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, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 171200855

 

TYPE: SPACING

 

ORDER NO. 407-2321

 

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 640-acre drilling and spacing unit for portions of Sections 3 and 4, Township 7 North, Range 65 West, 6th P.M., and approve up to 12 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”), 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 and 4, Township 7 North, Range 65 West, 6th P.M. are subject to this Rule for the Niobrara and Codell Formations.

 

5.         On October 12, 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 640-acre drilling and spacing unit for the below-described lands (“Application Lands”), and to approve up to 12 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 65 West, 6th P.M.

Section 3:        S˝

Section 4:        S˝

 

6.         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.

 

7.         On November 27, 2017, Bayswater Exploration & Production, LLC (“Bayswater”), by its attorneys, filed a Protest to the Application. On January 16, 2018, Bayswater withdrew its Protest.

 

8.         On November 20, 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.         Land testimony and exhibits submitted in support of the Application by Louis A. Oswald, III, Landman for WYOTEX Drilling Ventures, LLC, Consultant for Nickel Road, showed that Nickel Road holds oil and gas leasehold interests and has a right to drill in the Application Lands.

 

10.       Geologic testimony and exhibits submitted in support of the Application by Christopher (Kit) Tincher, Geologist and Managing Partner for Nickel Road, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 240 to 275 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 further showed that the Codell Formation is present throughout the Application Lands, is approximately 17 to 19 feet thick, is generally of uniform thickness throughout the Application Lands, and is a common source of supply underling the Application Lands.  The geologic testimony showed that the Codell Formation consists of sandstone.

 

11.       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 Niobrara Formation wells is estimated at 56 acres, the drainage area for analog horizontal Codell Formation wells is estimated at 78 acres and an approximate 640-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically, and effectively drained by 12 horizontal wells producing oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.

 

12.       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.

 

13.       Nickel Road 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, and based on the Hearing Officer review of the Application under Rule 511, the Commission should establish an approximate 640-acre drilling and spacing unit for portions of Sections 3 and 4, Township 7 North, Range 65 West, 6th P.M., and approve up to 12 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 640-acre drilling and spacing unit for the below-described lands is hereby established, and a total of up to 12 horizontal wells are hereby approved, 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 not less than 150 feet from the productive interval of any other wellbore producing from the same source of supply within the unit, unless an exception is granted by the Director:

 

Township 7 North, Range 65 West, 6th P.M.

Section 3:        S˝

Section 4:        S˝

 

2.            The wells permitted under this Order shall be located on no more than two multi-well pads within the Application Lands, subject to Rule 318A, unless an exception is granted by the Director.  

 

 

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 27th day of February, 2018 effective as of January 29, 2018.

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

 

By: ______________________________________ 

             Julie Spence Prine, Secretary