BEFORE THE OIL & 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, WELD COUNTY, COLORADO.

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CAUSE NO. 407

   

DOCKET NO. 160800351

 

TYPE: SPACING

 

ORDER NO.  407-1794

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on October 24, 2016, at the Northeastern Junior College, Hayes Student Center Ballroom, 100 College Avenue, Sterling, Colorado,, upon application for an order to vacate Order Nos. 407-87 and 499-15 as they pertain to Sections 28 and 33, Township 1 North, Range 68 West, 6th P.M., establish an approximate 1,280-acre drilling and spacing unit for Sections 28 and 33, Township 1 North, Range 68 West, 6th P.M.; and approve up to 20 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

 

            The Commission finds as follows:

 

1.            Extraction Oil and Gas, LLC, Operator No. 10459 (“Extraction” or “Applicant”) is an interested party in the subject matter of the above referenced hearing.

 

2.            Due notice of 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 the parties interested therein, and has authority 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.

 

5.         On April 16, 1991 (Corrected May 17, 1991), the Commission entered Order No. 407-66 which applies to a well or wells drilled, completed or recompleted in the Codell and/or Niobrara Formations, where the production is commingled or dually completed with the “J” Sand formations underlying the Codell-Niobrara Spaced Area.  This Order established (1) that the “J” Sand and Codell formations constitute common sources of supply of oil, gas and associated hydrocarbons, and (2) that the size of the voluntary unit for production from the Codell and/or Niobrara Formations not less than that prescribed by Cause No. 407.  Sections 28 and 33, Township 1 North, Range 68 West, 6th P.M. are subject to this Order for the Niobrara and Codell Formations.

 

6.         On February 19, 1992, the Commission entered Order No. 407-87, which established 80-acre drilling and spacing units for the production of oil and/or gas from the Codell-Niobrara Formations underlying lands in Adams, Boulder, Jefferson, Larimer, and Weld Counties. The Order allows for dual completion and downhole commingling as to both oil and gas in the Codell-Niobrara Formations. Sections 28 and 33, Township 1 North, Range 68 West, 6th P.M. are subject to this Order for the Niobrara and Codell Formations.

 

7.         On November 16, 1992, the Commission entered Order No. 499-15, which established 320-acre drilling and spacing units for certain lands for production from the Dakota Formation, to provide for procedures to obtain exceptions to the permitted well locations and to allow the recompletion and downhole commingling of production from the Dakota, "J" Sand, Codell, Niobrara, Sussex and Shannon Formations.  Sections 28 and 33, Township 1 North, Range 68 West, 6th P.M. are subject to this Order for the Codell and Niobrara Formations.

 

8.         The Carr #1 well (API #05-123-10017), Dump UU #28-5 well (API #05-123-25289), Dump UU #28-06D well (API #05-123-25277), Dump UU #28-11D well (API #05-123-25276), Dump UU #28-12 well (API #05-123-25290), Meikle #28-1 well (API #05-123-10665), Dump UU #28-16 well (API #05-123-25976), Dump UU #28-2 well (API #05-123-25679), and Dump UU #28-3 well (API #05-123-25678) are vertical wells within the Application Lands that currently produce from the Codell and Niobrara Formations. Applicant is the operator of these wells and will plug and abandon the wells pursuant to the Commission Rules as soon as production is established in the requested drilling and spacing unit.

 

9.         On June 30, 2016, Extraction, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to vacate Order Nos. 407-87 and 499-15 as they pertain to  Sections 28 and 33, Township 1 North, Range 68 West, 6th P.M.; establish an approximate 1,280-acre drilling and spacing unit for  the below-described lands (“Application Lands”) and approve up to 20 horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of each wellbore be no closer than 150 feet from the productive interval of any other wellbore producing from the Codell and Niobrara Formations, and no closer than 100 feet from a unit boundary, unless such boundary abuts or corners lands for which the Commission has not at the time of the drilling permit application granted the right to locate the productive interval of the wellbore no closer than 100 feet from a unit boundary.  If the Commission has not at the time of the drilling permit application granted to the owners of the adjacent or cornering lands the right to locate the productive interval of the wellbore no closer than 100 feet from a unit boundary, then the productive interval of the wellbore shall be located no closer than 300 feet from the unit boundary, unless an exception is granted by the Director:

 

Township 1 North, Range 68 West, 6th P.M.

Section 28:      All

Section 33:      All

 

10.          On October 3, 2016, Extraction, 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 testimony and exhibits were submitted in support of the Application.

 

11.          Land testimony and exhibits submitted in support of the Application by Jason Lowrey, Senior Landman for Extraction, showed that Extraction holds oil and gas leasehold interests and has a right to drill in the Application Lands.

 

12.          Geologic testimony and exhibits submitted in support of the Application by Matt Volkmar, Petroleum Engineer for Extraction showed that the Niobrara and Codell Formations are present throughout the Application Lands, are approximately 365 to 505 feet thick from the top of the Niobrara through the base of the Codell.

 

13.          Engineering testimony and exhibits submitted in support of the Application by Boyd McMaster, Petroleum Engineer for Extraction, showed that the drainage area for analogous horizontal Codell and Niobrara Formation wells are estimated at 148-244 acres and 1.5-33.5 acres, respectively, and an approximate 1280-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically and effectively drained by 20 horizontal wells producing oil, gas and associated hydrocarbons from the benches of the Codell and Niobrara Formations.

 

14.          On October 14, 2016, Extraction, by its attorneys, filed with the Commission an Amended Request for Recommendation of Approval of Application Without a Hearing to request an enlargement of the Application’s requested unit boundary setback from 100 feet to 460 feet consistent with Commission Rule 318A.a.(4)D.

 

15.          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.

 

16.          Extraction agreed to be bound by oral order of the Commission.

 

17.          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 Order Nos. 407-87 and 499-15 as they pertain to Sections 28 and 33, Township 1 North, Range 68 West, 6th P.M.; establish an approximate 1,280-acre drilling and spacing unit for Sections 28 and 33, Township 1 North, Range 68 West, 6th P.M.; and approve up to 20 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

 

ORDER

 

            IT IS HEREBY ORDERED:

 

1.            Order Nos. 407-87 and 499-15, as they pertain to Sections 28 and 33, Township 1 North, Range 68 West, 6th P.M., are hereby vacated

 

2.            One approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 20 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 68 West, 6th P.M.

Section 28:      All

Section 33:      All

 

3.            The productive interval of the wellbore shall be no closer than 150 feet from the productive interval of any other wellbore producing from the Niobrara and Codell Formations, and no closer than 460 feet from a unit boundary, unless an exception is granted by the Director.

 

4.            The wells will be drilled from no more than one well pad within the unit, 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 November, 2016, as of October 24, 2016.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

Julie Murphy, Secretary