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. 180300198 TYPE:  SPACING ORDER NO. 407-2391

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 640-acre drilling and spacing unit for the E½ of Sections 20 and 29, Township 1 North, Range 66 West, 6th P.M., and approve eight 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.         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 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 the production of oil, gas, and associated hydrocarbons from the 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 66 West, 6^th P.M., are subject to this Order for the Niobrara and Codell Formations.

5.         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 66 West, 6^th P.M., are subject to this Rule for the Niobrara and Codell Formations.

6.         On January 18, 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 640-acre drilling and spacing unit for the E½ of Sections 20 and 29, Township 1 North, Range 66 West, 6th P.M., and approve eight horizontal wells in the proposed unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations; and 2) providing 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 any other wellbore located in the unit, unless an exception is granted by the Director:  

Township 1 North, Range 66 West, 6th P.M.

Section 20:      E½ 

Section 29:      E½ 

7.         On February 16, 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 Niobrara Formation is present throughout the Application Lands, and ranges from approximately 340 to 410 feet in thickness, and that the Codell Formation is present throughout the Application Lands, and ranges from approximately 16 to 20 feet in thickness.

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 a 9,640’ Niobrara horizontal well is expected to drain approximately 45 acres, and a 9,640’ Codell horizontal is expected to drain approximately 154 acres. Accordingly, total drainage from the requested well count (8) should not exceed the 640-acre unit size, and an approximate 640-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 and Codell Formations.

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 640-acre drilling and spacing unit for the E½ of Sections 20 and 29, Township 1 North, Range 66 West, 6th P.M., and approve eight horizontal wells in the proposed unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

ORDER

IT IS HEREBY ORDERED:

1.         An approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to eight 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 North, Range 66 West, 6th P.M.

Section 20:      E½ 

Section 29:      E½ 

2.         The productive interval of any wellbore will be located no closer than 460 feet from the boundaries of the unit and not less than 150 feet from the productive interval of another wellbore located within the unit, unless the Director grants an exception.

3.         The proposed wells shall be located on no more than one well pad to be located within the unit, subject to Rule 318A, unless an exception is granted by the Director.

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 17th day of April, 2018, as of March 19, 2018.        

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By_______________________________________

               Julie Spence Prince, Secretary