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. 170900562
TYPE: EXCEPTION LOCATION
ORDER NO. 407-2303 |
REPORT OF THE COMMISSION
The Commission heard this matter on December 11, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to reduce the setbacks to 200 feet for the eastern and western exterior boundaries and 250 feet for the northern and southern exterior boundaries of Sections 3, 4, 5, 6, 7, and 8, Township 4 North, Range 61 West, 6th P.M. and Sections 1, 2, 11, 12, 13, and 14, Township 4 North, Range 62 West, 6th P.M., subject to a proposed United States Bureau of Land Management federal unit (“Riverside Federal Unit”), effective on the date the Riverside Federal Unit is established, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.
FINDINGS
The Commission finds as follows:
1. Bill Barrett Corporation (Operator No. 10071) (“BBC” 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 April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Sections 3, 4, 5, 6, 7, and 8, Township 4 North, Range 61 West, 6th P.M. and Sections 1, 2, 11, 12, 13, and 14, Township 4 North, Range 62 West, 6th P.M, are subject to this Rule for the Codell and Niobrara Formations.
5. On February 22, 2011 (Corrected April 4, 2013), the Commission entered Order Nos. 407-779 and 535-4 which, among other things, established 640-acre drilling and spacing units and approved up to one horizontal well for the development and operation of the Niobrara Formation with the treated interval of such well to be no closer than 460 feet from the boundaries of the respective 640-acre drilling and spacing unit. Sections 3, 4, 5, 7 and 8, Township 4 North, Range 61 West, 6th P.M. and Sections 1, 2, 11, 12, 13 and 14, Township 4 North, Range 62 West, 6th P.M., are subject to Nos. 407-779 and 535-4 for the Niobrara Formation.
6. On December 16, 2013 (Amended December 15, 2014), the Commission entered Order No. 407-902 which, among other things, established an approximate 1,026.47-acre drilling and spacing unit and approved up to 16 wells for Section 1: Lot 2, the S½NW¼, SW¼, SW¼NE¼, and those portions of Lot 4 and the W½SE¼ lying outside of the Riverside Reservoir right-of-way, and Section 2, Township 4 North, Range 62 West, 6th P.M. Order No. 407-902 applies to portions of Section 1 and all of Section 2, Township 4 North, Range 62 West, 6th P.M. The productive interval of the approved wells in Order No. 407-902 shall be no closer than 460 feet from the unit boundaries.
7. Commission records reflect that there are four horizontal wells producing from the Codell and/or Niobrara Formations in Sections 1 and 2, Township 4 North, Range 62 West, 6th P.M.: Anschutz State 4-62-2-1721BH2 (API No. 05-123-38961), Anschutz State 4-62-2-3228BH2 (API No. 05-123-38962), Anschutz State 4-62-2-1721CH2 (API No. 05-123-38963), and Anschutz State 4-62-2-3228CH2 (API NO. 05-123-38964) within the 1,026.47-are drilling and spacing unit established in Order No. 407-902.
8. On July 13, 2017, amended September 13, 2017 BBC, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to reduce setbacks to 200 foot for the eastern and western exterior boundaries and 250 foot subsurface setbacks for the northern and southern exterior boundaries of the below-described lands (“Application Lands”), subject to a proposed United States Bureau of Land Management (“BLM”) federal unit (“Riverside Federal Unit”), effective on the date the Riverside Federal Unit is established, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations:
Township 4 North, Range 61 West, 6th P.M.
Section 3: All
Section 4: All
Section 5: All
Section 6: All
Section 7: All
Section 8: All
Township 4 North, Range 62 West, 6th P.M.
Section 1: All
Section 2: All
Section 11: All
Section 12: All
Section 13: All
Section 14: All
9. BBC’s Application provides that upon establishment of the Riverside Federal Unit, the approximate 640-acre drilling and spacing units established by Order Nos. 407-779 and 535-4 for Sections 3, 4, 5, 7, and 8, Township 4 North, Range 61 West, 6th P.M., and Sections 1, 2, 11, 12, 13, and 14, Township 4 North, Range 62 West, 6th P.M. will be vacated. BBC’s Application also provides that upon establishment of the Riverside Federal Unit, the approximate 1026.47-acre drilling and spacing unit established by Order No. 407-902 for portions of Section 1 and all of Section 2, Township 4 North, Range 62 West, 6th P.M. will be vacated.
