BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE APPLICATION OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 160600257
TYPE: SPACING
ORDER NO. 407-1740 |
REPORT OF THE COMMISSION
The Commission heard this matter on June 6, 2016, at the Colorado Oil and Gas Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) modify Order No. 407-560 to include the Codell Formation and approve an additional 19 horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 407-560, for Section 26, Township 4 North, Range 63 West, 6th P.M.; 2) modify Order Nos. 407-528 and 535-103 to include the Codell Formation and approve an additional 18 horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order Nos. 407-528 and 535-103, for Section 10, Township 4 North, Range 63 West, 6th P.M.; 3) modify Order Nos. 407-528, 535-103, and 407-876 to include the Codell Formation and approve an additional 10 horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order Nos. 407-528, 535-103, and 407-876, for Section 14, Township 4 North, Range 63 West, 6th P.M; 4) approve an additional six horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 407-997, for Section 22, Township 4 North, Range 63 West, 6th P.M.; 5) approve an additional six horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 407-998, for Section 24, Township 4 North, Range 63 West, 6th P.M.; and 6) approve an additional six horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 407-1007, for Section 28, Township 4 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.
FINDINGS
The Commission finds as follows:
1. Bonanza Creek Energy, Inc. (“Bonanza” 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. Sections 10, 14, 22, 24, 26, and 28, Township 4 North, Range 63 West, 6th P.M. are subject to this Rule for the Codell and Niobrara Formations.
5. On June 27, 2011 (corrected on 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 26, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and approved up to one horizontal well within the unit.
6. On December 12, 2011, the Commission entered Order Nos. 407-528 and 535-103 which, among other things, established approximate 640-acre drilling and spacing units for Sections 10 and 14, Township 4 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and approved up to two horizontal wells within each unit.
7. On October 28, 2013, the Commission entered Order No. 407-876 which approved up to 10 horizontal wells within the approximate 640-acre drilling and spacing unit established for Section 14, Township 4 North, Range 63 West, 6th P.M. for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
8. On April 28, 2014, the Commission entered Order No. 407-997 which established an approximate 640-acre drilling and spacing unit for Section 22, Township 4 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations and approved up to 14 horizontal wells within the proposed unit.
9. On April 28, 2014, the Commission entered Order No. 407-998 which established an approximate 640-acre drilling and spacing unit for Section 24, Township 4 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations, and approved up to 14 horizontal wells within the unit.
10. On April 28, 2014, the Commission entered Order No. 407-1007 which, among other things, established an approximate 640-acre drilling and spacing unit for Section 28, Township 4 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formation, and approved 14 horizontal wells within the unit.
11. On March 15, 2016 (amended April 27, 2016 and May 2, 2016), Bonanza Creek, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to: 1) modify Order No. 407-560 to include the Codell Formation and approve an additional 19 horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 407-560, for Section 26, Township 4 North, Range 63 West, 6th P.M.; 2) modify Order Nos. 407-528 and 535-103 to include the Codell Formation and approve an additional 18 horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 407-528 and 535-103, for Section 10, Township 4 North, Range 63 West, 6th P.M.; 3) modify Order Nos. 407-528, 535-103, and 407-876 to include the Codell Formation and approve an additional 10 horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order Nos. 407-528, 535-103, and 407-876, for Section 14, Township 4 North, Range 63 West, 6th P.M; 4) approve an additional six horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 407-997, for Section 22, Township 4 North, Range 63 West, 6th P.M.; 5) approve an additional six horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 407-998, for Section 24, Township 4 North, Range 63 West, 6th P.M.; and 6) approve an additional six horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 407-1007, for Section 28, Township 4 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.
Township 4 North, Range 63 West, 6th P.M.
Section 10: All
Section 14: All
Section 22: All
Section 24: All
Section 26: All
Section 28: All
Applicant requested that all wells proposed under this Order be located on no more than four wellpads within each respective drilling and spacing unit.
12. On March 29, 2016, the Department of Energy, Western Area Power Administration (“Western”) submitted a Rule 510 statement requesting that the Commission include restrictions as conditions of its approval of the application. The restrictions included: 1) no drilling or well pad site located within Western’s transmission line easements or within any access or spur roads used by Western to access the power line; 2) no drilling or pad sites within 200 feet of the property boundary of the Willoby Substation in Section 10; 3) to ensure safety of all personnel and facilities for all entities, Western asks that no drilling or well pads by located within 100 feet of the centerline of the electric transmission line; 4) Western’s access to its facilities shall be maintained at all times and no access or spur roads shall be blocked, damaged, or otherwise occupied so that Western’s personnel cannot access the power line and substation facilities; 5) no seismic or other similar testing shall be conducted within Western’s easements or within 200 feet of the property line for the substation; and 6) National Electric Safety Code (NESC) clearances shall be maintained during all operations.
13. On May 16, 2016, Bonanza, 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.
14. Land Testimony and exhibits submitted in support of the Application by Maxwell Faith, CPL, Land Manager for Bonanza, showed that Bonanza holds oil and gas leasehold interests and has a right to drill in the Application Lands.
