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, ADAMS COUNTY, COLORADO.

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CAUSE NO. 407

   

DOCKET NO. 161000471

 

TYPE: SPACING

 

ORDER NO.  407-1827

 

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 establish an approximate 640-acre drilling and spacing unit for the W½ of Sections 2 and 11, Township 1 South, Range 68 West, 6th P.M. and approve up to 10 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 September 9, 2016, Extraction, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 640-acre drilling and spacing unit for  the below-described lands (“Application Lands”) and approve up to 10 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 located no closer than 150 feet from the productive interval of any other wellbore in the drilling and spacing unit producing from the same formation, and permitted no closer than 100 feet from the drilling and spacing unit boundary and any drilling and spacing unit or Rule 318A.a.(4)D. horizontal wellbore spacing unit covering adjacent or cornering lands shall have the corresponding right to locate the productive interval of a wellbore no closer than 100 feet from the drilling and spacing unit boundary:

 

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

Section 2:      W½                

Section 11:    W½

 

6.            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.

 

7.            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.

 

8.            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.

 

9.            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 640-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically and effectively drained by 10 horizontal wells producing oil, gas and associated hydrocarbons from the benches of the Codell and Niobrara Formations.

 

10.          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 Rule 318A.a.(4)D.

 

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.          Extraction 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 640-acre drilling and spacing unit for the W½ of Sections 2 and 11, Township 1 South, Range 68 West, 6th P.M. and approve up to 10 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.            One approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 10 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 South, Range 68 West, 6th P.M.

Section 2:        W½                

Section 11:      W½  

 

2.            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.

 

3.            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 7th day of November, 2016, as of October 24, 2016.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

Julie Murphy, Secretary