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 FOR THE NIOBRARA AND CODELL FORMATIONS, WATTENBERG FIELD, ADAMS COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 171000690
TYPE: SPACING
ORDER NO. 407-2375 |
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: 1) amend Order Nos. 407-1162 and 407-1635 to limit their applicability to the Anderson #18-3-11HC Well only; 2) amend Order No. 407-1159 to limit its applicability to the Anderson #19-1-10HC Well only; and 3) establish an approximate 1280-acre drilling and spacing unit for Sections 18 and 19, Township 1 South, Range 66 West, 6th P.M., and approve up to 23 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. Ward Petroleum Corporation, (Operator No. 10359) (“Ward” 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. On April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Sections 18 and 19, Township 1 South, Range 66 West, 6th P.M., are subject to this Rule for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
5. On April 28, 2014, the Commission entered Order No. 407-996, which established a 640-acre drilling and spacing unit for Section 19, Township 1 South, Range 66 West, 6th P.M., and approved the drilling of one horizontal well in such unit for the production of oil, gas, and associated hydrocarbons from the Niobrara or Codell Formation.
6. On December 15, 2014, the Commission also entered Order No. 407-1159, which approved up to 12 the number of wells in the approximate 640-acre drilling and spacing unit previously established by Order 407-996 for Section 19, Township 1 South, Range 66 West, 6th P.M., for production of oil, gas and associated hydrocarbons from horizontal wells to the Niobrara and Codell Formations.
7. On December 15, 2014, the Commission entered Order No. 407-1162, which established an approximate 640-acre drilling and spacing unit for Section 18, Township 1 South, Range 66 West, 6th P.M., and approved the drilling of up to 12 horizontal wells in such unit for the production of oil, gas, and associated hydrocarbons from the Niobrara or Codell Formations.
8. On January 26, 2016, the Commission entered Order No. 407-1635, which pooled the approximate 640-acre drilling and spacing unit established by Order 407-1162 for Section 18, Township 1 South, Range 66 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, and applied the cost recovery provisions of C.R.S. §34-60-116(7) to any non-consenting owners within said unit for the Anderson #18-1-10 HC and Anderson #18-3-11 HC Wells.
9. On January 10, 2018, Ward, by its attorneys, filed with the Commission a verified amended application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) amend Order Nos. 407-1162 and 407-1635 to limit their applicability to the Anderson #18-3-11HC Well (API No. 05-001-09941) only; 2) amend Order No. 407-1159 to limit its applicability to the Anderson #19-1-10HC Well (API No. 05-001-09847) only; and 3) establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve up to 23 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, without exception being granted by the Director:
Township 1 South, Range 66 West, 6th P.M.
Section 18: All
Section 19: All
10. Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than two multi-well pads, subject to Rule 318A, without exception being granted by the Director.
11. On October 16, 2017, Petro Operating Company filed a protest. On January 11, 2018, the Petro Operating Company protest was withdrawn.
12. On February 26, 2018, Ward, 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.
13. Land testimony and exhibits submitted in support of the Application by Kent Craig, Landman Rockies for Ward, showed that Ward holds oil and gas leasehold interests and has a right to drill in the Application Lands. Land testimony further showed that the only well drilled and producing in Section 18, Township 1 South, Range 66 West, 6th P.M., is the Anderson #18-3-11HC Well (API #05-01-09941), and that well has been pooled and has been paying to an approximate 640-acre drilling and spacing unit consisting of Section 18, Township 1 South, Range 66 West, 6th P.M. Land testimony also showed that the only well drilled and producing in Section 19, Township 1 South, Range 66 West, 6th P.M., is the Anderson #19-1-10HC Well (API #05-01-09847), and has been paying to that approximate 640-acre drilling and spacing unit.
14. Geologic testimony and exhibits submitted in support of the Application by Jordan K. Revielle, Geologist for Ward, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 380 to 410 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. Geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 14 to 16 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Codell Formation is made up of sandstone and is a common source of supply.
15. Engineering testimony and exhibits submitted in support of the Application by Kimberly Mitchell, Reservoir Engineer for Ward, showed that the drainage area for analog horizontal Niobrara Formation wells are estimated at 39 acres, and an approximate 1280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Niobrara Formation. Engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells are estimated at 127 acres, and an approximate 1280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Codell Formation.
16. The proposed drilling and spacing unit contains federal minerals in the W½NW¼ of Section 18, Township 1 South, Range 66 West, 6th P.M. As such, Ward agreed that it or its successor operator will submit a Communitization Agreement (“CA”) to the Bureau of Land Management (“BLM”) 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.
17. 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.
18. Ward agreed to be bound by oral order of the Commission.
19. 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 order to: 1) amend Order Nos. 407-1162 and 407-1635 to limit their applicability to the Anderson #18-3-11HC Well only; 2) amend Order Nos. 407-996 and 407-1159 to limit their applicability to the Anderson #19-1-10HC Well only; and 3) establish an approximate 1280-acre drilling and spacing unit for Sections 18 and 19, Township 1 South, Range 66 West, 6th P.M., and approve up to 23 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. Order Nos. 407-1162 and 407-1635 are hereby amended to provide that they are applicable only to the Anderson #18-3-11HC Well (API No. 05-001-09941). No further wells shall be drilled in the approximate 640-acre drilling and spacing unit created and pooled by Order Nos. 407-1162 and 407-1635. The Anderson #18-3-11HC Well shall continue to pay to the approximate 640-acre drilling and spacing unit created and pooled by Order Nos. 407-1162 and 407-1635. Upon the plugging and abandonment of Anderson #18-3-11HC Well, Order Nos. 407-1162 and 407-1635 shall be deemed vacated.
2. Order Nos. 407-996 and 407-1159 are hereby amended to provide that they are applicable only to the Anderson #19-1-10HC Well (API No. 05-001-09847). No further wells shall be drilled in the approximate 640-acre drilling and spacing unit created by Order No. 407-996, or pursuant to Order No. 407-1159. The Anderson #19-1-10HC Well shall continue to pay to the approximate 640-acre drilling and spacing unit created by Order No. 407-996. Upon the plugging and abandonment of Anderson #19-1-10HC Well, Order Nos. 407-996 and 407-1159 shall be deemed vacated.
3. An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 23 horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:
Township 1 South, Range 67 West, 6th P.M.
Section 18: All
Section 19: All
4. 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.
5. All wells permitted under this Order shall be drilled from no more than two multi-well pads within the Application Lands or on adjacent lands, subject to Rule 318A, unless the Director grants an exception.
6. Ward, or its successor operator, shall submit a CA to the BLM 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 3rd day of March, 2018, as of March 19, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By______________________________________
Julie Spence Prine, Secretary