15. Geologic Testimony and exhibits submitted in support of the Application by Jeffrey Schroeder, Development Geologist for Bonanza, showed that the Codell and Niobrara Formations are present throughout the Application Lands, the Niobrara Formation ranges from approximately 260 feet to 270 feet in thickness, and the Codell Formation ranges from approximately 10 feet to 15 feet in thickness, and are both generally of uniform thickness throughout the Application Lands. Further testimony showed that the Niobrara Formation is a sequence of chalks, marls and limestones and the Codell Formation consists mainly of fine-grained sandstones and silty shales.
16. Engineering Testimony and exhibits submitted in support of the Application by Joel Dill, P.E., Engineer for Bonanza, showed the average drainage area for analog horizontal Niobrara Formation wells is estimated at 40 acres, and the average drainage area for analog Codell Formation wells is estimated at 143 acres, and an approximate 640-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by eight horizontal wells producing oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
17. On May 23, 2016, Bonanza indicated its approval of Western’s conditions with the inclusion of the following language to Condition 6: “To the extent directly applicable to any operations performed by Bonanza Creek.”
18. 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.
19. Bonanza agreed to be bound by oral order of the Commission.
20. 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) modify Order No. 407-560 to include the Codell Formation and approve an additional 19 horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 407-560, for Section 26, Township 4 North, Range 63 West, 6th P.M.; 2) modify Order Nos. 407-528 and 535-103 to include the Codell Formation and approve an additional 18 horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order Nos. 407-528 and 535-103, for Section 10, Township 4 North, Range 63 West, 6th P.M.; 3) modify Order Nos. 407-528, 535-103, and 407-876 to include the Codell Formation and approve an additional 10 horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order Nos. 407-528, 535-103, and 407-876, for Section 14, Township 4 North, Range 63 West, 6th P.M; 4) approve an additional six horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 407-997, for Section 22, Township 4 North, Range 63 West, 6th P.M.; 5) approve an additional six horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 407-998, for Section 24, Township 4 North, Range 63 West, 6th P.M.; and 6) approve an additional six horizontal wells, for a total of up to 20 horizontal wells within an approximate 640-acre drilling and spacing unit established by Order No. 407-1007, for Section 28, Township 4 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.
ORDER
IT IS HEREBY ORDERED:
1. Order No. 407-560 is hereby modified to include the Codell Formation and to approve an additional 19 horizontal wells, for a total of up to 20 horizontal wells, within an existing approximate 640-acre drilling and spacing unit established by Order No. 407-560, for the below described lands, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations;
Township 4 North, Range 63 West, 6th P.M.
Section 26: All
2. Order Nos. 407-528 and 535-103 are hereby modified to include the Codell Formation and approve an additional 18 horizontal wells, for a total of up to 20 horizontal wells, within the existing approximate 640-acre drilling and spacing unit established by Order Nos. 407-528 and 535-103, for the below-described lands, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations;
Township 4 North, Range 63 West, 6th P.M.
Section 10: All
3. Order Nos. 407-528, 535-103, and 407-876 are hereby modified to include the Codell Formation and approve an additional 10 horizontal wells, for a total of up to 20 horizontal wells, within the existing approximate 640-acre drilling and spacing unit established by Order Nos. 407-528, 535-103, and 407-876 for the below-described lands, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations;
Township 4 North, Range 63 West, 6th P.M.
Section 14: All
4. An additional six horizontal wells, for a total of up to 20 horizontal wells, are hereby approved within the existing approximate 640-acre drilling and spacing unit established by Order No. 407-997 for the below-described lands, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations;
Township 4 North, Range 63 West, 6th P.M.
Section 22: All
5. An additional six horizontal wells, for a total of up to 20 horizontal wells, are hereby approved within the existing approximate 640-acre drilling and spacing unit established by Order No. 407-998 for the below-described lands, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations;
Township 4 North, Range 63 West, 6th P.M.
Section 24: All
6. An additional six horizontal wells, for a total of up to 20 horizontal wells, are hereby approved within the existing approximate 640-acre drilling and spacing unit established by Order No. 407-1007 for the below-described lands, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations; and
Township 4 North, Range 63 West, 6th P.M.
Section 28: All
7. The productive interval of the proposed wellbores for the horizontal wells to be drilled under this Application shall be located not less than 460 feet from the boundaries of each drilling and spacing unit, and not less than 150 feet from the productive interval of any other well producing from the Codell and Niobrara Formations, without exception being granted by the Director.
8. All wells proposed under this Order shall be located on no more than four wellpads within each respective drilling and spacing unit.
9. No drilling or well pad site located within Western’s transmission line easements or within any access or spur roads used by Western to access the power line.
10. No drilling or pad sites within 200 feet of the property boundary of the Willoby Substation in Section 10, Township 4 North, Range 63 West, 6th P.M..
11. To ensure safety of all personnel and facilities for all entities, Western asks that no drilling or well pads by located within 100 feet of the centerline of the electric transmission line.
12. Western’s access to its facilities shall be maintained at all times. No access or spur roads shall be blocked, damaged, or otherwise occupied so that Western’s personnel cannot access the power line and substation facilities.
13. No seismic or other similar testing shall be conducted within Western’s easements or within 200 feet of the property line for the substation.
14. To the extent directly applicable to any operations performed by Bonanza Creek, National Electric Safety Code (NESC) clearances shall be maintained during all operations.
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