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 AND CODELL FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 180100020

 

TYPE:  SPACING

 

ORDER NO. 407-2364

AMENDED

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on February 12, 2018, at the Colorado Oil and Gas Conservation Commission, The Chancery Building, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to establish an approximate 2,560-acre drilling and spacing unit for Sections 28, 29, 32, and 33, Township 4 North, Range 65 West, 6th P.M., and approve up to 30 horizontal wells within the unit, for production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.            PDC Energy, Inc. (Operator No. 69175) (“PDC”), 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 28, 29, 32, and 33, Township 4 North, Range 65 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.

5.            On February 19, 1992 (amended August 20, 1993), the Commission entered Order No. 407-87 which established 80-acre drilling and spacing units for the production of oil, gas, and associated hydrocarbons from the Codell-Niobrara Formations, the Codell Formation, and the Niobrara Formation underlying certain lands, including Sections 28, 29, 32, and 33, Township 4 North, Range 65 West, 6th P.M., with the permitted well locations in accordance with the provisions of Order 407-1.

6.            Sections 28, 29, 32, and 33, Township 4 North, Range 65 West, 6th P.M., contain 109 vertical or directional wells designated as producing, shut in, or temporarily abandoned, according to COGIS records (“Existing Wells”).  PDC excluded the Existing Wells from its Application, to the extent they are still producing, and all production and payments from the Existing Wells should be maintained under the authority of the applicable Commission Rules and Orders under which the wells are currently operating.

7.            On November 20, 2017, PDC, 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 2,560-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approved up to 30 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations, with the productive interval of the wellbore to be located no closer than 460 feet from the east and west unit boundaries, and no closer than 150 feet from the north and south unit boundaries, and not less than 150 feet from the productive interval of any other wellbore located in the same unit, without exception being granted by the Director:

 

Township 4 North, Range 65 West, 6th P.M.

Section 28:  All

Section 29:  All

Section 32:  All

Section 33:  All

 

8.            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.

 

9.            On January 5, 2018, PDC, 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.

 

10.          Land Testimony and exhibits submitted in support of the Application by Daniel R. McCoy, Regional Landman for PDC, showed that PDC holds oil and gas leasehold interests and has a right to drill in the Application Lands.

 

11.          Geologic Testimony and exhibits submitted in support of the Application by Nathan Marolf, Associate Geologist for PDC, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 310 to 330 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.  Further geologic testimony showed that the Codell Formation is present throughout the Application Lands, is approximately 14 to 17 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Codell Formation is a sequence of chalks, marls and limestones and is a common source of supply.

 

12.          Engineering Testimony and exhibits submitted in support of the Application by John Yetkin, Reservoir Engineer for PDC, showed that the drainage area for analog 7,770-foot long horizontal Niobrara Formation wells is estimated at 61 acres, and an approximate 2,560-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically, and effectively drained by a horizontal well producing oil, gas, and associated hydrocarbons from the Niobrara Formation.  Further engineering testimony showed that the drainage area for analog 7,770-foot long horizontal Codell Formation wells is estimated at 74 acres, and an approximate 2,560-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically, and effectively drained by a horizontal well producing oil, gas, and associated hydrocarbons from the Codell Formation.

 

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.          PDC agreed to be bound by oral order of the Commission.

 

15.          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 2,560-acre drilling and spacing unit for Sections 28, 29, 32, and 33, Township 4 North, Range 65 West, 6th P.M., and to approve up to 30 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.            An approximate 2,560-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 30 horizontal wells within the unit are hereby approved, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations:

 

Township 4 North, Range 65 West, 6th P.M.

Section 28:  All

Section 29:  All

Section 32:  All

Section 33:  All

 

2.            The productive interval of the wellbore will be located no closer than 460 feet from the east and west unit boundaries, and no closer than 150 feet from the north and south unit boundaries, and not less than 150 feet from the productive interval of any other wellbore within the same unit 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 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 28th day of February, 2018, as of February 12, 2018.

AMENDED this 9th day of May, 2018, as of February 12, 2018.

 

 

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By:                                                                              

            Julie Spence Prine, Secretary