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

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CAUSE NO. 407

 

DOCKET NO. 160600210

 

TYPE: SPACING

 

ORDER NO. 407-1709

 

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 vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-1125 for Section 21, Township 1 North, Range 66 West, 6th P.M., establish an approximate 320-acre drilling and spacing unit for the S˝ of Section 21, Township 1 North, Range 66 West, 6th P.M., and approve up to six horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations. 

 

FINDINGS

 

The Commission finds as follows:

 

1.            Ward Petroleum Corporation (“Ward”), 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 February 19, 1992 (amended August 20, 1993), the Commission entered Order No. 407-87, which, among other things, established 80-acre drilling and spacing units for production of oil, gas and assorted hydrocarbons from the Codell-Niobrara Formation, with the permitted well locations to be in accordance with Order No 407-1.  Section 21, Township 1 North, Range 66 West, 6th P.M is subject to Order No. 407-87 for the Codell and Niobrara Formations.

 

5.            On November 16, 1992, the Commission entered Order No. 499-15 which established 320-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, when commingled or dual-completed with the Dakota and/or “J” Sand Formations.  Section 21, Township 1 North, Range 66 West, 6th P.M is subject to Order No. 499-15 for the Codell and Niobrara Formations.

 

6.            On October 27, 2014, the Commission entered Order No. 407-1125, which maintained the units established by Order Nos. 407-87 and 499-15, established a 640-acre drilling and spacing unit for Section 21, Township 1 North, Range 66 West, 6th P.M., and authorized the drilling of up to four horizontal wells in such unit to the Codell and Niobrara Formations, with the producing interval of the wellbores 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 of the Commission.  Section 21, Township 1 North, Range 66 West, 6th P.M is subject to this Order for the Codell and Niobrara Formations.

 

7.            On April 7, 2016, Ward, by its attorneys, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No 407-1125 for Section 21, Township 1 North, Range 66 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations; 2) establish an approximate 320-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to six horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of the wellbores 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 1 North, Range 66 West, 6th P.M.
Section 21:  S˝

 

Applicant also requested to locate the surface facilities from the proposed wells on no more than one wellpad within the unit.

 

8.            On May 20, 2016, Ward, 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 Kent Craig, Landman-Rockies for Ward, showed that Ward holds oil and gas leasehold interests in the Application Lands.    

 

10.          Geologic testimony and exhibits submitted in support of the Application showed the Applicant requested the Commission take administrative notice of the geologic testimony in Order No. 407-1125. In Order No. 407-1125, the Commission found that geologic testimony and exhibits submitted in support of the application by Paul Fears, DJ Basin Geologist for Carrizo Oil & Gas Inc, showed that the Codell and Niobrara Formations are contiguous under the Application Lands; the Niobrara Formation averages approximately 440 feet in thickness, generally increasing towards the southwest by approximately 180 feet, and is a common source of supply; and the Codell Formation averages approximately 20 feet in thickness, generally increasing towards the northwest by approximately 10 feet, and is a common source of supply.

 

11.          Engineering testimony and exhibits submitted in support of the Application by Marshall Hall, Petroleum Engineer for Ward, showed that the drainage area for analogue horizontal Codell Formation wells are estimated at 90 acres and Niobrara Formation wells are estimated at 20 acres, and a 320-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Codell and Niobrara Formations in the Application Lands.  Such testimony also indicated establishment of the requested drilling and spacing unit, and approval of up to six horizontal wells therein, will prevent or assist in preventing waste by ensuring the pool as a whole may be efficiently and economically developed, without prejudice to the rights of other leasehold or mineral owners.

 

12.          The above-referenced testimony and exhibits show that the granting of the Application will allow more efficient reservoir drainage, prevent waste, will assure a greater ultimate recovery of oil and gas, and not violate correlative rights.

 

13.          Ward has agreed to be bound by the 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 an approximate 640-acre drilling and spacing unit established by Order No. 407-1125 for Section 21, Township 1 North, Range 66 West, 6th P.M., establish an approximate 320-acre drilling and spacing unit for the S˝ of Section 21, Township 1 North, Range 66 West, 6th P.M., and approve up to six horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations. 

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED, that with respect to the Application Lands,

 

1.            The approximate 640-acre drilling and spacing unit established by Order No. 407-1125 for Section 21, Township 1 North, Range 66 West, 6th P.M., for the production of oil, gas and associated hydrocarbons, is hereby vacated.

 

2.            An approximate 320-acre drilling and spacing unit is hereby established for the below-described lands, and a total of up to six horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.  

 

Township 1 North, Range 66 West, 6th P.M.
Section 21:  S˝

 

3.            The productive interval of the wellbores shall 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.  

 

4.            All proposed wells shall be located on no more than one multi-wellpad within the unit.

 

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 20th day of June, 2016, as of June 6, 2016. 

 

 

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By__________________________________

Julie Murphy, Secretary