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 NIOBRARA AND CODELL FORMATIONS, WATTENBERG  FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 160400175

 

TYPE:  SPACING

 

ORDER NO. 407-1683

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on April 18, 2016, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to establish an approximate 480-acre drilling and spacing unit for Sections 4 and 5, Township 4 North, Range 67 West, 6th P.M., and approve up to nine 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 April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule.   Sections 4 and 5, Township 4 North, Range 67 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.

 

5.         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 Niobrara and Codell Formations, with the permitted well locations in accordance with the provisions of Order No. 407-1.  Sections 4 and 5, Township 4 North, Range 67 West, 6th P.M., are subject to this Order.

 

6.         On February 18, 2016, Synergy, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 480-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve up to nine 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 each 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 within the unit, unless the Director grants an exception:

 

Township 4 North, Range 67 West, 6th P.M.

Section 4:        NW¼

Section 5:        N½

 

7.         On March 30, 2016, supplemented on April 6, 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.

 

            8.         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.      

 

9.         Geologic testimony and exhibits submitted in support of the Application by Thomas Birmingham, Vice President, Exploration for Synergy, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 290 to 335 feet thick, and is generally of uniform thickness throughout the Application Lands.  Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 13 to 18 feet thick, and is generally of uniform thickness throughout the Application Lands.

 

10.       Engineering testimony and exhibits submitted in support of the Application by Brett Hall, Reservoir Engineer for Synergy, showed that Synergy is planning to drill seven horizontal wells in the Niobrara formation and two horizontal wells in the Codell Formation.  Engineering testimony further showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 35 acres, the drainage area for analog horizontal Codell Formation wells is estimated at 81 acres, and an approximate 480-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by seven horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara Formation and two horizontal wells producing oil, gas and associated hydrocarbons from the Codell Formation.

 

11.       Applicant stated that the wells will be drilled from no more than two pads.

 

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 480-acre drilling and spacing unit for Sections 4 and 5, Township 4 North, Range 67 West, 6th P.M., and approve up to seven horizontal wells within the unit for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and and approve up to two horizontal wells within the unit for the production of oil, gas, and associated hydrocarbons from the Codell Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 480-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to seven horizontal wells within the unit are hereby approved for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, and a total of up to two horizontal wells within the unit are hereby approved for the production of oil, gas and associated hydrocarbons from the Codell Formation:

 

Township 4 North, Range 67 West, 6th P.M.

Section 4:        NW¼

Section 5:        N½

 

2.         The productive interval of each wellbore shall 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 within the unit, unless the Director grants an exception.

 

3.         The wells shall be drilled from no more than two pads, unless the Director grants an exception.

 

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 29th day of April, 2016, as of April 18, 2016.           

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

                                                                        By__________________________________

            Julie Murphy, Secretary