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. 170900606

 

TYPE:  SPACING

 

ORDER NO:  407-2373

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on March 19, 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 Sections 20 and 29, Township 1 North, Range 64 West, 6th P.M., and approve up to 16 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.            Verdad Resources LLC (Operator No. 10485) (“Verdad” 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 20 and 29, Township 1 North, Range 64 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 Niobrara, Codell-Niobrara, and Codell Formations, with the permitted well locations in accordance with the provisions of Order No. 407-1.  Sections 20 and 29, Township 1 North, Range 64 West, 6th P.M., is subject to this Order for the Niobrara and Codell Formations.

6.            On July 13, 2017, Verdad, 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 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 16 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 unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless an exception is granted by the Director:

 

Township 1 North, Range 64 West, 6th P.M.

Section 20:      All 

Section 29:      All

 

7.            Applicant stated that any horizontal wells to be drilled under its Application will be drilled from no more than four multi-well pads subject to Rule 318A, unless an exception is granted by the Director.

 

8.            On August 28, 2017, a Protest to the Application was filed by Bill Barrett Corporation (“Protestant”).  The Protestant is a leasehold interest owner in the Application Lands.  On January 21, 2018, BBC withdrew their Protest.

 

9.            On August 21, 2017, Verdad, 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 Frederick E. Rowe, IV, Land Manager for Verdad, showed that Verdad 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 Andrew Jarrett, Vice President of Exploration for Verdad, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 380 feet thick (on average), 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 and exhibits submitted also showed that the Codell Formation is present throughout the Application Lands, is approximately 15 feet thick (on average), 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 L. Arthur Beecherl, IV, Vice President of Operations for Verdad, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 102 acres, the drainage area for analog horizontal Codell Formation wells is estimated at 238 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 horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

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

 

15.          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 enter an order to establish an approximate 1,280-acre drilling and spacing unit for Sections 20 and 29, Township 1 North, Range 64 West, 6th P.M., and to approve up to 16 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 1,280-acre drilling and spacing unit for the below-described lands is hereby established, and a total of up to 16 horizontal wells are hereby approved for production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations:

 

Township 1 North, Range 64 West, 6th P.M.

Section 20:      All 

Section 29:      All

 

2.            The productive interval of the wellbore shall 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 within the unit, unless the Director grants an exception. 

 

3.            The proposed wells shall be located on no more than four multi-well pads on the surface of the drilling unit, 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 18th day of April, 2018, as of March 19, 2018.

 

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By:                                                                                 

            Julie Spence Prine, Secretary