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, BROOMFIELD COUNTY, COLORADO. |
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CAUSE NO. 407
DOCKET NO. 170900598
TYPE: SPACING
ORDER NO. 407-2256 |
REPORT OF THE COMMISSION
The Commission heard this matter on December 11, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln St., Suite 801, Denver, Colorado, upon application for an order establishing an approximate 1,600-acre drilling and spacing unit for Sections 7, 18, and 19, Township 1 South, Range 68 West, 6th P.M., and to approve up to 20 new horizontal wells (subsequently reduced to one horizontal well) in the unit for the production of the oil and associated hydrocarbons from the Codell and Niobrara Formations.
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 July 13, 2017, Extraction, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 1,600-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve up to 20 horizontal wells, oriented in a north-south direction, within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations with 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, eastern and western unit boundaries and 150 feet from the northern unit boundary, without exception being granted by the Director:
Township 1 South, Range 68 West, 6th P.M.
Section 7: S ½
Section 18: All
Section 19: All
6. 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.
7. 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.
8. Geologic testimony and exhibits submitted in support of the Application by Ms. Alicia Branch, Geologic Consultant and Jim Folcik, Geoscience Manager, for Extraction showed that the Niobrara and Codell Formations are present throughout the Application Lands and are approximately 270 feet to 300 feet thick, and 14 feet to 15 feet thick, respectively from the top through the base of the formation.
9. Engineering testimony and exhibits submitted in support of the Application by Neel Duncan, consultant Reservoir Petroleum Engineer for Extraction, showed that the estimated drainage area is 25.3 acres for a Niobrara horizontal well, and 83.5 acres for a Codell horizontal well, and an approximate 1,600-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically and effectively drained by one (1) horizontal well producing oil, gas and associated hydrocarbons from the benches of the Codell and Niobrara Formations. Applicant’s proposed wellbore layout and pressure/fracture data supports the requested inter-well and unit boundary setbacks. Further testimony concluded that the project economics are sound.
10. On August 24, 2017, the City and County of Broomfield filed a protest/intervention to Extraction’s Application.
11. On August 28, 2017, the Wildgrass Master Association filed a protest/intervention to Extraction’s Application.
12. On August 31, 2017, Extraction, by its attorneys, filed an amendment to the Application, requesting that the Commission approve one horizontal well, oriented in a north-south direction, within the unit, for the development of the Codell and Niobrara formations.
13. On October 20, 2017, a final prehearing conference was held.
14. 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.
15. On October 30, 2017, certain aspects of this matter were heard before the Commission. The matter was then continued until the December 11, 2017 hearing of the Commission.
16. On December 1, 2017, the City and County of Broomfield withdrew its protest/intervention conditioned upon the entry of the proposed Order herein.
17. On December 1, 2017, the Wildgrass Master Association withdrew its protest.
18. The above-referenced testimony and exhibits showed 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.
19. Extraction agreed to be bound by oral order of the Commission.
20. Based on the facts stated in the verified Application, the protests having been withdrawn, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to establish an approximate 1,600-acre drilling and spacing unit for Sections 7, 18, and 19, Township 1 South, Range 68 West, 6th P.M., and to approve one new horizontal wells (subsequently reduced to one horizontal well) in the unit for the production of the oil and associated hydrocarbons from the Codell and Niobrara Formations
ORDER
IT IS HEREBY ORDERED:
1. One approximate 1,600-acre drilling and spacing unit for the below-described lands, is hereby established, and one horizontal well, within the unit is hereby approved, 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 7: S½
Section 18: All
Section 19: All
2. The productive interval of the wellbore shall be 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 southern, eastern and western unit boundaries and 150 feet from the northern unit boundary, unless an exception is granted by the Director.
3. The wells will be drilled from surface locations within the unit or at legal location(s) 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. The horizontal well 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 21st day of December, 2017, as of December 11, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Julie Spence Prine, Secretary