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, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 170700491
TYPE: SPACING
ORDER NO. 407-2211
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REPORT OF THE COMMISSION
The Commission heard this matter on October 30, 2016, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado upon application for an order to: 1) establish an approximate 520-acre drilling and spacing unit for Sections 2 and 3, Township 6 North, Range 67 West, 6th P.M., and approve up to eight horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations; and 2) establish an approximate 720-acre drilling and spacing unit for Sections 2, 3, and 4, Township 6 North, Range 67 West, 6th P.M., and approve up to eight 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 2, 3, and 4, Township 6 North, Range 67 West, 6th P.M., are subject to this rule for the Niobrara and Codell Formations.
5. On May 25, 2017, amended July 14, 2017,, Extraction, by its attorneys, filed with the Commission a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) establish an approximate 520-acre drilling and spacing unit (“DSU No. 1”) for the below-described lands (“Application Lands”) and to approve up to eight 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 150 feet from the treated interval of any other wellbore producing from the Niobrara and/or Codell Formations, and no closer than 460 feet from the northern, southern and eastern unit boundaries and 800 feet from the western unit boundary, without exception being granted by the Director; and, 2) establish an approximate 720-acre drilling and spacing unit (“DSU No. 2”) for the Application Lands and to approve up to eight 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 150 feet from the treated interval of any other wellbore producing from the Niobrara and/or Codell Formations, and no closer than 460 feet from the northern, southern and eastern unit boundaries and 990 feet from the western unit boundary, without exception being granted by the Director:
DSU No. 1
Township 6 North, Range 67 West, 6th P.M.
Section 2: N½
Section 3: NE¼, E½E½NW¼
DSU No. 2
Township 6 North, Range 67 West, 6th P.M.
Section 2: S½
Section 3: S½
Section 4: E½SE¼
6. Applicant stated that any horizontal wells to be drilled under this Application will be drilled from no more than one multi-well pad within each unit, or on adjacent lands with landowner consent, subject to Rule 318A, without exception being granted by the Director.
7. Applicant stated, and Commission records reflect, that for DSU No. 1, there are four horizontal-wellbore-spacing-unit configurations which overlap the western boundary of the proposed unit but do not extend beyond the proposed unit boundary setback. The overlapping horizontal wellbore spacing units include the Mickey 1 (API No. 05-123-43853), Mickey 2 (API No. 05-123-43850), Mickey 3 (API No. 05-123-43852), Mickey 4 (API No. 05-123-43851), Mickey 5 (API No. 05-123-43855), Mickey 6 (API No. 05-123-43947), Mickey 7 (API No. 05-123-43857) Mickey 8 (API No. 05-123-43856), Mickey 9 (API No. 05-123-43846), Mickey 10 (API No. 05-123-43847), Mickey 11 (API No. 05-123-43848), Mickey 12 (API No. 05-123-43845), and Mickey 13 (API No. 05-123-43854) (collectively, the “Mickey WSUs”). Applicant operates the Mickey Wells. The Mickey WSUs will not be affected by the proposed DSU No. 1 such that proceeds from the sale of oil or gas from those wells shall continue to be distributed based on the established Mickey WSUs, and the Mickey WSUs will not share in production from the proposed DSU No. 1.
8. Applicant stated, and Commission records reflect, that for DSU No. 2, there are five horizontal-wellbore-spacing-unit configurations which overlap the western boundary of the proposed unit but do not extend beyond the proposed unit boundary setback. The overlapping horizontal wellbore spacing units include the Varra 2 (API No. 05-123-39982), Varra 3 (API No. 05-123-39884), Varra 4 (API No. 05-123-39883), Varra 5 (API No. 05-123-39985), Varra 6 (API No. 05-123-39989), Varra 7 (API No. 05-123-39987), Varra 8 (API No. 05-123-39988) Varra 9 (API No. 05-123-39986), Varra 10 (API No. 05-123-39990), Varra 11 (API No. 05-123-39991), and Varra 12 (API No. 05-123-39992), (collectively, the “Varra WSUs”). Applicant operates the Mickey Wells. The Varra WSUs will not be affected by the proposed DSU No. 2 such that proceeds from the sale of oil or gas from those wells shall continue to be distributed based on the established Varra WSUs, and the Mickey WSUs will not share in production from the proposed DSU No. 2.
9. On August 21, 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. Land testimony and exhibits submitted in support of the Application by Ellen Brown, Landman for Extraction, showed that Extraction holds oil and gas leasehold interests and has a right to drill in the Application Lands.
11. Geologic testimony and exhibits submitted in support of the Application by Alicia Branch, Geologic Consultant for Extraction, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 273 to 286 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. Geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 20 to 23 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Codell Formation is made up of sandstone, and is a common source of supply.
12. Engineering testimony and exhibits submitted in support of the Application by Blane Thingelstad, Northern Development Manager for Extraction, showed that for DSU No. 1., Applicant plans to drill five wells in the Niobrara Formation and three wells in the Codell Formation. Engineering testimony further showed that the drainage area for analog horizontal Niobrara Formation wells for an approximate 520-acre drilling and spacing unit is estimated at 95 acres, and an approximate 520-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by five horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara Formation. Engineering testimony further showed that the drainage area for analog horizontal Codell Formation wells for an approximate 520-acre drilling and spacing unit is estimated at 98 acres, and an approximate 520-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by three horizontal wells producing oil, gas and associated hydrocarbons from the Codell Formation.
13. The Engineering testimony and exhibits showed that for DSU No. 2., Applicant plans to drill five wells in the Niobrara Formation and three wells in the Codell Formation. Engineering testimony further showed that the drainage area for analog horizontal Niobrara Formation wells for an approximate 720-acre drilling and spacing unit is estimated at 127 acres, and an approximate 720-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by five horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara Formation. Engineering testimony further showed that the drainage area for analog horizontal Codell Formation wells for an approximate 720-acre drilling and spacing unit is estimated at 131 acres, and an approximate 7220-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by three horizontal wells producing oil, gas and associated hydrocarbons from the Codell Formation.
14. 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.
15. Extraction agreed to be bound by oral order of the Commission.
16. 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: 1) establish an approximate 520-acre drilling and spacing unit for Sections 2 and 3, Township 6 North, Range 67 West, 6th P.M., and approve up to eight horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations; and 2) establish an approximate 720-acre drilling and spacing unit for Sections 2, 3, and 4, Township 6 North, Range 67 West, 6th P.M., and approve up to eight 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. An approximate 520-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to eight horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:
DSU No. 1
Township 6 North, Range 67 West, 6th P.M.
Section 2: N½
Section 3: NE¼, E½E½NW¼
2. The productive interval of the wellbore will be located no closer than 460 feet from the northern, southern and eastern unit boundaries and 800 feet from the western unit boundary of DSU No. 1, 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. An approximate 720-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to eight horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:
DSU No. 2
Township 6 North, Range 67 West, 6th P.M.
Section 2: S½
Section 3: S½
Section 4: E½SE¼
4. The productive interval of the wellbore will be located no closer than 460 feet from the northern, southern and eastern unit boundaries and 990 feet from the western unit boundary of DSU No. 2, 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.
5. All wells permitted under this Order shall be drilled from no more than three multi-well pads within the Application Lands, 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 14th day of November, 2017, as of October 30, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Julie Spence Prine, Secretary