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. 1608000364

 

TYPE: SPACING

 

ORDER NO. 407-1797

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on October 24, 2016, in the Hayes Student Center Ballroom, Northeaster Junior College, 100 College Avenue, Sterling, Colorado upon application of Ward Petroleum Corporation for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-1036 and pooled by Order No. 407-1077 for Section 25, Township 1 South, Range 67 West, 6th P.M., 2) establish an approximate 1,280-acre drilling and spacing unit for Sections 25 and 36, Township 1 South, Range 67 West, 6th P.M., and approve up to 12 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” or “Applicant”), Operator No. 10359, 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.

 

5.            On February 19, 1992 (amended August 20, 1993), the Commission entered Order 407-87, which, among other things, established 80-acre drilling and spacing units for production of oil, gas and assorted hydrocarbons from the Codell and Niobrara Formations, with the permitted well locations to be in accordance with Order No. 407-1. 

 

6.            On June 17, 2014, the Commission entered Order No. 407-1036, which established a 640-acre drilling and spacing unit for Section 25, Township 1 South, Range 67 West, 6th P.M., and authorized the drilling of up to 12 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. 

 

7.            On June 17, 2014, the Commission entered Order No. 407-1077, which pooled the 640-acre drilling and spacing unit for Section 25, Township 1 South, Range 67 West, 6th P.M., for production of oil, gas and associated hydrocarbons from horizontal wells to the Codell and Niobrara Formations. 

 

8.            On June 29, 2016, Ward, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) vacate the approximate 640-acre drilling and spacing unit established by Order No. 407-1036 and pooled by Order No. 407-1077 for Section 25, Township 1 South, Range 67 West, 6th P.M., 2) establish an approximate 1,280-acre drilling and spacing unit for below-described lands (“Application Lands”), and approve up to 12 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 wellbore 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, without exception being granted by the Director: 

 

Township 1 South, Range 67 West, 6th P.M.

Section 25:         All

Section 36:         All

 

Applicant also requested to locate the surface facilities from the proposed wells on no more than two well pads.

 

10.          On August 10, 2016 Ward, by its attorneys, and the Colorado State Land Board (“SLB”) agreed that the Application Lands contain State leased and/or unleased minerals.  As such, Ward agrees to submit a Communitization Agreement (“CA”) to the SLB prior to drilling operations that access any such State minerals.

 

11.          On August 15, 2016, the Application was protested by Tucson Water Company Inc, on behalf of certain of its members.  That protest was withdrawn on September 13, 2016.

  

12.          On August 30, 2016, Ward, by its attorneys, and the Bureau of Land Management (“BLM”) agreed that the Application Lands contain federal leased and/or unleased minerals.   As such, Ward agrees to submit a CA to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the wells drilled within the drilling and spacing unit.

 

13.          On October 3, 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. 

 

14.          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.    

 

15.          Geologic testimony and exhibits submitted in support of the Application by Jordan Reveille, Geologist for Ward, showed that the Niobrara Formation is a series of chalks, organic marls and limestones deposits and the Codell Formation is a middle to upper shoreface sandstone deposits. Testimony further showed that the total thickness of the Niobrara Formations ranges from approximately 345-380 feet thick in the eastern portion of the proposed spacing unit and the total thickness of the Codell Formation ranges from 14 to 16 feet thick, with the thickest area in the western portion of the proposed spacing unit.  The Codell and Niobrara Formations are present under the Application Lands and are a common source of supply.

 

16.          Engineering testimony and exhibits submitted in support of the Application by Kimberly Mitchell, Reservoir Engineer for Ward, showed that six average wells having a horizontal length of 9,800 would be necessary to drain the Codell formation in the proposed unit, and 32 average wells having a horizontal length of 9,800 foot each would be necessary to drain the Niobrara wells in the proposed unit, and a 1,280-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 or Niobrara Formations.  Such testimony also indicated the proposed drilling and spacing unit will prevent or assist in preventing waste by ensuring that the pool as a whole may be efficiently and economically developed, without prejudice to the rights of other leasehold or mineral owners.  

 

17.          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.

 

18.          Ward agreed to be bound by oral order of the Commission. 

 

19.          Based on the facts stated in the verified Application, having resolved the protest, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-1036 and pooled by Order No. 407-1077 for Section 25, Township 1 South, Range 67 West, 6th P.M., and 2) establish an approximate 1,280-acre drilling and spacing unit for Sections 25 and 36, Township 1 South, Range 67 West, 6th P.M., and approve up to 12 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.            The approximate 640-acre drilling and spacing unit established by Order No. 407-1036 and pooled by Order No. 407-1077 for Section 25, Township 1 South, Range 67 West, 6th P.M., is hereby vacated.

 

2.            An approximate 1,280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 12 horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of the wellbore 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, without exception being granted by the Director:

 

Township 1 South, Range 67 West, 6th P.M.

Section 25:         All

Section 36:         All

3.            All proposed wells shall be located from no more than two multi-well pads within the unit.

 

4.            Ward shall submit a CA to the SLB prior to drilling operations that access any such State minerals.

 

5.            Ward shall submit a CA to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the wells drilled within the drilling and spacing 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 4th day of November, 2016, as of October 24, 2016.                      

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Julie Murphy, Secretary