BEFORE THE OIL & 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. 170500233

 

TYPE: SPACING

 

ORDER NO.  407-2049

 

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 1,280-acre drilling and spacing unit for Sections 33 and 34, Township 6 North, Range 65 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

 

            The Commission finds as follows:

 

1.            Extraction Oil and Gas, Inc., Operator No. 10459 (“Extraction” or “Applicant”) is an interested party in the subject matter of the above referenced hearing.

 

2.            Due notice of 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, 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 June 17, 2014, the Commission entered Order No. 407-1048, which approved Noble Energy, Inc.’s request for an order to pool all interests in two approximate 480-acre designated horizontal wellbore spacing units established for the S½S½ of Section 26, S½SE¼ of Section 27, N½NE¼ of Section 34, and N½N½ of Section 35, Township 6 North, Range 65 West, 6th P.M., effective as of the date of the Application, for development and operation of the Niobrara Formation and subjected all nonconsenting parties to the cost recovery provisions of Section 34-60-116(7), C.R.S., for the Steadfast E27-62-1HN and the Healy E34-69HN wells. 

 

6.            Noble Energy, Inc. operates the LDS E #35-79HC well (API# 05-123-35466) within a 320-acre Rule 318A horizontal wellbore spacing unit in the E½E½ of Section 34, Township 6 North, Range 65 West, 6th P.M., which is currently producing from the Codell Formation.  This well will remain subject to applicable Commission rules and spacing orders and shall not be affected by this Application.  Proceeds from the sale of oil or gas from this well shall continue to be distributed based on the applicable rules and spacing orders.

 

7.            Noble Energy, Inc. operates the Healy E34-69HN well (API# 05-123-38160), which was drilled from a surface location in the SE¼SE¼ of Section 26, Township 6 North, Range 65 West, 6th P.M., with a bottom hole location in the N½NW¼NE¼ of Section 34, Township 6 North, Range 65 West, 6th P.M., and within a 480-acre Rule 318A horizontal wellbore spacing unit covering the S½S½ of Section 26, S½SE¼ of Section 27, N½NE¼ of Section 34, and N½N½ of Section 35, Township 6 North, Range 65 West, 6th P.M., and is currently producing from the Codell Formation.  This well will remain subject to applicable Commission rules and spacing orders and shall not be affected by this Application.  Proceeds from the sale of oil or gas from this well shall continue to be distributed based on the applicable rules and spacing orders.

 

8.            On March 2, 2017, Extraction, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve up to 22 horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of the wellbore of any permitted wells in the unit 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 6 North, Range 65 West, 6th P.M.

Section 33:      All

Section 34:      All

 

9.            Applicant states that the wells shall be drilled from no more than one well pad within the unit, or from a legal location on adjacent lands, without exception being granted by the Director.

 

10.          On April 10, 2017, Extraction, 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 testimony and exhibits were submitted in support of the Application.

 

11.          Land testimony and exhibits submitted in support of the Application by Andrew Stout, Landman for Extraction, showed that Extraction holds oil and gas leasehold interests and has a right to drill in the Application Lands.

 

12.          Geologic testimony and exhibits submitted in support of the Application by Alicia Branch, Geologic Consultant for Extraction, showed that the Niobrara and Codell Formations are present throughout the Application Lands. The Codell Formation is approximately 19-20 feet in thickness and the Niobrara Formation is approximately 300-310 feet in thickness.

 

13.          Engineering testimony and exhibits submitted in support of the Application by Blane Thingelstad, Petroleum Engineer for Extraction, showed that the drainage area for analogous horizontal Codell and Niobrara Formation wells are estimated 171 acres for the Codell Formation and 58 acres for the Niobrara Formation with mid-reach laterals.  Testimony further stated that the proposed drainage acreage per 2-mile horizontal well is estimated at 70 acres for a Niobrara Formation well and 205 acres for a Codell Formation well. Thus, an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically and effectively drained by 22 horizontal wells producing oil, gas and associated hydrocarbons from the benches of the Codell and Niobrara Formations.

 

14.          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.

 

15.          Extraction agreed to be bound by oral order of the Commission.

 

16.          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 1,280-acre drilling and spacing unit for Sections 33 and 34, Township 6 North, Range 65 West, 6th P.M., and approve up to 22 horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

 

ORDER

 

            IT IS HEREBY ORDERED:

 

1.            One approximate 1,280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 22 horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations,  with the productive interval of each wellbore shall be no closer than 150 feet from the productive interval of any other wellbore producing from the Codell and Niobrara Formations, and no closer than 460 feet from a unit boundary, unless an exception is granted by the Director:

 

Township 6 North, Range 65 West, 6th P.M.

Section 33:      All

Section 34:      All

 

2.            The wells will be drilled from no more than one well pad within the unit or at legal location on adjacent lands, 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 23rd day of June, 2017, as of June 12, 2017.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By ________________________________

Peter Gowen, Acting Secretary