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. 160400178
TYPE: SPACING
ORDER NO. 407-1703
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REPORT OF THE COMMISSION
The Commission heard this matter on June 6, 2016, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) establish an approximate 1280-acre drilling and spacing unit for Sections 4 and 5, Township 3 North, Range 62 West, 6th P.M., and approve up to 16 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 1280-acre drilling and spacing unit for Sections 4 and 5, Township 3 North, Range 62 West, 6th P.M., and approve up to four horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Codell Formation.
FINDINGS
The Commission finds as follows:
1. Bill Barrett Corporation (Operator No. 10071) (“BBC” 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 3 North, Range 62 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.
5. On February 18, 2016, BBC, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve up to 16 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, 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; and 2) establish an approximate 1280-acre drilling and spacing unit for the Application Lands and approve up to four horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell Formation, 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 3 North, Range 62 West, 6th P.M.
Section 4: All
Section 5: All
6. On March 28, 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.
7. On April 4, 2016, Kerr-McGee Oil & Gas Onshore LP filed a Protest. On April 19, 2016, Kerr-McGee Oil & Gas Onshore LP withdrew its Protest.
8. On April 4, 2016, Bonanza Creek Energy, Inc., and Bonanza Creek Energy Operating Company, LLC jointly “Bonanza Creek”) filed a Protest. On April 25, 2016, Bonanza Creek filed an Amended Protest. The Bonanza Creek protest was withdrawn on April 27, 2016.
9. Land testimony and exhibits submitted in support of the Application by Bryce Doty, Landman for BBC, showed that BBC 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 Scott J. Hampton, Geologist 2 for BBC, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 262 to 264 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 8 to 9.5 feet thick, and is generally of uniform thickness throughout the Application Lands.
11. Engineering testimony and exhibits submitted in support of the Application by Sean Stewart, Senior Reservoir Engineer for BBC, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 163 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 16 horizontal wells producing oil, gas and associated hydrocarbons from three separate producing zones in the Niobrara Formation. Engineering testimony further showed that the drainage area for analog horizontal Codell Formation wells is estimated at 212 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 four horizontal wells producing oil, gas and associated hydrocarbons from the Codell Formation.
12. Applicant stated that the wells will be drilled from no more than four multi-well pads.
13. 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.
14. BBC agreed to be bound by oral order of the Commission.
15. Based on the facts stated in the verified Application, all protests having been withdrawn, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to: 1) establish an approximate 1280-acre drilling and spacing unit for Sections 4 and 5, Township 3 North, Range 62 West, 6th P.M., and approve up to 16 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 1280-acre drilling and spacing unit for Sections 4 and 5, Township 3 North, Range 62 West, 6th P.M., and approve up to four 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 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 16 horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:
Township 3 North, Range 62 West, 6th P.M.
Section 4: All
Section 5: All
2. An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 16 horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell Formation:
Township 3 North, Range 62 West, 6th P.M.
Section 4: All
Section 5: All
3. 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.
4. The wells shall be drilled from no more than four multi-well 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 27th day of June, 2016, as of June 6, 2016.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Julie Murphy, Secretary