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. 170500245 TYPE: SPACING ORDER NO. 407-2097

REPORT OF THE COMMISSION

The Commission heard this matter on July 24, 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 1,280-acre drilling and spacing unit for Sections 4 and 5, Township 1 North, Range 64 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 Niobrara Formation.

            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 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) 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, 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 1 North, Range 64 West, 6^th P.M.

Section 4:        All

Section 5:        All

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.         On April 17, 2017 (Amended July 17, 2017), Verdad Resources LLC (“Verdad” or “Protestant”) filed a protest to the Application stating that approval of the 1280-acre drilling and spacing unit in the Application Lands would interfere with its development plans.  On July 21, 2017, Verdad withdrew its protest to the Application.

9.         Land testimony and exhibits submitted in support of the Application by Gabriel Findlay, Senior Landman 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.

10.       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 332 to 352 feet thick, and the Codell Formation is present throughout the Application Lands and is approximately 13 to 15 feet thick.

11.       Engineering testimony and exhibits submitted in support of the Application by Sean Stewart, Senior Reservoir Engineer at BBC, demonstrated that an average Niobrara horizontal has an average drainage area of 98 acres and an average Codell horizontal has an average drainage area of 168 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.

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

13.       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.

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

15.       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 4 and 5, Township 1 North, Range 64 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.

ORDER

IT IS HEREBY ORDERED:

1.         An approximate 1,280-acre drilling and spacing unit is hereby established for the below-described lands, and up to 16 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 1 North, Range 64 West, 6^th P.M.

Section 4:        All

Section 5:        All

2.         The approved wells shall be located on no more than four well pads 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 16^th day of August, 2017, effective as of July 24, 2017.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

By: ____________________________________     

     James Rouse, Acting Secretary