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.  171200880

 

TYPE:  SPACING

 

ORDER NO. 407-2380

 

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 an application for an order to amend Order No. 407-1958 to include additional lands in Section 30, Township 3 North, Range 68 West, 6th P.M., to the approximate 1,280-acre drilling and spacing unit previously established by Order No. 407-1958 for portions of Section 6, Township 2 North, Range 68 West, 6th P.M., and Sections 30 and 31, Township 3 North, Range 68 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations, while continuing to approve up to 20 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.            Cub Creek Energy, LLC (Operator No. 10542) (“Cub Creek” 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 herein, 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.  Section 6, Township 2 North, Range 68 West, 6th P.M., and Sections 30 and 31, Township 3 North, Range 68 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.

 

5.            On May 1, 2017, the Commission issued Order No. 407-1958 which, among other things, established an approximate 1,280-acre drilling and spacing unit for portions of Section 6, Township 2 North, Range 68 West, 6th P.M., and Sections 30 and 31, Township 3 North, Range 68 West, 6th P.M., and approved up to 20 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

6.            On October 12, 2017, Cub Creek, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to amend Order No. 407-1958 to include additional lands in a previously established drilling and spacing unit creating an approximate 1,440-acre drilling and spacing unit for the below-described lands (“Application Lands”), while continuing to approve 14 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 production of oil, gas, and associated hydrocarbons from the Codell Formation, 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 2 North, Range 68 West, 6th P.M.

Section 6:        N½

 

Township 3 North, Range 68 West, 6th P.M.

Section 30:      S½ and S½ N½

Section 31:      All

 

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

 

8.            On November 22, 2017, the City of Longmont (“Protestant”) filed its Protest and Intervention letter (“Protest”) wherein the City described various concerns with the prayer that the Commission deny the Application.  On February 20, 2018, the City of Longmont withdrew its Protest and Intervention.

 

9.            On November 20, 2017, Cub Creek, 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 Scott B. Baily, Vice President of Land and Business Development for Cub Creek, showed that Cub Creek 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 Daniel J. Berberick, Vice President of Exploration for Cub Creek, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 280 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 showed the Codell Formation is present throughout the Application Lands, is approximately 22 feet thick, and is generally of uniform thickness throughout the Application Lands.  Further testimony showed that the Codell Formation is a sequence of siltstones and sandstones and is a common source of supply.  

 

12.          Engineering testimony and exhibits submitted in support of the Application by Neel L. Duncan, Consulting Petroleum Engineer for Cub Creek, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 36.1 acres, the drainage area for analog horizontal Codell Formation wells is estimated at 90.9 acres, and an approximate 1,440-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 and Niobrara 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.          Cub Creek agreed to be bound by the 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 amend Order No. 407-1958 to include additional lands in Section 30, Township 3 North, Range 68 West, 6th P.M. to the approximate 1,280-acre drilling and spacing unit previously established by Order No. 407-1958 for portions of Section 6, Township 2 North, Range 68 West, 6th P.M., and Sections 30 and 31, Township 3 North, Range 68 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations, while continuing to approve up to 20 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.            Order No. 407-1958 is hereby amended to include the S½ N½ of Section 30, Township 3 North, Range 68 West, 6th P.M., in a previously established drilling and spacing unit creating an approximate 1,440-acre drilling and spacing unit for the below-described lands, and a total of up to 14 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 Codell Formation:

 

Township 2 North, Range 68 West, 6th P.M.

Section 6:        N½

 

Township 3 North, Range 68 West, 6th P.M.

Section 30:      S½ and S½ N½

Section 31:      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 producing from the same source of supply within the unit, unless the Director grants an exception.

 

3.            The proposed wells shall be located on no more than three 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