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. 151200723
ORDER NO. 407-1677
TYPE: SPACING |
REPORT OF THE COMMISSION
The Commission heard this matter on April 18, 2016, at Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) vacate the approximate 640-acre drilling and spacing unit established by Order No. 407-560 for Section 32, Township 4 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) establish an approximate 1,280-acre drilling and spacing unit for Sections 31 and 32, Township 4 North, Range 62 West, 6th P.M., and approve up to 16 horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 3) establish an approximate 1,280-acre drilling and spacing unit for Sections 31 and 32, Township 4 North, Range 62 West, 6th P.M. and approve up to four horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Codell Formation.
FINDINGS
The Commission finds as follows:
1. Bill Barrett Corporation (“BBC” 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 June 27, 2011 (corrected February 14, 2012), the Commission entered Order No. 407-560 which, among other things, established an approximate 640-acre drilling and spacing unit for Section 32, Township 4 North, Range 62 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.
6. On October 8, 2015, BBC, by its attorneys, filed with the Commission a verified application (“Application”) for an order to: (1) vacate the approximate 640-acre drilling and spacing unit established by Order No. 407-560 for Section 32, Township 4 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to 16 horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 3) establish an approximate 1,280-acre drilling and spacing unit for the Application Lands, and approve up to four horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Codell Formation; and 4) require 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:
Township 4 North, Range 62 West, 6th P.M.
Section 31: All
Section 32: All
7. Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than five multi-well pads on the surface of the Application Lands, or on adjacent lands with consent of the landowner, without exception being granted by the Director.
8. On January 5, 2016, BBC, 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. On January 12, 2016, a protest was filed by Kerr-McGee Oil & Gas Onshore LP (“Kerr-McGee” or “Protestant”), alleging it owned 50% of the proposed unit and that the establishment of the 1280-acre drilling and spacing unit would violate its correlative rights. On April 18, 2016, Kerr-McGee withdrew the protest.
10. On April 5, 2016, Anadarko Land Corporation filed a Rule 510 statement alleging that there are no compelling statutory considerations requiring the establishment of the 1280-acre drilling and spacing unit.
11. Testimony and exhibits submitted in support of the Application by Bryce Doty, Landman for BBC, showed that BBC owns substantial leasehold interests in the Application Lands.
12. Testimony and exhibits submitted in support of the Application by Scott Hampton, Geologist for BBC, showed that the thickness of the Niobrara Formation underlying the Application Lands ranges from approximately 260 to 263 feet thick, and the thickness of the Codell Formation underlying the Application Lands is approximately 8 to 10 feet thick. Further testimony showed that the Niobrara Formation is a sequence of chalks, marls and limestones and is a common source of supply, while the Codell Formation is a very fine sandstone/siltstone and is also a common source of supply.
13. Engineering testimony and exhibits submitted in support of the Application by Sean Stewart, Senior Reservoir Engineer for BBC, showed that drilling and completing horizontal wells within the Codell and Niobrara Formations underlying the Application Lands is the most efficient and economic method of developing the resource. Testimony concluded a 1,280-acre unit would accommodate up to 16 horizontal Niobrara wells and four horizontal Codell wells, while protecting correlative rights of adjacent mineral owners.
14. 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.
15. BBC agrees to be bound by oral order of the Commission.
16. Based on the facts stated in the verified Application, having resolved all protests, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order to: 1) vacate the approximate 640-acre drilling and spacing unit established by Order No. 407-560 for Section 32, Township 4 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; (2) establish an approximate 1,280-acre drilling and spacing unit for Sections 31 and 32, Township 4 North, Range 62 West, 6th P.M., and approve up to 16 horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and (3) establish an approximate 1,280-acre drilling and spacing unit for Sections 31 and 32, Township 4 North, Range 62 West, 6th P.M. and approve up to four horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Codell Formation.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 640-acre drilling and spacing unit established by Order No. 407-560 for Section 32, Township 4 North, Range 62 West, 6th P.M., is hereby vacated.
2. An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and up to sixteen horizontal wells within the unit, are hereby approved, 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, unless an exception is granted by the Director:
Township 4 North, Range 62 West, 6th P.M.
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Section 31: |
All |
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Section 32: |
All |
3. An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and up to four horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell 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, unless an exception is granted by the Director:
Township 4 North, Range 62 West, 6th P.M.
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Section 31: |
All |
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Section 32: |
All |
4. All wells permitted under this Order shall be drilled from no more than five multi-well pads within the unit, subject to Rule 318A, 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 the 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 2nd day of May, 2016, as of April 18, 2016.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Julie Murphy, Secretary