BEFORE THE OIL AND GAS CONSERVATION COMMISSION                        

OF THE STATE OF COLORADO

 

IN THE MATTER OF PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE CODELL-NIOBRARA FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 161200549

 

TYPE:  ADDITIONAL WELLS

 

ORDER NO. 407-1841

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on December 12, 2016, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon an application for an order to approve an additional 15 horizontal wells, for a total of 20 wells, within the approximate 640-acre drilling and spacing unit established by Order No. 407-1126 for Section 18, Township 4 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, and revert the setbacks from unit boundaries from 600 feet to 460 feet.

 

FINDINGS

 

            The Commission finds as follows:

 

1.            Bonanza Creek Energy Operating Co., LLC (“Bonanza” or “Applicant”), Operator #8960, 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 herein, 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 October 27, 2014, the Commission entered Order No. 407-1126 which, among other things, established an approximate 640-acre drilling and spacing unit for the Application Lands, and approved the drilling of up to five 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 located no closer than 600 feet from the unit boundaries, and an inter-well setback not less than 150 feet from the productive interval of any other Codell or Niobrara permitted or producing within the unit, without exception from the Director.

 

6.            On October 13, 2016, Bonanza, by its attorneys, filed a verified application pursuant to §34-60-116, C.R.S., for an order to approve an additional 15 horizontal wells, for a total of 20 wells, within the approximate 640-acre drilling and spacing unit established by Order No. 407-1126 for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, and revert the setbacks from unit boundaries from 600 feet to 460 feet.

 

Township 4 North, Range 62 West, 6th P.M.

  Section 18:

All

 

Applicant states that the proposed wells shall be drilled on the surface of the unit, subject to Rule 318.A.

 

7.            On November 21, 2016, Bonanza Creek, by and through its attorneys, filed with the Commission a written request to the Application based on the merits of the verified application, written testimony and supporting exhibits.

 

8.            Land testimony and exhibits presented in support of the Application by Alexander S. Newell, Landman for Bonanza Creek, showed Bonanza Creek owns substantial leasehold interests underlying the Application Lands, which include working interests / operating rights for the Niobrara Formation.

 

9.            Geologic testimony and exhibits in support of the Application from Jeffrey Schroeder, Development Geologist for Bonanza Creek, showed that the Codell-Niobrara Formation is well understood and underlies the entirety of the Application Lands with a thickness ranging from 260 to 270 feet.  Further testimony showed that the Codell-Niobrara Formation underlying the Application Lands is a common source of supply.

 

10.          Engineering testimony and exhibits presented by Joel Dill, Petroleum Engineer for Bonanza Creek, showed that the drilling of an additional 15 Codell-Niobrara Formation horizontal wells with the Application Lands will vastly increase ultimate recoveries of oil and gas with the proposed unit, while protecting correlative rights and preventing waste of the resource.

 

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.          Bonanza Creek agrees to be bound by the 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 approve an additional 15 horizontal wells, for a total of 20 wells, within the approximate 640-acre drilling and spacing unit established by Order No. 407-1126 for Section 18, Township 4 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, and revert the setbacks from unit boundaries from 600 feet to 460 feet.

 

ORDER

IT IS HEREBY ORDERED:

1.         An additional 15 horizontal wells, for a total of 20 wells, within the approximate 640-acre drilling and spacing unit established by Order No. 407-1126 for the below-described lands, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation:

 

Township 4 North, Range 62 West, 6th P.M.

  Section 18:

All

 

2.         The productive interval of any wellbore shall be located no closer than 460 feet from the unit boundaries, unless an exception is granted by the Director.

 

3.         The proposed wells shall be drilled on the surface of the unit, subject to Rule 318A.

 

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