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. 160400189

 

ORDER NO. 407-1693

 

TYPE: SPACING

CORRECTED

DRAFT 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: 1) amend an approximate 1280-acre drilling and spacing unit established by Order No. 407-583 for portions of Sections 12 and 13, Township 6 North, Range 61 West, 6th P.M. to include the Codell Formation; and 2) approve up to 28 horizontal wells within the unit, with 24 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 from the Niobrara and Codell Formations.

 

The Commission heard this matter again on August 29, 2016, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon the Motion to Correct and Confirm this Order as to previously unnoticed parties.

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.   Section 12 and 13, Township 6 North, Range 61 West, 6th P.M. are subject to this Rule for the Niobrara and Codell Formations.

5.         On July 8, 2010, the Commission entered Order No. 407-583 which, among other things, established nine approximate 640-acre drilling and spacing units and one approximate 1280-acre drilling and spacing unit for certain lands, including the Application Lands, and approved up to four horizontal wells in each unit, with bottomhole locations of any permitted well to be no closer than 460 feet from the boundary of the unit for the production of oil and gas and associated hydrocarbons from the Niobrara Formation.

6.         On February 18, 2016, Caerus, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to amend Order No. 407-583 with respect to the below-described lands (“Application Lands”) and to approve up to 28 horizontal wells within the unit, with 24 horizontal wells to be drilled to the Niobrara Formation and four horizontal wells to be drilled to the Codell Formation, the productive interval of the wellbore to be located no closer than 460 feet from the unit boundaries, no closer than 100 feet from the productive interval of any other wellbore located within the unit, without exception being granted by the Director:

Township 6 North, Range 61 West, 6th P.M.

Section 12:      All       

Section 13:      All       

 

7.         On March 28, 2016, Caerus, by its attorneys, filed with the Commission a written request to approve the Application based on the merits of the verified Application, the settlement terms 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 Jeff Grisham, Landman for Caerus, showed that Caerus 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 Lisa Gusek, Petroleum Geologist for Caerus, showed that the Niobrara and Codell Formations are present throughout the Application Lands, that the Niobrara Formation is approximately 300 feet thick, that the Codell Formation is approximately 8 feet thick, and that both Formations are generally of uniform thickness throughout the Application Lands.

10.       Engineering testimony and exhibits submitted in support of the Application by James Bautsch, Reservoir Engineer for Caerus, showed that the drainage area for analog horizontal Niobrara and Codell Formations wells are estimated at 76.5 acres per mile of lateral for horizontal wells drilled in the A, B, and C benches of the Niobrara Formation and the Codell Formation, and an appropriate 1280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.

11.       After the April 18, 2016 Order was entered, Caerus discovered that certain interested parties were not properly served as “Interested Parties” when the Spacing Application was approved by this Commission at the April 18, 2016, hearing.

13.       On May 19, 2016, Caerus, by its attorneys, filed a Motion to Correct and Confirm this Order pursuant to the terms of this Order and C.R.C.P. 59 to correct and confirm Order 407-1693, to recently discovered interested parties. 

14.       On June 27, 2016, Caerus, by its attorneys, filed with the Commission a written request to grant the Motion. Sworn written testimony and exhibits were submitted in support of the Motion.

15.       Land testimony and exhibits submitted in support of the Application by Jeff Grisham, Landman for Caerus, showed that the four previously unnoticed interested parties, Buffalo Royalties, LLC, Bonanza Creek Energy Inc., Vecta Oil and Gas Ltd, and Foreland Investments LP were served with a copy of the Spacing Application and Motion and have received notice of the hearing on this matter at least 35 days prior to the July 19, 2016 hearing date.

16.       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.

17.       Caerus 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: 1) amend an approximate 1280-acre drilling and spacing unit established by Order No. 407-583 for portions of Sections 12 and 13, Township 6 North, Range 61 West, 6th P.M. to include the Codell Formation; and 2) approve up to 28 horizontal wells within the unit, with 24 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 from the Niobrara and Codell Formations.

ORDER

IT IS HEREBY ORDERED:

1.         The approximate 1280-acre drilling and spacing unit established by Order No. 407-583 for portions of Sections 12 and 13, Township 6 North, Range 61 West, 6th P.M., is hereby amended to include the Codell Formation.

2.         A total of up to 28 horizontal wells within the unit, with 24 horizontal wells to the Niobrara Formation, and four horizontal wells to the Codell Formation, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:

Township 6 North, Range 61 West, 6th P.M.

Section 12:      All       

Section 13:      All       

3.         The productive interval of any wellbore shall be located no closer than 100 feet from any other wellbore producing from the Codell and Niobrara Formations, and no closer than 460 feet from the unit boundaries, unless an exception is 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, 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 3rd day of May, 2016, as of April 18, 2016.

CORRECTED this ___ of September, 2016, as of August 29, 2016.

 

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

By____________________________________

Julie Murphy, Secretary