BEFORE THE OIL & 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 CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, ADAMS AND BROOMFIELD COUNTIES, COLORADO. |
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CAUSE NO. 407
DOCKET NO. 170900602
TYPE: EXCEPTION LOCATION
ORDER NO. 407-2220 |
REPORT OF THE COMMISSION
The Commission heard this matter on October 30-31, 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. 407-1795 and allow the productive interval of any permitted well to be located no closer than 460 feet from the southern unit boundary and 150 feet from the northern, eastern, and western unit boundaries of an approximate 1,280-acre drilling and spacing unit established for portions of Sections 9 and 16 in Township 1 South, Range 68 West, 6th P.M.
The Commission finds as follows:
1. Extraction Oil and 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 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 the parties interested therein, and has authority to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.
4. On April 27, 1988, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule, which was amended on August 8, 2011 to, among other things, address the drilling of horizontal wells and requires that a horizontal wellbore spacing unit must include any governmental quarter-quarter section that is located less than 460’ from the completed interval of the wellbore lateral. The Rule does not, however, prohibit the establishment of drilling and spacing units within the Greater Wattenberg Area.
5. On October 24, 2016, corrected December 8, 2016, the Commission entered Order No. 407-1795, which established an approximate 1,280-acre drilling and spacing unit for Sections 9 and 16, 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 with the productive interval of each wellbore to be located no closer than 150 feet from the productive interval of any other wellbore producing from the Codell and Niobrara Formations and no closer than 460 feet from the 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 to amend Order No. 407-1795 and modify the unit boundary setbacks within the established approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) for production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations such that the treated interval of each wellbore be no closer than 150 feet from the treated interval of any other wellbore producing from the Codell and Niobrara Formations, and no closer than 460 feet from the southern unit boundary and 150 feet from the northern, eastern, and western unit boundaries, without exception being granted by the Director:
Township 1 South, Range 68 West, 6th P.M.
Section 9: All
Section 16: All
Applicant stated that all horizontal wells will be drilled in a north-south orientation.
7. 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 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.
9. Geologic testimony and exhibits submitted in support of the Application by Ms. Alicia Branch, Geologist for Extraction showed that the Niobrara and Codell Formations are present throughout the Application Lands, and are approximately 280 to 320 feet thick and 15 to 17 feet thick, respectively from the top through the base of the formation.
10. Engineering testimony and exhibits submitted in support of the Application by Neel Duncan, consultant Reservoir Petroleum Engineer for Extraction, showed that Applicant’s drainage analysis, pressure/fracture data, and rate-transient analyses from analogous horizontal offsetting wells supports the requested inter-well and unit boundary setbacks. Further testimony concluded that the project economics are sound.
11. On August 24, 2017, the City and County of Broomfield filed a protest/intervention to Extraction’s Application.
12. On October 20, 2017, a final prehearing conference was held.
13. Effective October 24, 2017, Extraction and the City and County of Broomfield reached a resolution of the Protest as part of a Settlement Agreement that included entering into an Amended and Restated Oil and Gas Operator Agreement dated October 24, 2017. Pursuant to the Amended and Restated Oil and Gas Operator Agreement, Extraction and the City and County of Broomfield agreed to certain surface locations within the City and County of Broomfield and the number of wells that may be drilled from each such location for the development of the Application Lands.
14. On October 26, 2017, the City and County of Broomfield withdrew its Protest. Extraction and the City and County of Broomfield jointly proposed an Order for Commission consideration and this matter was placed by Commission Staff on the consent agenda for the October 30-31, 2017 hearing.
15. At the October 30-31, 2017 hearing, the Commission removed Docket No. 170900602 from the consent agenda pursuant to Rule 520. Upon agreement by Extraction, Docket No. 170900602 was heard at the end of the remaining agenda. Following consideration and discussion, the Commission amended the language of paragraph 4 in the below Order from that proposed by Extraction and the City and County of Broomfield so that the Order would be consistent with Commission Rules and the Oil and Gas Act, 34-60-101 - 130, C.R.S. Both Extraction and the City and County of Broomfield agreed to the amended language, as is reflected below.
16. 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.
17. Extraction agreed to be bound by oral order of the Commission.
18. 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 amending Order No. 407-1795 to modify the setbacks in an established 1,280-acre drilling and spacing unit for the Sections 9 and 16, Township 1 South, Range 68 West, 6th P.M., to allow the treated interval of each wellbore to be no closer than 150 feet from the treated interval of any other wellbore producing from the Codell and Niobrara Formations, and no closer than 460 feet from the southern unit boundary and 150 feet from the northern, eastern and western unit boundaries, without exception being granted by the Director.
ORDER
IT IS HEREBY ORDERED:
1. Order No. 407-1795 is hereby modified to allow the productive interval of any permitted well to be located no closer than 460 feet from the southern unit boundary and 150 feet from the northern, eastern and western unit boundaries of an approximate 1280-acre drilling and spacing unit established for the below described lands, unless the Director grants and exception, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations:
Township 1 South, Range 68 West, 6th P.M.
Section 9: All
Section 16: All
2. The productive interval of the wellbores shall be no closer than 150 feet from the productive interval of any other wellbore producing from the Codell and Niobrara Formations, unless an exception is granted by the Director.
3. The wells will be drilled from surface locations within the unit or at legal locations on adjacent lands. Any applications for Permits to Drill (Form 2) or Oil and Gas Location Assessments (Form 2A) filed by Extraction Oil & Gas, Inc. in the unit on surface lands within the City and County of Broomfield will comport with the October 24, 2017 Amended and Restated Oil and Gas Operator Agreement between Applicant and the City and County of Broomfield.
4. All horizontal wells shall be drilled in a north-south orientation.
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, as of October 31, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Julie Spence Prine, Secretary