BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

IN THE MATTER OF PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE NIOBRARA AND CODELL FORMATIONS, WATTENBERG FIELD, ADAMS COUNTY, COLORADO

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CAUSE NO. 407 DOCKET NO. 170900582 TYPE: EXCEPTION LOCATION ORDER NO. 407-2214

REPORT OF THE COMMISSION

The Commission heard this matter on October 30, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to modify Order No. 407-1827 and allow the productive interval of any permitted well to be located no closer than 460 feet from the northern and eastern unit boundaries and 150 feet from the southern and western unit boundaries of an approximate 640-acre drilling and spacing unit established for portions of Sections 2 and 11, Township 1 South, Range 68 West, 6^th P.M., 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 and 11, Township 1 South, Range 68 West, 6^th P.M.

5.         On October 24, 2016, the Commission entered Order No. 407-1827, which established an approximate 640-acre drilling and spacing unit for the W½ of Sections 2 and 11, Township 1 South, Range 68 West, 6^th P.M., and approved up to 10 horizontal wells within the unit for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations with the productive interval of the wellbore located no closer than 150 feet from the productive interval of any other wellbore producing from the Niobrara and Codell Formations, and no closer than 460 feet from a unit boundary, unless an exception is granted by the Director. 

6.         On July 13, 2017, Extraction, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order modifying Order No. 407-1827 to allow the productive interval of any permitted well to be located no closer than 460 feet from the northern and eastern unit boundaries and 150 feet from the southern and western unit boundaries of an approximate 640-acre drilling and spacing unit established for the below-described lands (“Application Lands”) for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, and to allow the productive interval of any permitted well to be located no closer than 150 feet from the treated interval of any other well producing from the Niobrara and/or Codell Formations, unless the Director grants an exception:

Township 1 South, Range 68 West, 6^th P.M.

Section 2:        W½                

Section 11:      W½

Applicant stated that all horizontal wells will be drilled in a north-south orientation.

7.         On August 22, 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.

8.         Land testimony and exhibits submitted in support of the Application by Jason Rayburn, Landman for Extraction, showed that Extraction holds oil and gas leasehold interests and has a right to drill in the Application Lands.  Land testimony also showed that Extraction is the working interest owner of lands adjoining the western and southern boundaries of the drilling and spacing unit established for the Application Lands.

10.       Geologic testimony and exhibits submitted in support of the Application by Alicia Branch, Geologic Consultant for Extraction, showed the that the Niobrara Formation is present throughout the Application Lands, is approximately 320 to 335 feet thick, and is generally of uniform thickness throughout the Application Lands.  The Geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 14 to 17 feet thick, and is generally of uniform thickness throughout the Application Lands.

11.       Engineering testimony and exhibits submitted in support of the Application by Neel L. Duncan, Vice President of Operations for integrated Petroleum Technologies, demonstrated that based upon FracPro analysis, the anticipated average fracture geometry for Niobrara and Codell wells on the Application Lands has a propped fracture length of 138 feet, and that the requested setbacks of 460 feet from the northern and eastern unit boundaries and 150 feet from the southern and western unit boundaries of the Application Lands will promote efficient drainage, protect correlative rights, and prevent waste.

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.       Extraction agreed 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 modify 407-1827 and allow the productive interval of any permitted well to be located no closer than 460 feet from the northern and eastern unit boundaries and 150 feet from the southern and western unit boundaries of an approximate 640-acre drilling and spacing unit established for portions of Sections 2 and 11, Township 1 South, Range 68 West, 6^th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

ORDER

IT IS HEREBY ORDERED:

1.         Order No. 407-1827 is hereby modified to allow the productive interval of any permitted well to be located no closer than 460 feet from the northern and eastern unit boundaries and 150 feet from the southern and western unit boundaries of an approximate 640-acre drilling and spacing unit established for the below-described lands, unless the Director grants an exception, for the production of the oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations:

Township 1 South, Range 68 West, 6^th P.M.

Section 2:        W½                

Section 11:      W½

2.         The wells shall be located no closer than 150 feet from the treated interval of another well producing from the Niobrara and/or Codell Formations, unless the Director grants an exception.

3.         All horizontal wells 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 15th day of November, 2017, as of October 31, 2017.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By: ____________________________________     

     Julie Spence Prine, Secretary