BEFORE THE OIL & 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, ADAMS COUNTY, COLORADO. |
) ) ) ) ) ) ) |
CAUSE NO. 407
DOCKET NO. 170500282
TYPE: SPACING
ORDER NO. 407-2422 |
|
|
|
|
REPORT OF THE COMMISSION
The Commission heard this matter on April 30, 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado 80203, upon application for an order to: 1) vacate nine designated Rule 318A horizontal wellbore spacing units; 2) vacate Order No. 407-1121; and 3) establish an approximate 1,280-acre drilling and spacing unit covering the E½ of Section 10, all of Section 11, and the W½ of Section 12, Township 1 South, Range 66 West, 6th P.M., and approve up to 12 horizontal wells within the unit for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
The Commission finds as follows:
1. Extraction Oil and Gas, Inc., Operator No. 10459 (“Extraction” or “Applicant”) is an interested party in the subject matter of the above referenced hearing.
2. Due notice of 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, 1988, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule, which was amended on August 8, 2011 to, among other things, address the drilling of horizontal wells and requires that a horizontal wellbore spacing unit must include any governmental quarter-quarter section that is located less than 460’ from the completed interval of the wellbore lateral.
5. On October 27, 2014, the Commission entered Order No. 407-1121, which approved Extraction Oil & Gas Inc.’s request for an order to pool all interests in nine approximate 320-acre designated Rule 318A horizontal wellbore spacing units established by Extraction for the E½W½, W½E½ of Section 12, Township 1 South, Range 66 West, 6th P.M. (the “Duck Club WSUs”), effective as of the date of the Application, for development and operation of the Codell and Niobrara Formations and subjected all nonconsenting parties to the cost recovery provisions of Section 34-60-116(7), C.R.S., for the Duck Club #1 Well (API No. 05-001-09821), the Duck Club #2 Well (API No. 05-001-09820), the Duck Club #3 Well (API No. 05-001-09818), the Duck Club #4 Well (API No. 05-001-09819), the Duck Club #5 Well (API No. 05-001-09817), the Duck Club #6 Well (API No. 05-001-09814), the Duck Club #7 Well (API No. 05-001-09822), the Duck Club #8 Well (API No. 05-001-09815), and the Duck Club #9 Well (API No. 05-001-09816) (the “Duck Club wells”). None of the Duck Club wells have been drilled.
6. On March 2, 2017, amended December 21, 2017, Extraction, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to vacate the Duck Club WSUs and Order No. 407-1121 and establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve up twelve (12) horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations with the treated interval of each wellbore be no closer than 150 feet from the treated interval of any other wellbore producing from the Codell and Niobrara Formations, and no closer than 460 feet from a unit boundary, without exception being granted by the Director:
Township 1 South, Range 66 West, 6th P.M.
Section 10: E½
Section 11: All
Section 12: W½
7. On August 28, 2017, Confluence DJ LLC filed a protest to the Application.
8. On December 28, 2017, Confluence withdrew its protest to the Application.
9. On January 12, Verdad Resources, LLC filed a protest to the Application.
10. On April 18, 2018, Verdad withdrew its protest to the Application.
11. On January 8, 2018, supplemented April 19, 2018, Extraction, 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 testimony and exhibits were submitted in support of the Application.
12. Land testimony and exhibits submitted in support of the Application by Pam Kingery, Land Advisory for Extraction, showed that Extraction holds oil and gas leasehold interests and has a right to drill in the Application Lands.
13. Geologic testimony and exhibits submitted in support of the Application by Ms. Alicia Branch, Geologist for Extraction showed that the Niobrara and Codell Formations are present throughout the Application Lands, and are approximately 14 to 18 feet thick in the Codell Formation, and 310 to 320 feet thick in the Niobrara Formation.
14. Engineering testimony and exhibits submitted in support of the Application by Neel Duncan, consulting engineer for Extraction, showed that the estimated drainage area, based on analogous horizontal Codell and Niobrara Formation wells, for each of the proposed Niobrara Formation horizontal wells is estimated at 23 acres and for each of the proposed Codell Formation horizontal wells is estimated at 26 acres; therefore an approximate 1,280-acre drilling and spacing unit is not less than the maximum area that can be efficiently, economically and effectively drained by twelve (12) horizontal wells producing oil, gas and associated hydrocarbons from the benches of the Codell and Niobrara Formations.
15. 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.
16. Extraction agreed to be bound by oral order of the Commission.
17. 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 (1) vacate the nine above-described designated Rule 318A horizontal wellbore spacing units and Order No. 407-1121 and (2) establish an approximate 1,280-acre drilling and spacing unit for the E½ of Section 10, all of Section 11, and the W½ of Section 12, Township 1 South, Range 66 West, 6th P.M., and approve up to twelve (12) horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations with the treated interval of each wellbore be no closer than 150 feet from the treated interval of any other wellbore producing from the Codell and Niobrara Formations, and no closer than 460 feet from a unit boundary, without exception being granted by the Director.
ORDER
IT IS HEREBY ORDERED:
1. The nine approximate 320-acre designated Rule 318A horizontal wellbore spacing units for the Duck Club #1 Well (API No. 05-001-09821), the Duck Club #2 Well (API No. 05-001-09820), the Duck Club #3 Well (API No. 05-001-09818), the Duck Club #4 Well (API No. 05-001-09819), the Duck Club #5 Well (API No. 05-001-09817), the Duck Club #6 Well (API No. 05-001-09814), the Duck Club #7 Well (API No. 05-001-09822), the Duck Club #8 Well (API No. 05-001-09815), and the Duck Club #9 Well (API No. 05-001-09816) are hereby vacated;
2. Order No. 407-1121 is hereby vacated;
3. An approximate 1,280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 12 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 66 West, 6th P.M.
Section 10: E½
Section 11: All
Section 12: W½
4. The productive interval of the wellbore shall be no closer than 150 feet from the productive interval of any other wellbore producing from the Niobrara and Codell Formations, and no closer than 460 feet from a unit boundary, unless an exception is granted by the Director.
5. All horizontal wells approved under this Order will be drilled from no more than one well pad within the unit or at legal location on adjacent lands, unless an exception is granted by the Director.
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 10th day of May, 2018, as of April 30, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By___________________________________
Julie Spence Prine, Secretary