BEFORE THE OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 170100056
TYPE: EXCEPTION LOCATION
ORDER NO. 407-1880 |
REPORT OF THE COMMISSION
The Commission heard this matter on January 30, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to modify Order No. 407-1824 to allow for 150-foot reduced setbacks as to the eastern boundary of an approximate 1,120-acre drilling and spacing unit established for portions of Sections 25 and 26, Township 6 North, Range 67 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
FINDINGS
The Commission finds as follows:
1. Great Western Operating Company, LLC (“Great Western” or “Applicant”), 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. Sections 25 and 26, Township 6 North, Range 67 West, 6th P.M. are subject to this Rule for the Niobrara and Codell Formations.
5. On February 19, 1992 (amended August 20, 1993), the Commission entered Order No. 407-87 which, among other things, established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations underlying certain lands, with permitted well locations in accordance with the provisions of Order No. 407-1.
6. On October 24,
2016, the Commission entered Order No. 407-1824 which established an
approximate 1,120-acre drilling and spacing unit for production of oil, gas,
and associated hydrocarbons from the Niobrara and Codell Formations, and
approved up to 21 horizontal wells within the unit, with the productive
interval of each wellbore shall be no closer than 150 feet from the productive
interval of any other wellbore producing from the Niobrara or Codell Formations
and no closer than 460 feet from a unit boundary.
Township 6 North, Range 67 West, 6th P.M.
Section 25: All
Section 26: E˝; E˝W˝
8. On January 9, 2017 (Supplemented on January 18, 2017), 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.
9. Land testimony and exhibits submitted in support of the Application by Michael Tucker, Senior Landman for Great Western, showed that both the mineral and surface interests in the Application Lands are owned in fee, and that Great Western owns a partial undivided leasehold ownership interest in the Application Lands.
10. Geoscience 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 and ranges in total thickness from approximately 309’ to 312’, and that micorseismic results and pressure data show that 150-foot setbacks as to the eastern boundary are necessary to adequately recover the oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
11. Engineering testimony and exhibits submitted in support of the Application by Lewis S. Wandke, Senior Engineer at Petrotek Engineering Corporation, demonstrated that an 8,630’ Niobrara horizontal is expected to drain approximately 44 acres, and an 8,630’ Codell horizontal is expected to drain approximately 149 acres, and that the reduction of well setbacks to 150’ at the toe will serve to increase both the efficiency and economy of Niobrara and Codell Development, will reduce waste in the Application Lands, and will protect correlative rights.
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. Bill Barrett Corporation (Operator No. 10071), Extraction Oil & Gas, LLC (Operator No. 10459), Noble Energy, Inc. (Operator No. 100322), and Synergy Resources Corporation (Operator No. 10311) submitted written statements pursuant to Rule 510 in support of Great Western’s request.
14. Staff has reviewed the testimony submitted in support of Great Western’s request for a reduced setback from the eastern boundary. Historically, Staff has opposed all requests for setbacks less than 460 feet in the Greater Wattenberg Area, which is established in Rule 318A. To develop the minerals between units and within the 460 foot setbacks, operators have created wellbore spacing units and drilled and completed boundary wells. Great Western’s testimony, which is supported by the written 510 Statements submitted by four other operators, illustrate that relying upon 460 foot setbacks and boundary wells is no longer the optimal way to develop the reservoirs because operators are no longer drilling boundary wells perpendicular to the unit wells. The failure to drill these wells can create waste if unit boundary setbacks are maintained at 460 feet. Staff recommends approval of the Application under these circumstances due to the limited horizontal development around or adjacent to this unit, the agreement of the offsetting mineral owners, the reduction in unnecessary wells and surface disturbances, the opportunity to increase reserves at minimal incremental cost, and the reduced likelihood of waste.
15. Great Western agreed to be bound by oral order of the Commission.
16. 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. 407-1824 to allow for 150-foot reduced setbacks as to the eastern boundary of an approximate 1,120-acre drilling and spacing unit established for portions of Sections 25 and 26, Township 6 North, Range 67 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
ORDER
IT IS HEREBY ORDERED:
1. The setbacks for the approximate 1,120-acre drilling and spacing unit established by Order No. 407-1824 are hereby modified, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, such that the productive interval of any permitted well within the unit be no less than 460 feet from the northern, southern and western boundaries of the unit, and no less than 150 feet from the eastern boundary of the unit, without exception being 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 14th day of February, 2017, as of January 30, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ____________________________________
Julie Murphy, Secretary