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 OPERATION FOR THE CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY,      COLORADO

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CAUSE NO. 407

 

DOCKET NO. 170700431

 

TYPE: SPACING

 

ORDER NO. 407-2115

 

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, CO, upon application for an order to establish an approximate 1,280-acre drilling and spacing unit for Sections 5 and 8, Township 1 South, Range 65 West, 6th P.M., and approve up to 20 horizontal wells, for production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Confluence DJ LLC, Operator No. 10518 (“Confluence” 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 Rule 318A for the Codell and Niobrara Formations.

 

5.         On May 24, 2017, Confluence, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order establishing an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to 20 horizontal wells oriented in a general north/south direction, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations, with the productive intervals of the proposed horizontal wells to be no closer than 460 feet from the unit boundaries of the drilling and spacing unit, and no closer than 150 feet from the productive interval of another well producing from the same formation, without exception being granted by the Director:

 

Township 1 South, Range 65 West, 6th P.M.

Section 5:        All

Section 8:        All

 

6.         Applicant states that all wells permitted under this Order shall be located on no more than four multi-well pads within the unit or on adjacent lands with landowner consent, subject to Rule 318A, unless an exception is granted by the Director.

 

7.         The online records maintained by the COGCC indicate that there are no vertical, directional or horizontal wells currently producing from the Target Formations in the Application Lands.

 

8.         On or about July 3, 2017, Confluence, 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.

 

9.         Testimony and exhibits submitted in support of the Application by William E. Nicas, Senior Vice President of Land and Business Development for Confluence, showed that Confluence owns a leasehold interest in the Application Lands.

 

10.       Geology testimony and exhibits submitted in support of the Application by Robert H. Sterling, Senior Vice President of Geoscience for Confluence, showed that the thickness of the Niobrara Formation underlying the Application Lands ranges from approximately 389 to 441 feet thick and that the thickness of the Codell Formation underlying the Application Lands ranges from approximately 14 to 19 feet thick. Further testimony showed that the Niobrara Formation is a sequence of chalks and marls, that the Codell Formation consists mainly of fine-grained sandstones, and that both are common sources of supply. 

 

11.       Engineering testimony and exhibits submitted in support of the Application by John P. Seidle, Vice President of MHA Petroleum Consultants LLC, consultants for Confluence, showed that drilling and completing horizontal wells within the Niobrara and Codell Formations underlying the Application Lands is an efficient and economic method of developing the resource. Testimony showed a 1,280-acre unit would accommodate up to a total of 20 approved horizontal wells drilled to the Codell and Niobrara Formations, while protecting correlative rights of adjacent mineral owners.

 

12.       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.

 

13.       Applicant agrees to be bound by oral order of the Commission. 

 

14.       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 5 and 8, Township 1 South, Range 65 West, 6th P.M., and approve up to 20 horizontal wells, 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 for the below-described lands is hereby established, and a total of up to 20 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 intervals of the wellbore of any permitted wells to be located not less than 460 feet from the unit boundary and not less than 150 feet from the productive interval of any well being drilled or producing from the Codell and Niobrara Formations, unless an exception is granted by the Director:

 

Township 1 South, Range 65 West, 6th P.M.

Section 5:        All

Section 8:        All

 

2.         Any permitted wells drilled under this Order shall be located on no more than four multi-well pads within the unit or on adjacent lands with landowner consent 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 the 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 14th day of August, 2017, as of July 24, 2017.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

James Rouse, Acting Secretary