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 NIOBRARA AND CODELL FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
) ) ) ) ) ) )
|
CAUSE NO. 407
DOCKET NO. 160400188
TYPE: SPACING
ORDER NO. 407-2206
|
REPORT OF THE COMMISSION
The Commission heard this matter on September 11, 2017, at the Durango Public Library, Program Room #2, 1900 E. 3rd Avenue, Durango, Colorado upon application for an order to establish an approximate 1,280-acre drilling and spacing unit for Sections 13 and 14, Township 7 North, Range 61 West, 6th P.M., and approve up to 24 horizontal wells within the unit for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and up to four horizontal wells within the unit for the production of oil, gas, and associated hydrocarbons from the Codell Formation.
FINDINGS
The Commission finds as follows:
1. Caerus WashCo LLC (Operator No. 86610) (“Caerus” or “Applicant”) 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. Sections 13 and 14, Township 7 North, Range 61 West, 6th P.M., are subject to this rule for the Niobrara and Codell Formations.
5. On February 18, 2016, Caerus, by its attorneys, filed with the Commission 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 to approve up to 24 horizontal wells within the unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, and approve up to four horizontal wells within the unit for the production of oil, gas and associated hydrocarbons from the Codell Formation 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 7 North, Range 61 West, 6th P.M.
Section 13: All
Section 24: All
6. Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than four multi-well pads, subject to Rule 318A, without exception being granted by the Director.
7. On March 28, 2016, amended August 29, 2017, Caerus, 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 3, 2016, Eric D. Nielsen filed a “protest” advising that he was deployed to the Middle East as an active duty U.S. Coast Guard Member, and that he was requesting a stay of this proceeding pursuant to the provisions of the Servicemembers Civil Relief Act. On January 25, 2017, the Hearing Officer entered an order staying this proceeding until 90 days after Mr. Nielsen returned to the United States from his deployment. On August 8, 2017, Mr. Nielsen advised the Director by email that he had returned to the United States on May 25, 2017, and stated, “Again, I wish to space all of the lands as requested in Docket # 160400188; I am confident that this avenue is in the best interest of the public, the affected land/minerals, and all affected parties.” Based on Mr. Nielsen’s August 8, 2017 email, and the expiration of the stay required by the Servicemembers Civil Relief Act, the Commission considers Mr. Nielsen’s protest to be resolved.
9. Land testimony and exhibits submitted in support of the Application by Jeff Grisham, Landman for Caerus, showed that Caerus holds oil and gas leasehold interests and has a right to drill in the Application Lands.
10. Geologic testimony and exhibits submitted in support of the Application by Nathan Cumella, Operations Geologist for Caerus, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 299 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Niobrara Formation is a sequence of chalks, marls and limestones and is a common source of supply. The geologic testimony also showed that the Niobrara Formation contains four potentially productive zones, those being the Niobrara A Chalk, the Niobrara B Chalk, the Niobrara C Chalk, and the Niobrara D Chalk. Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 9 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Codell Formation consists of sandstone, and is a common source of supply.
11. Engineering testimony and exhibits submitted in support of the Application by James Bautsch, Reservoir Engineer for Caerus, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 160 acres, and an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 24 horizontal wells producing oil, gas and associated hydrocarbons from four zones in the Niobrara Formation. Engineering testimony further showed that that the drainage area for analog horizontal Codell Formation wells is estimated at 320 acres, and an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by four horizontal wells producing oil, gas and associated hydrocarbons from the Codell Formation.
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. Caerus agreed to be bound by oral order of the Commission.
14. Based on the facts stated in the verified Application, the protest having been resolved, 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 13 and 14, Township 7 North, Range 61 West, 6th P.M., and approve up to 24 horizontal wells within the unit for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and up to four horizontal wells within the unit for the production of oil, gas, and associated hydrocarbons from the Codell Formation.
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 24 horizontal wells within the unit are hereby approved for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, and a total of up to four horizontal wells within the unit are hereby approved for the production of oil, gas and associated hydrocarbons from the Codell Formation:
Township 7 North, Range 61 West, 6th P.M.
Section 13: All
Section 24: All
2. The productive interval of the wellbore will 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 producing from the same source of supply within the unit, unless the Director grants an exception.
3. All wells permitted under this Order shall be drilled from no more than four multi-well pads within the Application Lands, or on adjacent lands with consent of the landowner, subject to Rule 318A, unless the Director grants an exception.
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 26th day of September, 2017, as of September 11, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
James P. Rouse, Acting Secretary