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, ADAMS COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 170500299

 

TYPE: POOLING

 

ORDER NO. 407-2054

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on June 12, 2017, at Rio Blanco County Courthouse, 555 Main St., Meeker, Colorado, upon application for an order to establish an approximate 480-acre drilling and spacing unit for certain lands in Sections 1 and 12, Township 1 South, Range 68 West, 6th P.M., and approve up to 12 horizontal wells within the unit, for the production of oil, gas, associated hydrocarbons from the Codell and Niobrara Formations. 

 

FINDINGS

 

The Commission finds as follows:

 

1.            Ward Petroleum Corporation (“Ward” or “Applicant”), Operator No. 10359, 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, 1988, the Commission adopted Rule 318A, the Greater Wattenberg Special Well Location, Spacing and Unit Designation Rule. Sections 14, 23 and 26, Township 1 South, Range 68 West, 6th P.M. are subject to this Rule for the Niobrara and Codell Formations.

 

5.            On February 19, 1992 (amended August 20, 1993), the Commission issued Order 407-87, which, among other things, established 80-acre drilling and spacing units for production of oil, gas and assorted hydrocarbons from the Codell and Niobrara Formations, with the permitted well locations to be in accordance with Order No 407-1.  Sections 14, 23 and 26, Township 1 South, Range 68 West, 6th P.M. are subject to this Order for the Niobrara and Codell Formations

 

6.            On March 3, 2017, Ward, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 480-acre drilling and spacing unit for below-described lands (“Application Lands”), and approve up to 12 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara 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, without exception being granted by the Director: 

 

                        Township 1 South, Range 68 West, 6th P.M.

                        Section 1:   SW¼

                        Section 12: W½

                       

Applicant states that the proposed wells will be drilled from no more than one pad within the unit, or from a legal location on adjacent lands.

                       

10.          On April 10, 2017, Ward, 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. 

 

11.          On April 14, 2017 (updated April 17, 2017), Robert Migliore (“Migliore” or “Protestant”) filed a protest to the Application, alleging that 110 new wells have already been approved by the COGCC within 1 mile of the residence and expressed concern regarding the health and safety impacts of a high density well site in an urban area. The protest also identified road safety, noise, light, odor and vibration issues and the possibility of cumulative impacts for these wells.  The requested relied was that no additional wells be approved in the area until tests have been completed to show no significant impacts from additional wells to health and safety, as well as no impact from noise, light, odor and vibration, and traffic and incident management studied are complied and conclude no significant impact from additional wells.

 

12.          On April 14, 2017, Ward, by its counsel, filed a Motin to Dismiss the Protest.  A response was filed by Mr. Migliore on March 15, 2017.

 

13.          On May 18, 2017, a prehearing conference was held.

 

14.          On May 18, 2017, the Hearing Officer granted the Motion to Dismiss the Protest on the grounds that the arguments made are not related to spacing of the lands or downhole development issues. Instead, the issues raised are more appropriate for the Form 2A process when OGLA determines where the well will be located and conditions of approval and Best Management practices are put in place for the operator prior to development.  The Protest was converted to a Rule 510 statement.

 

15.          Land testimony and exhibits submitted in support of the Application by Kent Craig, Landman - Rockies for Ward, showed that Ward holds oil and gas leasehold interests in the Application Lands and a right to drill in the Application Lands.    

 

16.          Geologic testimony and exhibits submitted in support of the Application by Jordan Reveille, Geologist for Ward, showed that the Niobrara Formation is a series of chalks, organic marls and limestones deposits and the Codell Formation is a middle to upper shoreface sandstone deposits. Testimony further showed that the total thickness of the Niobrara Formations ranges from approximately 350 to 420 feet in thickness in the eastern portion of the proposed spacing unit and the total thickness of the Codell Formation ranges from 12 to 16 feet in thickness, with the thickest area in the western portion of the proposed spacing unit. The Codell and Niobrara Formations are present under the Application Lands and are a common source of supply.

 

17.          Engineering testimony and exhibits submitted in support of the Application by Dan Harms, Reservoir Engineer for Ward, showed that Ward plans to drill horizontal wells with lateral lengths of 6,980 feet within the Application Lands. Further testimony showed that the drainage area for analog horizontal Niobrara wells is estimated at 46 acres, and an approximate 480-acre drilling and spacing unit is therefore not less than the maximum areas that can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associate hydrocarbons from the Niobrara Formation.  The engineering testimony also showed that the drainage area for analog horizontal Codell wells is estimated at 149 acres, and an approximate 480-acre drilling and spacing unit is therefore not less than the maximum areas that can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associate hydrocarbons from the Codell Formation.

 

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.          Ward 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 establish an approximate 480-acre drilling and spacing unit for certain lands in Sections 1 and 12, Township 1 South, Range 68 West, 6th P.M., and approve up to 12 horizontal wells within the unit, for the production of oil, gas, associated hydrocarbons from the Codell and Niobrara Formations. 

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.            An approximate 480-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 12 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 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, without exception being granted by the Director:

 

            Township 1 South, Range 68 West, 6th P.M.

            Section 1:   SW¼

            Section 12: W½

 

2.            Vertical or directional wells producing from the Application Lands shall remain subject to Order 407-87 rather than this Order.

 

3.            All proposed wells shall be located from no more than one multi-well pad within the drilling and spacing unit, or from a legal location on adjacent lands, subject to Rule 318A, 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