND CODELL FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO
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CAUSE NO. 407
DOCKET NO. 150900553
ORDER NO. 407-1452
TYPE: SPACING
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REPORT OF THE COMMISSION
The Commission heard this matter on September 14, 2015, at the Western State Colorado University, University Center, South Ballroom, 600 North Adams Street, Gunnison, Colorado, upon application for an order to establish an approximate 1280-acre drilling and spacing unit for the portions of Section 14, 23, and 26, Township 5 North, Range 66 West, 6th P.M., and approve up to 18 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
FINDINGS
The Commission finds as follows:
1. Synergy Resources Corporation (“Synergy” or “Applicant”) (Operator No. 10311) 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 December 19, 1983, the Commission entered order No. 407-1 (amended March 29 2000) which, among other things, established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell Formation, with the unit to be designated by the operator drilling the first well in each quarter section. The Order provided that the permitted well shall be located in the center of either 40-acre tract within the unit, with a tolerance of 200 feet in any direction, and the operator shall have the option to drill an additional well on the undrilled 40-acre tract in each 80-acre drilling and spacing unit. The Application Lands are subject to this Order for the Codell Formation.
5. On February 19, 1992, the Commission entered Order 407-87 (amended August 20, 1993), which, among other things, established 80-acre drilling and spacing units for production of oil, gas and assorted hydrocarbons from the Codell and Niobrara Formations, with the permitted well locations to be in accordance with Order No 407-1. The Application Lands are subject to this Order for the Codell and Niobrara Formations.
6. On April 27, 1998, the Commission adopted Rule 318A, which, among other things, allowed certain drilling locations to be utilized to drill or twin a well, deepen a well or recomplete a well and to commingle any or all of the Cretaceous Age Formations from the base of the Dakota Formation to the surface. On December 5, 2005, Rule 318A was amended to allow interior infill and boundary wells to be drilled and wellbore spacing units to be established. Township 5 North, Range 66 West of the 6th P.M., Section 14: N½, Section 23: All, and Section 26: S½ are subject to this Rule.
7. On June 22, 2015, Synergy, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 18 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, with the productive interval of the wellbore to be 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 such unit, unless an exception is granted by the Director:
Township 5 North, Range 66 West, 6th P.M.
Section 14: S½
Section 23: All
Section 26: N½
8. On August 24, 2015, Synergy, 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 Ron Morgenstern, Vice President of Land & Business Development for Synergy, showed that Synergy holds oil and gas leasehold interests and has a right to drill in the Application Lands.
10. Geologic testimony and exhibits submitted in support of the Application by for Synergy, showed that the Niobrara and Codell Formations are present throughout the Application Lands, the Niobrara Formation is approximately 300 feet thick, and the Codell Formation is approximately 20 feet thick, and both are generally of uniform thickness throughout the Application Lands.
11. Engineering testimony and exhibits submitted in support of the Application by Brett Hall, Reservoir Engineer for Synergy, showed that the drainage area for analog horizontal Niobrara Formation wells are estimated at 30 acres, and an approximate 1280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 18 horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara and Codell 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. Synergy agreed to be bound by oral order of the Commission.
14. 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 establish an approximate 1280-acre drilling and spacing unit for the portions of Section 14, 23, and 26, Township 5 North, Range 66 West, 6th P.M., and approve up to 18 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 18 horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:
Township 5 North, Range 66 West, 6th P.M.
Section 14: S½
Section 23: All
Section 26: N½
2. The productive interval of the wellbore will be 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 such unit, unless an exception is granted by the Director.
3. The wells will be drilled from no more than four well pads within the unit, unless an exception is 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 September, 2015, as of September 14, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Julie Murphy, Secretary