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, CODELL, AND CARLILE FORMATIONS, WATTENBERG FIELD, ADAMS COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 180300132
TYPE: SPACING
ORDER NO. 407-2383
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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 13 and 24, Township 1 South, Range 68 West, 6th P.M., and approve one horizontal well for the production of oil, gas and associated hydrocarbons from the Niobrara, Codell, and Carlile Formations in the unit, and to also approve an additional 25 horizontal wells in the proposed unit, for a total of up to 26 horizontal wells in the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara, Codell, and Carlile Formations.
FINDINGS
The Commission finds as follows:
1. Great Western Operating Company, LLC (Operator No. 10110) (“Great Western” 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
13 and 24, Township 1 South, Range 68 West, 6th P.M., are subject to
this Rule for the Niobrara, Codell, and Carlile Formations.
5. On February 19, 1992 (amended August 20, 1993), the Commission entered Order No. 407-87 which, among other things, established 80-acre drilling and spacing units for certain lands, including Sections 13 and 24, Township 1 South, Range 68 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations underlying certain lands, with permitted well locations in accordance with the provisions of Order No. 407-1.
6. On January 10, 2018, Great Western, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara, Codell, and Carlile Formations; 2) approve an additional 25 horizontal wells in the proposed unit, for a total of up to 26 horizontal wells in the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara, Codell, and Carlile Formations; and 3) provide that the productive interval of any horizontal well shall be no closer than 460 feet from the boundaries of the unit and not less than 150 feet from the productive interval of another well producing from the same formation within the unit, and approve one well pad to be located adjacent to the proposed unit, unless an exception is granted by the Director:
Township 1 South, Range 68 West, 6th P.M.
Section 13: All
Section 24: All
7. On February 16, 2018 (amended on February 26, 2018), Great Western, 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.
8. Land testimony and exhibits submitted in support of the Application by Matthew Acree, Senior Landman for Great Western, showed that both the mineral and surface interests in the Application Lands are owned in fee, and that Great Western has the authority to operate a partial undivided leasehold interest in the Application Lands.
9. Geologic testimony and exhibits submitted in support of the Application by Willis Wilcoxon, Geologist for Great Western, showed that the Carlile Formation is present throughout the Application Lands, and ranges from approximately 77 to 84 feet in thickness, and consists of shale. Geologic testimony further showed that the Niobrara Formation is present throughout the Application Lands, ranges from approximately 380 to 440 feet in thickness, and consists of chalks and marls. The testimony also showed that the Codell Formation is present throughout the Application Lands, and ranges from approximately 16 to 29 feet in thickness, and consists of sandstone.
10. Engineering testimony and exhibits submitted in support of the Application by Lewis Wandke, Senior Engineer for Petrotek Engineering Corporation retained by Great Western, showed that based upon analysis of analog wells a 9,640-foot Niobrara Formation horizontal well is expected to drain approximately 46 acres. The engineering testimony also showed that based upon analysis of analog wells a 9,640-foot Codell horizontal is expected to drain approximately 182 acres. The testimony also showed that a 9,640-foot Carlile completion is expected to drain approximately 216 acres. However, the Carlile Formation is not being spaced as an intended target interval, but rather to accommodate potential deviation in a horizontal well targeting the Codell Formation. As such, any contributions from the Carlile Formation will likely be small, and will ultimately reduce the effective drainage area of the Codell Formation wells. Therefore, the drainage value of 182 acres per Codell horizontal should be regarded as the most conservative estimation. Accordingly, the total drainage from the requested 26 wells should not exceed the 1,280-acre unit size, and an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by the horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara, Codell, and Carlile Formations. The engineering testimony also showed that the drainage radius for Niobrara Formation and Codell Formation wells is estimated at 455 feet, and therefore a setback of 460 feet from the unit boundaries is appropriate.
11. 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.
12. Great Western agreed to be bound by oral order of the Commission.
13. 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 1,280-acre drilling and spacing unit for Sections 13 and 24, Township 1 South, Range 68 West, 6th P.M., and approve one horizontal well for the production of oil, gas and associated hydrocarbons from the Niobrara, Codell, and Carlile Formations in the unit, and to also approve an additional 25 horizontal wells in the proposed unit, for a total of up to 26 horizontal wells in the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara, Codell, and Carlile Formations.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 1,280-acre drilling and spacing unit is hereby established for the below-described lands, and one horizontal well is hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara, Codell, and Carlile Formations:
Township 1 South, Range 68 West, 6th P.M.
Section 13: All
Section 24: All
2. An additional 25 horizontal wells are hereby approved in the approximate 1,280-acre drilling and spacing unit for the above described lands, for a total of up to 26 horizontal wells in the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara, Codell, and Carlile Formations.
3. The productive interval of any horizontal well shall be no closer than 460 feet from the boundaries of the unit and not less than 150 feet from the productive interval of another well producing from the same formation within the unit.
4. All horizontal wells approved by this Order shall be drilled from one multi-well pad to be located adjacent to the proposed unit, 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 3rd day of April, 2018, as of March 19, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Julie Spence Prince, Secretary