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 NIOBRAR AND CODELL FORMATIONS, UNNAMED FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407 DOCKET NO. 160300146 TYPE: SPACING ORDER NO. 407-1666

REPORT OF THE COMMISSION

            The Commission heard this matter on March 7, 2016, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to vacate Order No. 407-1452, and establish an approximate 1,617-acre drilling and spacing unit for portions of Sections 14, 23 and 26, Township 5 North, Range 66 West, 6^th P.M., and approve up to 22 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 (Operator No. 10311) (“Synergy” 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 February 19, 1992, the Commission entered Order No. 407-87 (amended August 20, 1993), which among other things, 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.

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

6.         On September 14, 2015, the Commission entered Order No. 407-1452, establishing an approximate 1280-acre drilling and spacing unit for the S½ of Section 14, Section 23, and the N½ of Section 26, Township 5 North, Range 66 West, 6th P.M., and allowing up to eighteen (18) horizontal wells within the unit for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.  Order No. 407-1452 also established that the productive interval of the any wellbore will be no closer than 460 feet from the unit boundaries, 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, and the wells will be drilled from no more than four (4) well pads within the unit, unless an exception is granted by the Director.

7.           On January 7, 2016, Synergy, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to vacate Order No. 407-1452,  establish an approximate 1,617-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 22 wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, with the productive interval of each wellbore to be located no closer than 460 feet from the unit boundary and no closer than 150 feet from the treated interval of any other wellbore producing from the same source of supply within the unit, unless an exception is granted by the Director: 

Township 5 North, Range 66 West, 6th P.M.

Section 14: S½, NW¼

Section 23: All

Section 26: N½

8.         On February 12, 2016, 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 David Baumbach, Senior Landman 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 Thomas Birmingham, Vice President of Exploration for Synergy, showed that the Niobrara and Codell Formations are present throughout the Application Lands, and that the Codell Formation is approximately 20 feet thick, and the Niobrara Formation is approximately 300 feet thick. 

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 Niobrara and Codell horizontal wells are estimated at 30 acres and that an approximate 1617-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 22 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 vacate Order No. 407-1452, and establish an approximate 1,617-acre drilling and spacing unit for the S½, NW¼ of Section 14, Section 23 and the N½ of Section 26, Township 5 North, Range 66 West, 6^th P.M., and approve up to 22 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.         Order No. 407-1452 is hereby vacated.

2.         An approximate 1,617-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 22 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, NW¼

Section 23: All

Section 26: N½

3.         The productive interval of the wellbore will be located no closer than 460 feet from the unit boundary and no closer than 150 feet from the treated interval of any other wellbore producing from the same source of supply within the unit, unless an exception is granted by the Director.

4.         A maximum of three new well pads will be allowed in 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 March, 2016, as of March 7, 2016.   

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By__________________________________

Julie Murphy, Secretary