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, IN THE WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 170700490
TYPE: POOLING
ORDER NO. 407-2152 |
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 1,590.50-acre drilling and spacing unit for certain portions of Sections 25 and 26, Township 6 North, Range 66 West, 6th P.M., and Sections 29 and 30, Township 6 North, Range 65 West, 6th P.M., and approve up to 20 horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.
FINDINGS
The Commission finds as follows:
1. Synergy Resources Corporation, doing business as SRC Energy, Inc., Operator No. 10311 (“Synergy” 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.
5. On May 25, 2017, Synergy, by its attorneys, filed with the Commission a verified application (“Application”) for an order to establish an approximate 1,590.5-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to 20 horizontal wells in a general east/west orientation. within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, with the the productive intervals of the wellbores to be no closer than 150 feet from the western boundary of the proposed unit and no closer than 460 feet to the northern, southern and eastern boundaries of the proposed unit, and the inter-well setback not less than 150 feet from the productive interval of a well producing from the same formation, without exception being granted by the Director:
Township 6 North, Range 66 West, 6th P.M.
Section 25: All
Section 26: E½E½
Township 6 North, Range 65 West, 6th P.M.
Section 29: W½W½
Section 30: All
Applicant states the proposed wells shall be located on no more than two multi-well pads on the surface of the drilling unit, or on adjacent lands with consent of the landowner, subject to Rule 318A, unless an exception is granted by the Director.
6. The records of the Commission indicate that there are numerous vertical and directional oil and gas wells producing or capable of producing from the Niobrara and Codell Formations underlying the Application Lands. Applicant hereby confirms that each of these wells shall remain subject to applicable spacing orders of the Commission, and shall not be affected by Applicant’s requested relief under this Application. Proceeds from the sale of oil or gas from these wells shall continue to be distributed based on the applicable spacing orders for these wells.
7. The records of the Commission indicate that there are five horizontal wells currently producing or cable of producing from the Niobrara and Codell Formations underlying portions of the Application Lands: the Matrix A-29HN (API No. 05-123-40692), the Matrix B-29HN (API No. 05-123-40697), the Matrix E-29HN (API No. 05-123-40705), the Matrix C-29HN (API No. 05-123-40894), and the Matrix D-29HC (API No. 05-123-40895). According to Commission records, these wells were permitted pursuant to Rule 318A. Applicant hereby confirms that each of these wells shall remain subject to applicable designated horizontal wellbore spacing units approved by the Director, and shall not be affected by Applicant’s requested relief under this Application. Proceeds from the sale of oil or gas from these wells shall continue to be distributed based on the applicable designated horizontal wellbore spacing units established for these wells.
8. On July 3, 2017, Synergy, 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. On July 17, 2017, Synergy and the Bureau of Land Management (“BLM”) agreed that the drilling and spacing unit contains federal minerals. As such, Synergy, or successor operator, agrees to submit a Communitization Agreement (“CA”) to the BLM at least 90 days before the anticipated date of first production (as defined in the COGCC Rules) from the initial well drilled within the drilling and spacing unit.
10. Testimony and exhibits submitted in support of the Application by Matt Miller, Vice-President of Land for Synergy, showed that Synergy owns substantial leasehold interests in the Application Lands.
11. Geology testimony and exhibits submitted in support of the Application by Thomas Birmingham, Vice President, Exploration, for Synergy, showed that the thickness of the Niobrara Formation underlying the Application Lands ranges from approximately 203 to 306 feet thick and that the thickness of the Codell Formation underlying the Application Lands ranges from approximately 17 to 25 feet thick. Further testimony showed that both the Codell and Niobrara Formations exist under all of the Application Lands and are common sources of supply within the Application Lands.
12. Engineering testimony and exhibits submitted in support of the Application by Brett Hall, Reservoir Engineer for Synergy, 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 concluded a 1,590.50-acre unit would accommodate up to total of 20 horizontal wells drilled to the Niobrara and Codell Formations, with setbacks of 460 feet from the unit boundaries.
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. Synergy agrees 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 1,590.50-acre drilling and spacing unit for certain portions of Sections 25 and 26, Township 6 North, Range 66 West, 6th P.M., and Sections 29 and 30, Township 6 North, Range 65 West, 6th P.M., and approve up to 20 horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 1,590.50-acre drilling and spacing unit is hereby established for the below-described lands, and up to 20 horizontal wells are approved within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell 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 6 North, Range 66 West, 6th P.M.
Section 25: All
Section 26: E½E½
Township 6 North, Range 65 West, 6th P.M.
Section 29: W½W½
Section 30: All
2. The proposed wells shall be located on no more than two multi-well pads on the surface of the drilling unit, or on adjacent lands with consent of the landowner, subject to Rule 318A, unless an exception is granted by the Director.
3. The drilling and spacing unit contains federal minerals. Synergy, or successor operator, agrees to submit a Communitization Agreement (“CA”) to the BLM at least 90 days before the anticipated date of first production (as defined in the COGCC Rules) from the initial well drilled within the drilling and spacing unit.
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 16th day of August, 2017, as of July 24, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
James Rouse, Acting Secretary