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 FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO

 

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CAUSE NO. 407

 

DOCKET NO. 161000438

 

TYPE: EXCEPTION LOCATION

 

ORDER 407-1836

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on December 12, 2016, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) modify Order No. 535-35 to allow a 150-foot setback from the north and south unit boundaries and a 600-foot setback from the east and west unit boundaries for the approximate 640-acre drilling and spacing unit established for Section 16, Township 2 North, Range 63 West, 6th P.M., and 2) approve an additional 15 horizontal wells for a total of 16 horizontal wells in the unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Verdad Oil & Gas Corporation (Operator No. 10485) (“Verdad” 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 June 27, 2011, the Commission entered Order No. 535-35, which established an approximate 640-acre drilling and spacing unit for the Application Lands for production of oil, gas and associated hydrocarbons from the Niobrara Formation, and approved one horizontal well within the unit, with the treated interval of the authorized well to be no closer than 600 feet from the unit boundaries, without exception being granted by the Director

 

5.         On August 25, 2016, Verdad, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S., for an order to:  1) modify Order No. 535-35 to allow a 150-foot setback from the north and south unit boundaries and a 600-foot setback from the east and west unit boundaries for the approximate 640-acre drilling and spacing unit established for the below described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) approve an additional 15 horizontal wells for a total of 16 wells in the unit, with the wells to be located no closer than 150 feet from the treated interval of another well producing from the same formation, unless an exception is granted by the Director:

 

Township 2 North, Range 63 West, 6th P.M.

Section 16:      All

 

6.         On November 21, 2016, Verdad, 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.

 

7.         Land testimony and exhibits submitted in support of the Application by Phillip W. Davis, Vice President of Land for Verdad, showed that Verdad 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 Dr. Steven M. Goolsby, Senior Exploration Geologist for Foreland Resources, showed that the Niobrara Formation is present throughout the Application Lands.  Geologic testimony further showed that the Niobrara formation is approximately 295 to 315 feet thick, and is generally of uniform thickness throughout the Application Lands. 

 

9.         Engineering testimony and exhibits submitted in support of the Application by R. Arthur Beecherl, IV, Vice-President of Operations for Verdad, demonstrated that the estimated drainage area of analogue horizontal wells in the Niobrara Formation is 53 acres, and an approximate 640-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 further showed that the requested setback of 150 feet from the north and south boundaries of the unit and 600 feet from the east and west boundaries of the unit established for the Application Lands, and locating the wells no closer than 150 feet from the treated interval of another well producing from the same formation, will promote efficient drainage, protect correlative rights, and prevent waste.

 

10.       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.

 

11.       Verdad agreed to be bound by oral order of the Commission. 

 

12.       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 modify Order No. 535-35 to: 1) allow a 150-foot setback from the north and south unit boundaries and a 600-foot setback from the east and west unit boundaries for the approximate 640-acre drilling and spacing unit established for Section 16, Township 2 North, Range 63 West, 6th P.M., and 2) approve an additional 15 horizontal wells for a total of 16 horizontal wells in the unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Order No. 535-35 is hereby modified to allow the productive interval of any permitted well to be located no closer than 150 feet from the north and south unit boundaries and 600-hundred feet from the east and west boundaries of the drilling and spacing unit established for the below described lands, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

Township 2 North, Range 63 West, 6th P.M.

Section 16:      All

 

2.         An additional 15 horizontal wells are hereby approved for a total of 16 horizontal wells in the unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

3.         The wells shall be located no closer than 150 feet from the treated interval of another well producing from the same formation, 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 15th day of December, 2016, as of December 12, 2016.

           

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By: ____________________________________     

                 Julie Murphy, Secretary