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, ADAMS COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 170300108
TYPE: SPACING
ORDER NO. 407-1905 |
REPORT OF THE COMMISSION
The Commission heard this matter on March 20, 2017, at the Larimer County Conference Center at The Ranch, First National Bank Building, 5280 Arena Circle, Loveland, Colorado upon application for an order to: 1) amend Order Nos. 407-1037 and 407-1078 to limit their applicability to the Sharp #24-3-11 HC Well only; and 2) establish an approximate 1280-acre drilling and spacing unit for Sections 13 and 24, Township 1 South, Range 67 West, 6th P.M., and approve up to 23 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.
FINDINGS
The Commission finds as follows:
1. Ward Petroleum Corporation, (Operator No. 10359) (“Ward” 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 February 19, 1992 (amended August 20, 1993), the Commission issued Order 407-87, which, among other things, established 80-acre drilling and spacing units for production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the permitted well locations to be in accordance with Order No 407-1. Sections 13 and 24, Township 1 South, Range 67 West, 6th P.M., are subject to this Order for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.
5. On April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Sections 13 and 24, Township 1 South, Range 67 West, 6th P.M., are subject to this Rule for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.
6. On June 17, 2014, the Commission entered Order No. 407-1037, which established a 640-acre drilling and spacing unit for Section 24, Township 1 South, Range 67 West, 6th P.M., and authorized the drilling of up to 12 horizontal wells in such unit to the Codell and Niobrara Formations, with the producing interval of the wellbores 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 of the Commission. The Application lands are subject to Order 407-1037 for the Codell and Niobrara Formations.
7. On June 17, 2014, the Commission entered Order No. 407-1078, which pooled the 640-acre drilling and spacing unit for Section 24, Township 1 South, Range 67 West, 6th P.M., for production of oil, gas and associated hydrocarbons from horizontal wells to the Codell and Niobrara Formations, to accommodate the Sharp #24-3-11HC Well (API No. 05-001-09801) and the Sharp #24-3-9HC Well (API No. 05-001-09802).
8. On December 29, 2016, Ward, by its attorneys, filed with the Commission a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) amend Order Nos. 407-1037 and 407-1078 to limit their applicability to the Sharp #24-3-11 HC Well (API No. 05-001-09801) only; and 2) establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 23 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 South, Range 67 West, 6th P.M.
Section 13: All
Section 24: All
9. Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than two multi-well pads, subject to Rule 318A, without exception being granted by the Director.
10. On February 27, 2017, Ward, 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.
11. Land testimony and exhibits submitted in support of the Application by Kent Craig, Landman for Ward, showed that Ward holds oil and gas leasehold interests and has a right to drill in the Application Lands. Land testimony further showed that the only well drilled in Section 24, Township 1 South, Range 67 West, 6th P.M., is the Sharp #24-3-11 HC Well (API No. 05-001-09801), and that well has been pooled and has been paying to an approximate 640-acre unit consisting of Section 24, Township 1 South, Range 67 West, 6th P.M.
12. The drilling and spacing unit contains federal minerals. As such, Ward agreed to submit a Communitization Agreement (“CA”) to the Bureau of Land Management (“BLM”) for any existing wells within 60 days of the entry of the Order, and Ward agreed to submit a CA to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the initial well drilled within the drilling and spacing unit.
13. Geologic testimony and exhibits submitted in support of the Application by Jordan K. Revielle, Geologist for Ward, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 350 to 390 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Niobrara Formation is a sequence of chalks, marls and limestones and is a common source of supply. Geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 14 to 16 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Codell Formation is made up of sandstone is a common source of supply.
14. Engineering testimony and exhibits submitted in support of the Application by Kimberly Mitchell, Reservoir Engineer for Ward, showed that the drainage area for analog horizontal Niobrara Formation wells are estimated at 44 acres, and an approximate 1280-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 also showed that the drainage area for analog horizontal Codell Formation wells are estimated at 155 acres, and an approximate 1280-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.
15. 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.
16. Ward agreed to be bound by oral order of the Commission.
17. 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 order to: 1) amend Order Nos. 407-1037 and 407-1078 to limit their applicability to the Sharp #24-3-11 HC Well only; and 2) establish an approximate 1280-acre drilling and spacing unit for Sections 13 and 24, Township 1 South, Range 67 West, 6th P.M., and approve up to 23 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. Order Nos. 407-1037 and 407-1078 are hereby amended to provide that they are applicable only to the Sharp #24-3-11 HC Well (API No. 05-001-09801). No further wells shall be drilled in the approximate 640-acre drilling and spacing unit created and pooled by Order Nos. 407-1037 and 407-1078. The Sharp #24-3-11 HC Well shall continue to pay to the approximate 640-acre drilling and spacing unit created and pooled by Order Nos. 407-1037 and 407-1078. Upon the plugging and abandonment of the Sharp #24-3-11 HC Well, Order Nos. 407-1037 and 407-1078 shall be deemed vacated.
2. An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 23 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 67 West, 6th P.M.
Section 13: All
Section 24: All
3. 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 producing from the same source of supply within the unit, unless the Director grants an exception.
4. All wells permitted under this Order shall be drilled from no more than two multi-well pads within the Application Lands, subject to Rule 318A, unless the Director grants an exception.
5. Ward shall submit a Communitization Agreement to the BLM for any existing wells within 60 days of the entry of this Order, and Ward shall submit a Communitization Agreement to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the initial well drilled within the drilling and spacing unit.
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 23rd day of March, 2017, as of March 20, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Peter Gowen, Acting Secretary