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-NIOBRARA FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO

 

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CAUSE NO.  407

 

DOCKET NO. 160800359

 

TYPE:  SPACING

 

ORDER NO. 407-1781

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on August 29, 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 1,280-acre drilling and spacing unit for Section 12, Township 7 North, Range 66 West, 6th P.M. and Section 7, Township 7 North, Range 65 West, 6th P.M. and approve up to 16 horizontal wells within the drilling and spacing unit, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         DJ Resources, Inc. (“DJ Resources” or “Applicant”), as applicant in the above-referenced matter, 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, Township 7 North, Range 66 West, 6th P.M. and Section 7, Township 7 North, Range 65 West, 6th P.M. are subject to this Rule for the Codell-Niobrara Formation.

 

5.         On June 30, 2016, DJ Resources, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 16 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, with the productive interval of the wellbore to be located no closer than 460 feet from the unit boundaries, no closer than 150 feet from the productive interval of any other wellbore producing in the Codell-Niobrara Formation, unless an exception is granted by the Director:

 

 

Township 7 North, Range 66 West, 6th P.M.

Section 12:        All

 

Township 7 North, Range 65 West, 6th P.M.

Section 7:        All

 

Applicant states that the proposed wells shall be located on no more than two multi-well pads within the drilling and spacing unit, subject to Rule 318A, without exception being granted by the Director.

 

7.         On August 8, 2016, DJ Resources, 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 Sharon Crumb, Senior Landman for DJ Resources, showed DJ Resources holds oil and gas leasehold interests and has a right to drill in the Application Lands.

 

9.         Geology testimony and exhibits submitted in support of the Application by Jack Rosenthal, Geoscience Supervisor for DJ Resources, showed that the Niobrara and Codell Formations are present throughout the Application Lands, that the Niobrara Formation has a range of approximately 298 to 306 feet thick, that the Codell Formation is approximately 23 feet thick, and that both Formations are generally of uniform thickness throughout the Application Lands. 

 

10.       Engineering testimony and exhibits filed in support of the Application by Dominic J. Bazile II, Executive Vice President and Chief Operating Officer for DJ Resources, showed that the drainage area for analog horizontal Niobrara Formation wells range from 56 to 179 acres and the drainage area for analog horizontal Codell Formation wells range from 216 to 402 acres, 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.       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.

12.       DJ Resources has agreed to be bound by oral order of the Commission.

 

13.       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 1,280-acre drilling and spacing unit for Section 12, Township 7 North, Range 66 West, 6th P.M. and Section 7, Township 7 North, Range 65 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 Codell-Niobrara Formation.

 

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         One approximate 1280-acre drilling and spacing unit is hereby established for the below-described lands, and up to 16 horizontal wells are hereby approved within the unit, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, with the productive interval of any wellbore shall be located no closer than 150 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:

 

Township 7 North, Range 66 West, 6th P.M.

Section 12:        All

 

Township 7 North, Range 65 West, 6th P.M.

Section 7:        All

 

2.         The proposed wells shall be located on no more than two multi-well pads within the drilling and spacing unit, subject to Rule 318A, 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 1st day of September, 2016, as of August 29, 2016.

 

                                                            OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

 

 

 

                                                            By____________________________________       

                                                                        Julie Murphy, Secretary