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 CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407 DOCKET NO. 170500243 TYPE: SPACING ORDER NO. 407-1978 CORRECTED

REPORT OF THE COMMISSION

The Commission heard this matter on May 1, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to establish an approximate 640-acre drilling and spacing unit for the E½ of Sections 30 and 31, Township 5 North, Range 63 West, 6^th P.M., and approve up to 16 horizontal wells in the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

FINDINGS

The Commission finds as follows:

1.         Bill Barrett Corporation (“BBC” 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.  The Application Lands are subject to this Rule for the Codell and Niobrara 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, with permitted well locations in accordance with the provisions of Order No. 407-1. The Application Lands are subject to this Order for the Codell and Niobrara Formations.

6.         On March 2, 2017, BBC, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to establish an approximate 640-acre drilling and spacing unit for the Application Lands and approve up to six horizontal wells in the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of any horizontal well to be no closer than 460 feet from the unit boundaries, and not less than 150 feet from the productive interval of another well within the unit, unless an exception is granted by the Director, on the below-described lands (the “Application Lands”):

Township 5 North, Range 63 West, 6^th P.M.

Section 30:      E½

Section 31:      E½

7.         On April 10, 2017, BBC, 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.

8.         Land testimony and exhibits submitted in support of the Application by Leslie Mann, Landman I for BBC, showed that both the mineral and surface interests in the Application Lands are owned in fee, and that BBC has a partial undivided leasehold interest in the Application Lands.

9.         Geoscience testimony and exhibits submitted in support of the Application by Dan Moore, Geologist 2 BBC, showed the Niobrara Formation is present throughout the Application Lands and is approximately 296 to 306 feet thick, and the Codell Formation is present throughout the Application Lands and is approximately 12 to 15 feet thick.

10.       Engineering testimony and exhibits submitted in support of the Application by Sean Stewart, Senior Reservoir Engineer at BBC, demonstrated that an average short-reach Niobrara lateral has an average drainage area of 81 acres and an average short-reach Codell lateral has an average drainage area of 119 acres, and an extended reach Niobrara lateral has an average drainage area of 199 acres and an average extended reach Codell lateral has an average drainage area of 323 acres, and that the drilling and completion of horizontal wells in the Codell and Niobrara Formations underlying the Application Lands is the most efficient and economic method to develop the resource potential of this formation and will reduce waste and surface disturbance, will promote efficient drainage, and protect correlative rights.

11.       Applicant stated that the wells will be drilled from no more than three well pads within the drilling and spacing unit, or adjacent thereto, unless an exception is granted by the Director.

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

14.       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 640-acre drilling and spacing unit for the E½ of Sections 30 and 31, Township 5 North, Range 63 West, 6^th P.M., and approve up to six horizontal wells in the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

ORDER

IT IS HEREBY ORDERED:

1)         An approximate 640-acre drilling and spacing unit is hereby established for the below-described lands, and up to 16 6 horizontal wells are hereby approved in the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of any horizontal well to be no closer than 460 feet from the unit boundaries, and not less than 150 feet from the productive interval of another well within the unit, unless an exception is granted by the Director:

Township 5 North, Range 63 West, 6^th P.M.

Section 30:      E½

Section 31:      E½

2)         The wells approved under this Order shall be located on no more than three surface locations within the unit, or adjacent thereto, 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 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 3^rd day of May, 2017, effective as of May 1, 2017.

CORRECTED this 12^th day of May, 2017, as of May 1, 2017.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

By: ____________________________________     

Peter Gowen, Acting Secretary