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. 161200513

 

TYPE: SPACING

 

ORDER NO. 407-1897

 

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 establish an approximate 956.16-acre drilling and spacing unit for Sections 18 and 19, Township 1 North, Range 64 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.         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 April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Sections 18 and 19, Township 1 North, Range 64 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.

 

5.         On October 13, 2016, Verdad, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 956.16-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, without exception being granted by the Director:

 

 

Township 1 North, Range 64 West, 6th P.M.

Section 18:      Lots 1 and 2, E½, E½W½ (a/d/a All)

Section 19:      Lot 1, NE¼, E½NW¼ (a/d/a N½)  

 

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.         On November 28, 2016, WYOTEX Drilling Ventures, LLC filed a protest.  On February 22, 2017, the Hearing Officer entered an order dismissing the WYOTEX protest.

 

8.         On November 28, 2016, the Swank family filed a protest.  On February 1, 2016, the Swank family withdrew its protest.

 

            9.         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.      

 

10.       Geologic testimony and exhibits submitted in support of the Application by Dr. Stephen M. Goolsby, Senior Exploration Geologist for Verdad, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 342 to 368 feet thick, and is generally of uniform thickness throughout the Application Lands.  The geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 15 to 21 feet thick, and is generally of uniform thickness throughout the Application Lands. 

 

11.       Engineering testimony and exhibits submitted in support of the Application by L. Arthur Beecherl, IV, Vice-President of Operations for Verdad, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 80 acres, and an appropriate 956.16-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. The engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated at 240 acres, and an appropriate 956.16-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.

 

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

 

14.       Based on the facts stated in the verified Application, all protests having been withdrawn or dismissed, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to establish an approximate 956.16-acre drilling and spacing unit for Sections 18 and 19, Township 1 North, Range 64 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.         An approximate 956.16-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 1 North, Range 64 West, 6th P.M.

Section 18:      Lots 1 and 2, E½, E½W½ (a/d/a All)

Section 19:      Lot 1, NE¼, E½NW¼ (a/d/a N½)  

 

2.         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.

 

3.         The proposed wells shall be located on no more than four well pads within the drilling and spacing unit, or from a legal location on adjacent lands, subject to Rule 318A, unless the Director grants and 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 28th day of March, 2017, as of March 20, 2017.    

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By_____________________________________

Peter Gowen, Acting Secretary