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 CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, ADAMS COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 170900528

 

TYPE:  SPACING

 

ORDER NO. 407-2246

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on November 28, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to establish an approximate 1,923.32-acre drilling and spacing unit for Section 12, Township 1 South, Range 67 West, 6th P.M., and Sections 7 and 8, Township 1 South, Range 66 West, 6th P.M., and approve up to 26 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Great Western Operating Company, LLC (Operator No. 10110) (“Great Western” 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. Section 12, Township 1 South, Range 67 West, 6th P.M., and Sections 7 and 8, Township 1 South, Range 66 West, 6th P.M. are subject to this Rule for the Codell and Niobrara Formations.

 

5.         On February 19, 1992 (amended August 20, 1993), the Commission entered Order No. 407-87  which, among other things, established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with permitted well locations in accordance with the provisions of Order No. 407-1.  Section 12, Township 1 South, Range 67 West, 6th P.M., and Sections 7 and 8, Township 1 South, Range 66 West, 6th P.M., are subject to this Order for the Codell and Niobrara Formations.

 

6.         On June 23, 2017, Great Western, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 1,923.32-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve  up to 26 horizontal wells in the unit, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations, providing that the productive interval of any horizontal well shall be no closer than 460 feet from the boundaries of the unit and not less than 150 feet from the productive interval of another well within the unit, and authorizing up to three well pads in the unit subject to Rule 318A or adjacent thereto, unless an exception is granted by the Director:

 

Township 1 South, Range 67 West, 6th P.M.

Section 12:      All  

 

Township 1 South, Range 66 West, 6th P.M.

Section 7:        All 

Section 8:        All

 

7.         On or before August 21, 2017, Great Western, 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 Matthew Acree, Senior Landman for Great Western, showed that Great Western 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 Willis Wilcoxon, Geologist for Great Western, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 420 to 490 feet thick, and that the Codell Formation is present throughout the Application Lands, is approximately 16 to 20 feet thick.

 

10.       Engineering testimony and exhibits submitted in support of the Application by Lewis Wandke, Senior Engineer for Petrotek Engineering Corporation retained by Great Western, showed that a 14,920’ Niobrara horizontal is expected to drain approximately 71 acres, a 14,920’ Codell horizontal is expected to drain approximately 240 acres, and based on the drilling and spacing unit area of 1,923.32 acres, these drainage calculations are consistent with the development of up to 27 Niobrara wells and up to eight Codell wells, for a total of up to 35 wells.  Accordingly, total drainage from the requested well count (26) should not exceed the 1,923.32-acre unit size, and an approximate 1,923.32-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 26 horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.

 

11.        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.

 

12.       The drilling and spacing unit contains federal minerals under a rail road that passes through Section 7, Township 1 South, Range 66 West, 6th P.M. As such, Great Western, or successor operator, agrees to submit a Communitization Agreement (“CA”) to the BLM at least 90 days before the anticipated date of first production (as defined in the COGCC Rules) from the initial well drilled within the drilling and spacing unit.  This will be accomplished after a lease covering the rail road is established with the BLM and Applications for Permits to drilled are filed and a Bond is posted with the BLM.

 

13.       Great Western agreed to be bound by oral order of the Commission.

 

14.       Based on the facts stated in the verified Application, all protests having been withdrawn or converted to Rule 510 Statements, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to establish an approximate 1,923.32-acre drilling and spacing unit for Section 12, Township 1 South, Range 67 West, 6th P.M., and Sections 7 and 8, Township 1 South, Range 66 West, 6th P.M., and approve a total of up to 26 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 1,923.32-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 26 horizontal wells within the unit are hereby approved for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations:

 

Township 1 South, Range 67 West, 6th P.M.

Section 12:      All  

 

Township 1 South, Range 66 West, 6th P.M.

Section 7:        All 

Section 8:        All

 

2.         The productive interval of each wellbore shall be no closer than 460 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located within the unit, unless the Director grants an exception.

 

3.         The wells shall be drilled from no more than three multi-well pads in the unit subject to Rule 318A or adjacent thereto, unless the Director grants an exception.

 

4.         The drilling and spacing unit contains federal minerals under a rail road that passes through Section 7, Township 1 South, Range 66 West, 6th P.M. As such, Great Western, or successor operator, shall submit a Communitization Agreement (“CA”) to the BLM at least 90 days before the anticipated date of first production (as defined in the COGCC Rules) from the initial well drilled within the drilling and spacing unit.  This will be accomplished after a lease covering the rail road is established with the BLM and Applications for Permits to drilled are filed and a Bond is posted with the BLM.

 

 

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 28th day of December, 2017, as of November 28, 2017.   

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By_______________________________________

                  Julie Spence Prine, Secretary