10. On August 1, 2017, BBC obtained preliminary approval of its Riverside Federal Unit plan from the BLM, which plan will govern the development and operation of the Application Lands for the production of oil, gas, and associated hydrocarbons therefrom. BBC incorporated reduced setbacks in the plan submitted to the BLM for the Riverside Federal Unit. The BLM has indicated to Applicant its preference for reduced setbacks as an alternative to a series of wellbore spacing units along each of the boundaries of the Riverside Federal Unit.
11. On August 28, 2017, Verdad filed a Protest to BBC’s Application alleging that BBC’s proposed reduced setbacks will violate Verdad’s correlative rights in adjacent sections, directly and adversely affecting and injuring Verdad.
12. On December 8, 2017, Verdad withdrew its Protest to BBC’s Application for no stated reason.
13. BBC presented testimony and exhibits in support of its Application before the Commission at the December 11, 2017 hearing.
14. Land testimony and exhibits submitted in support of the Application by Gabriel Findlay, Land Manager – Operations for BBC, showed that BBC holds oil and gas leasehold interests and has a right to drill in the Application Lands.
15. Geoscience testimony and exhibits submitted in support of the Application by Angie Southcott, Geologist for BBC, showed the Codell and Niobrara Formations are present throughout the Application Lands.
16. Engineering testimony and exhibits submitted in support of the Application by Sean Stewart, Senior Reservoir Engineer at BBC, demonstrated that rate transient analysis on nearest wells utilizing current completion technology and conservative assumptions show estimated drainage of 89 to 103 feet from the wellbore, and that the proposed wells within the proposed federal unit will drain less than 250 feet from parallel setbacks of the proposed unit, and that BBC’s reduced setbacks will reduce waste and surface disturbance, will promote efficient drainage, and protect correlative rights.
17. Applicant states that upon establishment of the Riverside Federal Unit, the approximate 640-acre drilling and spacing units established by Order Nos. 407-779 and 535-4 for Sections 3, 4, 5, 7 and 8, Township 4 North, Range 61 West, 6th P.M. and Sections 1, 2, 11, 12, 13 and 14, Township 4 North, Range 62 West, 6th P.M., will be vacated.
18. Applicant states that upon establishment of the Riverside Federal Unit, the approximate 1026.47-acre drilling and spacing unit established by Order No. 407-902 for portions of Section 1 and all of Section 2, Township 4 North, Range 62 West, 6th P.M., will be vacated.
19. Applicant states that it supports reciprocal setbacks for the offset acreage.
20. 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.
21. BBC agreed to be bound by oral order of the Commission.
22. Based on the facts stated in the verified Application, the Verdad protest having been withdrawn, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order to reduce setbacks to 200 feet for the eastern and western exterior boundaries and 250 feet for the northern and southern exterior boundaries of Sections 3, 4, 5, 6, 7, and 8, Township 4 North, Range 61 West, 6th P.M. and Sections 1, 2, 11, 12, 13, and 14, Township 4 North, Range 62 West, 6th P.M., subject to the Riverside Federal Unit, effective on the date the Riverside Federal Unit is established for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.
ORDER
IT IS HEREBY ORDERED:
1. Pursuant to the provisions of §34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act, the setback on the eastern and western exterior boundaries of Sections 3, 4, 5, 6, 7, and 8, Township 4 North, Range 61 West, 6th P.M. and Sections 1, 2, 11, 12, 13, and 14, Township 4 North, Range 62 West, 6th P.M. is hereby changed to 200 feet and the setback on the northern and southern exterior boundaries is hereby changed to 250 feet, unless an exception is by the Director, subject to the Riverside Federal Unit, effective on the date the Riverside Federal Unit is established, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.
2. Upon establishment of the Riverside Federal Unit, the approximate 640-acre drilling and spacing units established by Order Nos. 407-779 and 535-4 for Sections 3, 4, 5, 7 and 8, Township 4 North, Range 61 West, 6th P.M. and Sections 1, 2, 11, 12, 13 and 14, Township 4 North, Range 62 West, 6th P.M., will be vacated.
3. Upon establishment of the Riverside Federal Unit, the approximate 1026.47-acre drilling and spacing unit established by Order No. 407-902 for portions of Section 1 and all of Section 2, Township 4 North, Range 62 West, 6th P.M. will be vacated.
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 10th day of January, 2018, effective as of December 11, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ______________________________________
Julie Spence Prine, Secretary