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, WATTENBERG FIELD, BROOMFIELD AND WELD COUNTIES, COLORADO |
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CAUSE NO. 407
DOCKET NO. 170700470
TYPE: SPACING
ORDER NO. 407-2208 |
REPORT OF THE COMMISSION
The Commission heard this matter on October 30, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln St., Suite 801, Denver, Colorado, upon application for an order to: 1) vacate Order Nos. 407-1794, 407-1825 and 407-1826; and 2) establish an approximate 1,360-acre drilling and spacing unit for Sections 33 and 34, Township 1 North, Range 68 West, 6th P.M., and Sections 3 and 4, Township 1 South, Range 68 West, 6th P.M., and approve up to 20 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
FINDINGS
The Commission finds as follows:
1. Extraction Oil & Gas, Inc. (Operator No. 10459) (“Extraction 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 33 and 34, Township 1 North, Range 68 West, 6th P.M., and Sections 3 and 4, Township 1 South, Range 68 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.
5. On October 24, 2016, the Commission entered Order No. 407-1794 which established one approximate 1,280-acre drilling and spacing unit for Sections 28 and 33, Township 1 North, Range 68 West, 6th P.M., and approved up to a total of 20 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations. Section 33, Township 1 North, Range 68 West, 6th P.M., of the Application Lands is subject to this Order.
6. On October 24, 2016, the Commission entered Order No. 407-1825 which established one approximate 320-acre drilling and spacing unit for the W½ of Section 3, Township 1 South, Range 68 West, 6th P.M., and approved up to a total of 10 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations. The W½ of Section 3, Township 1 North, Range 68 West, 6th P.M., of the Application Lands is subject to this Order.
7. On October 24, 2016, the Commission entered Order No. 407-1826 which established one approximate 640-acre drilling and spacing unit for Section 4, Township 1 South, Range 68 West, 6th P.M., and approved up to a total of 20 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations. The E½ and E½E½W½ of Section 4, Township 1 North, Range 68 West, 6th P.M., of the Application Lands is subject to this Order.
8. On May 25, 2016, amended June 21, 2017, Extraction, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) vacate Order Nos. 407-1794, 407-1825 and 407-1826; and 2) establish an approximate 1,360-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 20 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, with the productive interval of the wellbore to be located no closer than 460 feet from the northern and western unit boundaries and 150 feet from the eastern and southern 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 North, Range 68 West, 6th P.M.
Section 33: E½
Section 34: W½
Township 1 South, Range 68 West, 6th P.M.
Section 3: W½
Section 4: E½, E½E½W½
Applicant stated that as part of an agreement with the City and County of Broomfield, the wells will be drilled from one well pad located in the SE¼ of Section 28, Township 1 North, Range 68 West, 6th P.M., without exception granted by the Director.
9. On July 3, 2017, supplemented July 14, 2017, July 20, 2017, and August 24, 2017, Extraction, 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.
10. On August 28, 2017, Kerr-McGee Oil & Gas Onshore LP (“Kerr-McGee”) filed a protest. On September 6, 2017, Kerr-McGee withdrew its protest.
11. Numerous people filed Rule 510 statements opposing the Application.
12. Land testimony and exhibits submitted in support of the Application by Jason Rayburn, Staff Landman for Extraction, showed that Extraction owns an unleased mineral interest and has a right to drill in the Application Lands.
13. Geologic testimony and exhibits submitted in support of the Application by Alicia Branch, Geologic Consultant for Extraction, and Jim Folcik, Geosciences Manager for Extraction, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 323 to 347 feet thick, and is generally of uniform thickness throughout the Application Lands. The Niobrara Formation contains the Niobrara A, B, and C chalks. The geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 17 to 20 feet thick, and is generally of uniform thickness throughout the Application Lands. The Codell Formation is primarily sandstone. Geoscience testimony further showed that Extraction plans to drill a total of 14 horizontal wells in the Niobrara A, B, and C chalks, and six horizontal wells in the Codell Formation.
14. Engineering testimony and exhibits submitted in support of the Application by Neel L. Duncan, Vice President of Operations for Integrated Petroleum Technologies, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 16.1 acres, and an approximate 1,360-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 14 horizontal wells producing oil, gas and associated hydrocarbons from the three chalk zones in the Niobrara Formation. Engineering testimony further showed that the drainage area for analog horizontal Codell Formation wells is estimated at 62.5 acres, and an approximate 1,360-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by six horizontal wells producing oil, gas and associated hydrocarbons from the Codell Formation. The engineering testimony also confirmed that the wells will be drilled in a north-south orientation.
15. 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.
16. Extraction agreed to be bound by oral order of the Commission.
17. Based on the facts stated in the verified Application, the protest having been withdrawn, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to: 1) vacate Order Nos. 407-1794, 407-1825 and 407-1826; and 2) establish an approximate 1,360-acre drilling and spacing unit for Sections 33 and 34, Township 1 North, Range 68 West, 6th P.M., and Sections 3 and 4, Township 1 South, Range 68 West, 6th P.M., and approve up to 20 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
ORDER
IT IS HEREBY ORDERED:
1. Order Nos. 407-1794, 407-1825, and 407-1826 are hereby vacated.
2. An approximate 1,360-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 Niobrara and Codell Formations:
Township 1 North, Range 68 West, 6th P.M.
Section 33: E½
Section 34: W½
Township 1 South, Range 68 West, 6th P.M.
Section 3: W½
Section 4: E½, E½E½W½
3. The productive interval of the wellbore will be located no closer than 460 feet from the northern and western unit boundaries and 150 feet from the eastern and southern unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless the Director grants an exception.
4. The wells shall be drilled from one well pad located in the SE¼ of Section 28, Township 1 North, Range 68 West, 6th P.M., without exception granted by the Director.
5. All horizontal wells in the unit shall be drilled in a north-south orientation.
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 27th day of November, 2017, effective October 30, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ____________________________________
Julie Spence Prine, Secretary