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

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CAUSE NO. 407 DOCKET NO. 161000435 TYPE: SPACING ORDER NO. 407-1817

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 1) vacate Order No. 407-857, and 2) establish an approximate 800-acre drilling and spacing unit for Sections 20 and 21, Township 7 North, Range 66 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 Niobrara and Codell Formations.

FINDINGS

The Commission finds as follows:

1.         Great Western Operating Company (Operator No. 10110) (“Great Western” or “Applicant”) 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 20 and 21, Township 7 North, Range 66 West, 6th P.M., are subject to this Rule for production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

5.         On September 16, 2013, the Commission entered Order No. 407-857 which, among other things, established an approximate 640-acre horizontal drilling and spacing unit for Section 20, Township 7 North, Range 66 West, 6th P.M., and approved up to fourteen (14) horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formations.

6.         On August 25, 2016, Great Western, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) vacate Order No. 407-857, and 2) establish an approximate 800-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 Niobrara and Codell 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, unless the Director grants an exception:

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

Section 20:      All

Section 21:      NW¼  

7.         On October 3, 2015, Great Western, 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.

            8.         Land testimony and exhibits submitted in support of the Application by Santiago Rodriguez, Senior Landman for Great Western, showed that Great Western holds oil and gas leasehold interests and has a right to drill in the Application Lands.        

9.         Geologic testimony and exhibits submitted in support of the Application by Willis Wilcoxon, Geologist for Great Western, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 292 to 299 feet thick, and is generally of uniform thickness throughout the Application Lands.  Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 20.5 to 21.5 feet thick, and is generally of uniform thickness throughout the Application Lands.

10.       Engineering testimony and exhibits submitted in support of the Application by Lewis S. Wandke, Senior Engineer for Petrotek Engineering Corporation, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 29 acres, and an approximate 800-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 Niobrara Formation.  Engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated at 98 acres, and an approximate 800-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 Formation.

11.       Applicant stated that the proposed wells would be located on no more than two multi-well pads, unless the Director grants an exception.

12.       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.

13.       Great Western agreed to be bound by 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: 1) vacate Order No. 407-857, and 2) establish an approximate 800-acre drilling and spacing unit for Sections 20 and 21, Township 7 North, Range 66 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 Niobrara and Codell Formations.

ORDER

IT IS HEREBY ORDERED:

1.         Order No. 407-857 is hereby vacated.

2.      An approximate 800-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 16 horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:

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

Section 20:      All

Section 21:      NW¼

3.         The productive interval of the wellbore will 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 the Director grants an exception.

4.         The proposed wells shall be located on no more than two multi-well pads, unless the Director grants an exception.

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 _____ day of October, 2016, as of October 24, 2016.        

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By__________________________________

Julie Murphy, Secretary