BEFORE THE OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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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. 180100099
TYPE: SPACING
ORDER NO. 407-2366
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REPORT OF THE COMMISSION
The Commission heard this matter on February 12, 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln St., Suite 801, Denver, Colorado, upon application for an order to establish an approximate 640-acre drilling and spacing unit for portions of Sections 35 and 36, Township 7 North, Range 66 West, 6th P.M., and approve up to ten 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. Bayswater Exploration & Production, LLC (Operator No. 10261) (“Bayswater” 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 35 and 36, Township 7 North, Range 66 West, 6th P.M., are subject to this rule for the Niobrara and Codell Formations.
5. On September 16, 2013, the Commission entered Order No. 407-859, which pooled all interests in five approximate 400-acre designated horizontal wellbore spacing units established for portions of Section 1, Township 6 North, Range 66 West, 6th P.M., and Section 36, Township 7 North, Range 66 West, 6th P.M., for the development and operation of the Codell and Niobrara Formations, and to subject any nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., effective as of the earlier of the date of the Application, or the date that any of the costs specified in §34-60-116(7)(b), C.R.S., were first incurred for the drilling of the Renfroe #32-1-36CHZ Well (API No. 05-123-37276), Renfroe #32-1-36NHZ Well (API No. 05-123-37277), Renfroe #42-1-36NHZ Well, (API No. 05-123-37292), Renfroe #C-1-36NHZ Well (API No. 05-123-37293) and Renfroe #42-1-36CHZ Well (API No. 05-123-37294). Portions of Section 36, Township 7 North, Range 66 West, 6th P.M. are subject to this Order for the Codell and Niobrara Formations. The horizontal wells subject to Order No. 407-859 will remain subject to said Order and production from the wells will continue to be allocated according to Order No. 407-859.
6. On November 30, 2017, Bayswater, 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 approve up to ten 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 66 West, 6th P.M.
Section 35: N˝
Section 36: N˝
7. Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than one multi-well pad subject to Rule 318A, without exception being granted by the Director.
8. On January 7, 2018, Bayswater, 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.
9. Land testimony and exhibits submitted in support of the Application by Blake Leavitt, Senior Landman for Bayswater, showed that Bayswater 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 David Brewster, Senior Vice President of Exploration for Bayswater, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 232 to 282 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. Additional geologic testimony showed that the Codell Formation is present throughout the Application Lands, is approximately 18 to 22 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Codell Formation is a sequence of sandstones and is a common source of supply.
11. Engineering testimony and exhibits submitted in support of the Application by John Arsenault, Senior Vice President of Reservoir Engineering for Bayswater, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 66 acres, the drainage area for analog horizontal Codell Formation wells is estimated at 150 acres, and an approximate 640-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 and Codell Formations.
12. 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.
13. Bayswater agreed to be bound by oral order of the Commission.
14. 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 640-acre drilling and spacing unit for portions of Sections 35 and 36, Township 7 North Range 66 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
ORDER
1. An approximate 640-acre drilling and spacing unit for the below-described lands is hereby established, and a total of up to ten horizontal wells within the unit are hereby approved, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations:
Township 7 North, Range 66 West, 6th P.M.
Section 35: N˝
Section 36: N˝
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 one 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 February 12, 2018
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ______________________________________
Julie Spence Prine, Secretary