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 NIOBRARA AND CODELL FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 170600395
TYPE: SPACING
ORDER NO. 407-2048 |
REPORT OF THE COMMISSION
The Commission heard this matter on June 12, 2017, at the Rio Blanco County Courthouse, 555 Main Street, Meeker, Colorado, upon application for an order to establish an approximate 1280-acre drilling and spacing unit for Sections 10 and 15, 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 Resources LLC (Operator No. 10651) (“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 10 and 15, Township 1 North, Range 64 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.
5. On April 13, 2017, Verdad, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 1280-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, unless an exception is granted by the Director:
Township 1
North, Range 64 West, 6th P.M.
Section 10: All
Section 15: All
6. Applicant stated that the proposed wells shall be located on no more than four multi-well pads within the drilling and spacing unit, or on adjacent lands with the consent of the landowner, subject to Rule 318A, unless the Director grants an exception.
7. On May 18, 2017, 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.
8. Land testimony and exhibits submitted in support of the Application by Philip W. Davis, Vice President of Land for Verdad, showed that Verdad owns a leasehold interst and has a right to drill in the Application Lands. Mr. Davis further stated that to ensure that correlative rights are not violated, Verdad was stipulating to a larger 660-foot setback from the east and west boundary lines of the drilling and spacing unit and a 460-foot setback for the north and south boundary lines of the drilling and spacing unit for the production of oil, gas and associated hydrocarbons from the Codell Formation. The requested setbacks for the Niobrara Formation remain unchanged at 460 feet from the boundaries of the drilling and spacing unit.
9. Geologic testimony and exhibits submitted in support of the Application by Dr. Steven M. Goolsby, Senior Consulting Geologist for Verdad, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 330 to 370 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony also showed that the Niobrara Formation consists of shale, marlstones, and chalk. The geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 12 to 14 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony also showed that the Codell formation consists mainly of fine-grained sandstones and silty shales.
10. 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 105 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. The engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated at 317 acres, and an appropriate 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.
11. 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.
12. Verdad agreed to be bound by oral order of the Commission.
13. 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 1280-acre drilling and spacing unit for Sections 10 and 15, Township 1 North, Range 64 West, 6th P.M., 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.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 1280-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 10: All
Section 15: All
2. For the Niobrara Formation, the productive interval of the wellbore shall 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. For the Codell Formation, the productive interval of the wellbore shall be located no closer than 660 feet from the east and west unit boundaries, no closer than 460 feet from the north and south 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.
4. The proposed wells shall be located on no more than four multi-well pads within the drilling and spacing unit, or on adjacent lands with the consent of the landowner, 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 19th day of June, 2017, as of June 12, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Peter Gowen, Acting Secretary