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 IN THE NIOBRARA AND CODELL FORMATIONS, WATTENBERG FIELD, WELD County, Colorado.

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CAUSE NO. 407

 

DOCKET NO. 170900604

 

TYPE:  SPACING

 

ORDER NO. 407-2310

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on January 29, 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to establish an approximate 1,600-acre drilling and spacing unit for portions of Sections 19, 30, and 31, Township 1 North, Range 64 West, 6th P.M., and approve up to 16 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations. 

 

FINDINGS

 

The Commission finds as follows:

 

1.            Verdad Resources, LLC (Operator No. 10651) (“Verdad” 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, 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 19, 30, and 31, Township 1 North, Range 64 West, 6th P.M., are subject to this Rule for the Codell and Niobrara Formations.

 

5.            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-Niobrara Formations.  Sections 19, 30, and 31, Township 1 North, Range 64 West, 6th P.M., are subject to Order No. 407-87 for the Codell and Niobrara Formations.

 

6.            On July 13, 2017, Verdad, by its attorneys, filed a verified application pursuant to §34-60-116, C.R.S., for an order to establish an approximate 956.88-acre drilling and spacing unit for certain lands in Sections 19 and 30, Township 1 North, Range 64 West, 6th P.M., and approve up to 16 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.

 

7.            On August 28, 2017, Bill Barrett Corporation filed a Protest to Verdad’s application.  On October 26, 2017, Bill Barrett Corporation withdrew its Protest.

 

8.            On November 7, 2017, Verdad, by its attorneys, filed a verified amended 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 to approve up to 16 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 1 North, Range 64 West, 6th P.M.

Section 19:      S˝  

Section 30:      All

Section 31:      All

 

9.            Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than four multi-well pads subject to Rule 318A, without exception being granted by the Director.

 

10.          On November 20, 2017, Verdad, 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.

 

11.          Land testimony and exhibits submitted in support of the Application by Frederick Rowe Land Manager for Verdad, showed that Verdad holds oil and gas interests and has a right to drill in the Application Lands.

 

12.          Geologic testimony and exhibits submitted in support of the Application by Andrew Jarrett, Vice President-Exploration for Verdad, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 380 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Niobrara Formation is a sequence of chalks, marls and limestones and is a common source of supply.  Geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 12 to 13 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Codell Formation is sandstones and is a common source of supply.

 

13.          Engineering testimony and exhibits submitted in support of the Application by L. Arthur Beecherl IV, Vice-President of Operations for Verdad, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 130 acres, the drainage area for analog horizontal Codell Formation wells is estimated at 255 acres 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 16 horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

14.          The above-referenced testimony and exhibits show that granting the Application will allow for more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.

 

15.          Verdad agreed to be bound by oral order of the Commission. 

 

16.          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 enter an order to establish an approximate 1,600-acre drilling and spacing unit for portions of Sections 19, 30, and 31, Township 1 North Range 64 West, 6th P.M., and to  approve up to 16 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that:

 

1.            An approximate 1,600-acre drilling and spacing unit for the below-described lands is hereby established, and a total of up to 16 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 North, Range 64 West, 6th P.M.

Section 19:      S˝       

Section 30:      All

Section 31:      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 four 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 27th day of February, 2018, as of January 29, 2018

 

           

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

By: ______________________________________ 

            Julie Spence Prine, Secretary