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, IN THE WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 170300180

 

TYPE: SPACING

 

ORDER NO. 407-1934

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on March 20, 2017, at the at The Larimer County Conference Center at The Ranch, First National Bank Building, 5280 Arena Circle, Loveland, Colorado, upon application for an order to establish an approximate 1,039.492-acre drilling and spacing unit for certain portions of Sections 29 and 30, Township 6 North, Range 66 West, 6th P.M., and approve up to 20 horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Synergy Resources Corporation, Operator No. 10311 (“Synergy” 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.

 

5.         On January 30, 2017, the Commission entered Order No. 407-1880 which modified the setbacks for 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. to allow the productive interval of any permitted well within the unit to be no less than 150 feet from the eastern boundary of the unit.  Order No. 407-1880 was entered following an application filed by Great Western Operating Company, LLC (“Great Western”).  As the owner of the offsetting acreage in Section 30, Township 6 North, Range 66 West, 6th P.M., Synergy supported the relief requested by Great Western in return for reciprocal setbacks as to the western boundary of its proposed 960-acre drilling and spacing unit with Great Western, the owner of leasehold and/or mineral interests in the adjacent acreage.

 

6.         On February 2, 2017, Synergy, by its attorneys, filed with the Commission a verified application (“Application”) for an order to establish an approximate 1,039.492-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to 20 horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.

 

Township 6 North, Range 66 West, 6th P.M.

Section 29:      W½

Section 30:      All 

 

Applicant states that any horizontal wells to be drilled in the unit will be drilled from no more than two multi-well pads on the surface of the drilling unit, or on adjacent lands with consent of the landowner, unless an exception is granted by the Director. 

 

7.         The proposed horizontal wells will be oriented in a general east/west direction. The productive intervals of the proposed horizontal wells should be no closer than 150 feet from the eastern and western unit boundaries of the drilling and spacing unit (regardless of the lease lines within the unit), no closer than 460 feet from the northern and southern unit boundaries of the drilling and spacing unit (regardless of the lease lines within the unit), and no closer than 150 feet from the productive interval of another well producing from the same formation, unless an exception is granted by the Director.

 

8.         The online records maintained by the Commission indicate that 19 vertical wells are currently producing in the Application Lands.  Applicant hereby confirms that each of these wells shall remain subject to applicable spacing orders of the Commission, and shall not be affected by Applicant’s requested relief under this Application.  Proceeds from the sale of oil or gas from these wells shall continue to be distributed based on the applicable spacing orders for these wells.  As of the date of this Application, no horizontal wells have been drilled within the proposed unit.

 

9.         On February 27, 2017, Synergy, 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.

 

10.       Land testimony and exhibits submitted in support of the Application by Matt Miller, Vice-President of Land for Synergy, showed that Synergy owns substantial leasehold interests in the Application Lands.

 

11.       Geology testimony and exhibits submitted in support of the Application by Thomas Birmingham, Vice President, Exploration, for Synergy, showed that the thickness of the Niobrara Formation underlying the Application Lands ranges from approximately 203 to 306 feet thick and that the thickness of the Codell Formation underlying the Application Lands ranges from approximately 17 to 25 feet thick.  Further testimony showed that both the Codell and Niobrara Formations exist under the Application Lands and are common sources of supply.     

 

12.        Engineering testimony and exhibits submitted in support of the Application by Brett Hall, Reservoir Engineer for Synergy, showed that drilling and completing horizontal wells within the Niobrara and Codell Formations underlying the Application Lands is an efficient and economic method of developing the resource.  Testimony concluded a 1,039.492-acre unit would accommodate up to total of 20 horizontal wells drilled to the Niobrara and Codell Formations, while protecting correlative rights of adjacent mineral owners.

 

13.       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.

 

14.       Applicant agrees to be bound by oral order of the Commission. 

 

15.       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 establish an approximate 1,039.492-acre drilling and spacing unit for certain portions of Sections 29 and 30, Township 6 North, Range 66 West, 6th P.M., and approve up to 20 horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 1,039.492-acre drilling and spacing unit is hereby established for below-described lands, and up to 20 horizontal wells are approved within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.

 

Township 6 North, Range 66 West, 6th P.M.

Section 29:      W½

Section 30:      All 

 

2.         The proposed horizontal wells shall be oriented in a general east/west direction. The productive intervals of the proposed horizontal wells shall be no closer than 150 feet from the eastern and western unit boundaries of the drilling and spacing unit (regardless of the lease lines within the unit), no closer than 460 feet from the northern and southern unit boundaries of the drilling and spacing unit (regardless of the lease lines within the unit), and no closer than 150 feet from the productive interval of another well producing from the same formation, unless an exception is granted by the Director.

 

3.         Any horizontal wells to be drilled in the unit shall be drilled from no more than two multi-well pads on the surface of the drilling unit, or on adjacent lands with consent of the landowner, unless an exception is 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 the 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 23th day of March, 2017, as of March 20, 2017.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

                                                                        By____________________________________       

                                                                                    Peter Gowen, Acting Secretary