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 NIOBRARA, FORT HAYS, CODELL, AND CARLILE FORMATIONS, UNNAMED FIELD, WELD COUNTY, COLORADO |
) ) ) ) ) ) ) ) |
CAUSE NO. 407 & 535
DOCKET NO. 180100058
TYPE: SPACING
ORDER NO. 407-2359 & 535-939 |
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 1,280-acre drilling and spacing unit for Section 3, Township 7 North, Range 67 West, 6th P.M. and Section 34, Township 8 North, Range 67 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 Niobrara, Fort Hays, Codell, and Carlile Formations.
FINDINGS
The Commission finds as follows:
1. Enerplus Resources (USA) Corporation (Operator No. 10177) (“Enerplus” 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. Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that, on unspaced lands, wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. Section 3, Township 7 North, Range 67 West, 6th P.M. and Section 34, Township 8 North, Range 67 West, 6th P.M., are subject to Rule 318.a. for the Niobrara, Fort Hays, Codell, and Carlile 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 Cretaceous Age Formations from the base of the Dakota Formation to the surface. Rule 318A. supersedes all prior Commission drilling and spacing orders affecting well location and density requirements of Greater Wattenberg Area wells. On December 5, 2005, Rule 318A. was amended, among other things, to allow interior infill and boundary wells to be drilled and wellbore spacing units to be established. On August 8, 2011, Rule 318A. was again amended, among other things, to address drilling of horizontal wells. Section 3, Township 7 North, Range 67 West, 6th P.M. and Section 34, Township 8 North, Range 67 West, 6th P.M., are subject to certain aspects of this Rule for horizontal wells drilled in the Codell and Niobrara Formations. There are no other specific Commission Orders applicable to the Niobrara, Fort Hays, Codell, and Carlile Formations underlying Section 3, Township 7 North, Range 67 West, 6th P.M. and Section 34, Township 8 North, Range 67 West, 6th P.M.
6. On November 30, 2017, Enerplus, by its attorneys, filed 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 to approve two horizontal wells within the unit for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation and six horizontal wells within the unit for the production of oil, gas, and associated hydrocarbons from the Fort Hays, Codell, and Carlile Formations, with the productive interval of the wellbore to be located no closer than 600 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 3: All
Township 8 North, Range 67 West, 6th P.M.
Section 34: All
Applicant stated that any horizontal wells to be drilled will be drilled from no more than two multi-well pads on the surface of the drilling unit, or on adjacent lands with consent of the landowner, unless an exception is granted by the Director.
7. On January 8, 2018, Enerplus, 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.
8. Land testimony and exhibits submitted in support of the Application by Sean Gallagher, Senior Landman for Enerplus, showed that Enerplus holds oil and gas leasehold interests and has a right to drill in the Application Lands.
9. Geologic testimony and exhibits submitted in support of the Application by Jeff Kiernan, Senior Geologist for Enerplus, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 305 to 320 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 Niobrara Formation consists of chalks and marls. Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 22 to 23 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 bioturbated sandstone. Geologic testimony further showed that the Fort Hays Formation is present throughout the Application Lands, is approximately 21 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 Fort Hays Formation consists of limestone. Geologic testimony further showed that the Carlile Formation is present throughout the Application Lands, is approximately 48 to 49 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 Carlile Formation consists of shale.
10. Engineering testimony and exhibits submitted in support of the Application by Cody Clickner, Reservoir Engineer for Enerplus, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 602 acres, and an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically, and effectively drained by two horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation. The engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated at 212 acres, and an appropriate 1,280-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically, and effectively drained by six horizontal wells producing oil, gas, and associated hydrocarbons from the Codell Formation. Finally, the engineering testimony affirmed that the Fort Hays and Carlile Formations are not intentional target formations for the planned wells, but should be included in the drilling and spacing unit in the event a wellbore wanders outside of the target zone.
11. 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.
12. Enerplus agreed to be bound by oral order of the Commission.
13. Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to establish an approximate 1,280-acre drilling and spacing unit for Section 3, Township 7 North, Range 67 West, 6th P.M. and Section 34, Township 8 North, Range 67 West, 6th P.M., and to approve up to eight horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 1,280-acre drilling and spacing unit for the below-described lands is hereby established for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, and a total of up to two horizontal wells within the unit are approved for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation and up to six horizontal wells within the unit are approved for the production of oil, gas, and associated hydrocarbons from the Fort Hays, Codell, and Carlile Formations:
Township 7 North, Range 67 West, 6th P.M.
Section 3: All
Township 8 North, Range 67 West, 6th P.M.
Section 34: All
2. The productive interval of the wellbore will be located no closer than 600 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, without exception being granted by the Director.
3. Any horizontal wells to be drilled shall be drilled from no more than two multi-well pads on the surface of the drilling unit, or on adjacent lands with consent of the landowner, 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 26th day of February, 2018, as of January 29, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By_______________________________________
Julie Spence Prine, Secretary