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

)

CAUSE NO. 407

DOCKET NO. 170500273

TYPE: ADDITIONAL WELLS

ORDER NO. 407-1994

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 approve an additional three horizontal wells for a total of up to 24 wells within an approximate 1,120-acre drilling and spacing unit established by Order No. 407-1307 for certain lands in Sections 15 and 16, Township 6 North, Range 67 West, 6^th P.M., for the production of oil, gas and associated 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 February 19, 1992, the Commission entered Order No. 407-87 (amended August 20, 1993) 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.

5. 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 Niobrara and Codell Formations.

6. On January 7, 2013, the Commission entered Order No. 407-741 which: 1) vacated the approximate 80-acre drilling and spacing units established by Order No. 407-87 for Section 16, Township 6 North, Range 67 West, 6^th P.M.; 2) established an approximate 640-acre drilling and spacing unit consisting of Section 16, Township 6 North, Range 67 West, 6^th P.M., and 3) approved up to seven horizontal wells within each unit, for the development and operation of the Codell-Niobrara Formation, with the productive interval of the horizontal wellbores to be 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.

7. On July 29, 2013, the Commission entered Order No. 407-848, which pooled all interests in the approximate 640-acre drilling and spacing unit established by Order No. 407-741 for Section 16, Township 6 North, Range 67 West, 6^th P.M., for the development and operation of the Codell-Niobrara Formation.

8. On September 15, 2014, the Commission entered Order No. 407-1107, which applied the cost recovery provisions of §34-60-116(7), C.R.S., to any non-consenting owners within the approximate 640-acre drilling and spacing unit established by Order No. 407-741 for Section 16, Township 6 North, Range 67 West, 6^th P.M. for the DeTienne FD 16-022HC Well (API No. 05-123-39630).

9. On May 18, 2015, the Commission entered Order No. 407-1307 which, among other things, 1) amended Order No. 407-741 to authorize no more than one horizontal well within the approximate 640-acre drilling and spacing unit established by such order, for the development and operation of the Codell-Niobrara Formation, 2) established an approximate 1,120-acre drilling and spacing unit for the Application Lands, and 3) approved up to 21 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation.

10. On July 20, 2015, the Commission entered Order No. 407-1324 which, among other things, pooled all interests in the approximate 1120-acre drilling and spacing unit established by Order No. 407-1307 for portions of Sections 15 and 16, Township 6 North, Range 67 West, 6^th P.M., for the drilling of the Simpson FD 16-039HC Well, the Simpson FD 16-059HN Well, and the Simpson FD 16-062HN Well, for the development and operation of the Codell and Niobrara Formations.

11. On September 14, 2015, the Commission entered Order No. 407-1427 which, among other things, applied the cost recovery provisions of §34-60-116(7), C.R.S., to additional parties within the approximate 1120-acre drilling and spacing unit established by Order No. 407-1307 for Sections 15 and 16, Township 6 North, Range 67 West, 6^th P.M., and subjected any non-consenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., effective as of the earlier of the date of the Application, or the date that any of the costs specified in §34-60-116(7)(b), C.R.S., were first incurred for the drilling of the Simpson FD 16-039HC Well, the Simpson FD 16-059HN Well, or the Simpson FD 16-062HN Well, for the development and operation of the Codell and Niobrara Formations.

12. On March 2, 2017, Great Western, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order approving an additional three horizontal wells for a total of up to 24 wells within an approximate 1,120-acre drilling and spacing unit established for the below-described lands (“Application Lands”) by Order No. 407-1307, for the production of oil, gas and associated from the Codell and Niobrara Formations, with the productive interval of any horizontal well to be located no closer than 460 feet from the boundaries of the unit and not closer than 150 feet from the productive interval of another well within the unit, unless an exception is granted by the Director, and providing that the wells permitted under this Order shall be located on no more than one wellpad within the unit, unless an exception is granted by the Director:

Township 6 North, Range 67 West, 6^th P.M.

Section 15: W½, NE¼

Section 16: All

13. On April 10, 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.

14. 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 has the authority to operate a partial undivided leasehold interest in the Application Lands.

15. Geoscience testimony and exhibits submitted in support of the Application by Willis Wilcoxon, Geologist for Great Western, showed the Codell Formation is present throughout the Application Lands and is approximately 23 to 28 feet thick, and the Niobrara Formation is present throughout the Application Lands and is approximately 265 to 320 feet thick.

16. Engineering testimony and exhibits submitted in support of the Application by Lewis S. Wandke, Senior Engineer at Petrotek Engineering Corporation, demonstrated that the hydrocarbons under the Application Lands would not be fully recovered without the increased additional horizontal well density, and that the estimated drainage for a 8,320’ horizontal Niobrara well is approximately 35 acres and for a 8,320’ horizontal Codell well is approximately 145 acres, and that the existing drilling and spacing unit, with the approved existing setbacks, and the requested number of additional horizontal wells in the Codell and Niobrara Formations in the Application Lands, will promote efficient drainage, protect correlative rights, and prevent waste.

17. Applicant stated that the wells will be drilled from no more than one pad location within the drilling and spacing unit, unless an exception is granted by the Director.

18. 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.

19. Great Western agreed to be bound by oral order of the Commission.

20. 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 approve an additional three horizontal wells for a total of up to 24 wells within an approximate 1,120-acre drilling and spacing unit established by Order No. 407-1307 for certain lands in Sections 15 and 16, Township 6 North, Range 67 West, 6^th P.M., for the production of oil, gas and associated from the Codell and Niobrara Formations.

ORDER

IT IS HEREBY ORDERED:

1) An additional three wells are hereby approved, for a total of up to 24 horizontal wells, within an approximate 1,120-acre drilling and spacing unit established by Order No. 407-1307 for the below-described lands, for the production of oil, gas and associated from the Codell and Niobrara Formations:

Township 6 North, Range 67 West, 6^th P.M.

Section 15: W½, NE¼

Section 16: All

2) The surface locations for the additional wells shall be located on no more than one pad location within the unit or adjacent thereto, unless an exception is granted by the Director.

3) The treated interval of the wellbores shall be located no closer than 460 feet from the unit boundaries and no closer than 150 feet from the treated interval of any other wellbore located in 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 12^th day of May 2017, effective as of May 1, 2017.

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

By: ____________________________________

Peter Gowen, Acting Secretary