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 CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 171000725
TYPE: SPACING
ORDER NO. 407-2267 |
REPORT OF THE COMMISSION
The Commission heard this matter on December 11, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln St., Denver, Colorado, upon application for an order to establish an approximate 1,280-acre drilling and spacing unit for Sections 11 and 12, Township 7 North, Range 67 West, 6th P.M., and approve up to 24 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. Nickel Road Operating, LLC (Operator No. 10669), together with Cobalt Oil & Gas, LLC and Prelude Petroleum, LLC, both of which are affiliates of Nickel Road Operating, LLC under common ownership and control (together, “Nickel Road” or “Applicant”), as applicant herein, 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 February 19, 1992, the Commission entered Order No. 407-87 (amended August 20, 1993) 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. Sections 11 and 12, Township 7 North, Range 67 West, 6th P.M., are subject to this Order for the Codell and Niobrara Formations.
5. On April 27, 1998, the Commission adopted Rule 318A, which, among other things, allowed certain drilling locations to be utilized to drill or twin a well, deepen a well or recomplete a well and to commingle any or all of the Cretaceous Age Formations from the base of the Dakota Formation to the surface. On December 5, 2005, Rule 318A was amended to allow interior infill and boundary wells to be drilled and wellbore spacing units to be established. On August 8, 2011, Rule 318A was amended to, among other things, address drilling of horizontal wells but did not prohibit the establishment of drilling and spacing units within the Greater Wattenberg Area. Sections 11 and 12, Township 7 North, Range 67 West, 6th P.M., are subject to Rule 318A for wells drilled and producing in the Codell and Niobrara Formations and are also subject to 460 foot subsurface setback.
6. On August 31, 2017, Nickel Road, by its attorneys, filed with the Commission a verified Application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve up to 24 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 to be located no closer than 460 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:
Township 7 North, Range 67 West, 6th P.M.
Section 11: All
Section 12: All
7. Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than two multi-well pads subject to Rule 318A, without exception being granted by the Director.
8. On October 6, 2017, Nickel Road, 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.
9. On October 16, 2017, a Protest to the Application was filed by Extraction Oil & Gas, Inc. (“Protestant”). The Protestant is an owner in the Application Lands. On November 30, 2017, Extraction withdrew their Protest.
10. Land testimony and exhibits submitted in support of the Application by Louis A. Oswald, III, Landman for WYOTEX Drilling Ventures, LLC as a consultant for Nickel Road, showed that Nickel Road 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 Christopher Tincher, Geologist and Managing Partner for Nickel Road, showed that the Codell Formation is present throughout the Application Lands, is approximately 24 to 26 feet thick, and is generally of uniform thickness throughout the Application Lands. The geologic testimony also showed that the Niobrara Formation is present throughout the Application Lands, is approximately 280 to 290 feet thick, and is generally of uniform thickness throughout the Application Lands. The Further testimony showed that the Codell and Niobrara Formations are a sequence of chalks, marls, and limestones and are a common source of supply.
12. Engineering testimony and exhibits submitted in support of the Application by Andrew Haney, Reservoir Engineer and Managing Partner for Nickel Road, showed that the drainage area for analog horizontal Codell Formation wells is estimated at 34 acres, and an appropriate 1,280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically, and effectively drained by a horizontal well producing oil, gas, and associated hydrocarbons from the Codell Formation. The engineering testimony also showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 56 acres, and an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically, and effectively drained by a horizontal well producing oil, gas, and associated hydrocarbons from the Niobrara Formation.
13. 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.
14. Nickel Road agreed to be bound by oral order of the Commission.
15. Based on the facts stated in the verified Application, all protests having been withdrawn, and based on the Hearing Officer review of the Application under Rule 511., the Commission should establish an approximate 1,280-acre drilling and spacing unit for Sections 11 and 12, Township 7 North, Range 67 West, 6th P.M., and to approve up to 24 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 1,280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 24 horizontal wells within the unit are hereby approved, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations:
Township 7 North, Range 67 West, 6th P.M.
Section 11: All
Section 12: All
2. The productive interval of the wellbore will be located no closer than 460 feet from the unit boundaries, 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. All wells permitted under this Order shall be drilled from no more than two 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 30 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 10th day of January, 2018, effective December 11, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ______________________________________
Julie Spence Prine, Secretary