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. 180100072

 

TYPE: SPACING

 

ORDER NO. 407-2332

 

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 vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-659 for Section 24, Township 4 North, Range 62 West, 6th P.M.; and establish an approximate 1,280-acre drilling and spacing unit for Sections 24 and 25, Township 4 North, Range 62 West, 6th P.M. and approve up to eight 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.         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 24 and 25, Township 4 North, Range 62 West, 6th P.M. are subject to this Rule for the Codell and Niobrara Formations.

 

            5.         On July 9, 2012, the Commission entered Order No. 407-659 which, among other things, established an approximate 640-acre drilling and spacing unit for Section 24, Township 4 North, Range 62 West, 6th  P.M., to accommodate the planned Anschutz Spring Lake #16-24H Well, a horizontal well, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the permitted wellbore to be located no closer than 600 feet from the boundaries of the proposed unit.

 

            6.         On November 30, 2017, BBC, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-659 for Section 24, Township 4 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve up to eight horizontal wells in the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of any horizontal well to be no closer than 460 feet from the unit boundaries, and not less than 150 feet from the productive interval of another well within the unit, unless an exception is granted by the Director:

 

Township 4 North, Range 62 West, 6th P.M.

Section 24:      All

Section 25:      All

 

Applicant stated that the wells will be drilled from no more than four new well pads within the drilling and spacing unit, or adjacent thereto, unless an exception is granted by the Director.

 

            7.         The records of the Commission reflect that there are no horizontal or vertical wells currently producing from the Niobrara and/or Codell Formations underlying the Application Lands

 

8.         On January 8, 2018, BBC, 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 January 12, 2018, Verdad Resources LLC (“Verdad”), by its attorneys, filed a Protest to the Application. On January 19, 2018, Verdad withdrew its Protest to the Application.

 

10.       Land testimony and exhibits submitted in support of the Application by Leslie Mann, Landman for BBC, showed that the surface and mineral ownership of the Application Lands is owned in fee, state and federal, and that BBC has a partial undivided leasehold interest in the Application Lands.

 

11.       Geoscience testimony and exhibits submitted in support of the Application by Dan Moore, Geologist 3 for BBC, showed the Niobrara Formation is present throughout the Application Lands and is approximately 302 to 326 feet thick, and the Codell Formation is present throughout the Application Lands and is approximately 7 to 9 feet thick.  

 

12.       Engineering testimony and exhibits submitted in support of the Application by Sean Stewart, Senior Reservoir Engineer at BBC, demonstrated that the average Niobrara horizontal in this area has an average estimated oil recovery of 149 MBbl, which averages a drainage area of 50 acres, with an average drainage area width of 353’, that Bill Barrett Corporation is planning development within the lower Niobrara and Codell of approximately 528’ apart in accordance with these results, which is the equivalent of 10 wells within the spacing unit, 8 of which fall within the standard 460’ setbacks, with the remaining 2 being boundary wells, and that the drilling and completion of horizontal wells in the Codell and Niobrara Formations underlying the Application Lands is the most efficient and economic method to develop the resource potential of this formation and will reduce waste and surface disturbance, will promote efficient drainage, and protect correlative rights.

 

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.       The drilling and spacing unit contains federal minerals.   As such, BBC agreed that it, or its successor operator, will submit a Communitization Agreement to the Bureau of Land Management at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the initial well drilled within the drilling and spacing unit.

 

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

 

16.       Based on the facts stated in the verified Application, the protest having been withdrawn, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-659 for Section 24, Township 4 North, Range 62 West, 6th P.M.; and establish an approximate 1,280-acre drilling and spacing unit for Sections 24 and 25, Township 4 North, Range 62 West, 6th P.M. and approve up to eight 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 established by Order No. 407-659 for Section 24, Township 4 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, is hereby vacated.

 

2.         An approximate 1,280-acre drilling and spacing unit is hereby established for the below-described lands, and up to eight horizontal wells are hereby approved in the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of any horizontal well to be no closer than 460 feet from the unit boundaries, and not less than 150 feet from the productive interval of another well within the unit, unless an exception is granted by the Director:

 

Township 4 North, Range 62 West, 6th P.M.

Section 24:      All

Section 25:      All

 

3.         The wells permitted under this Order shall be located on no more than four new well pads within the unit, or adjacent thereto, subject to Rule 318A., unless an exception is granted by the Director.

 

4.         BBC, or its successor operator, shall submit a Communitization Agreement to the Bureau of Land Management at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the initial well drilled within the drilling and spacing unit.

 

 

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 21st day of February, 2018, as of January 29, 2018.

 

                                                                       

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

By: ____________________________________     

Julie Spence Prine, Secretary