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, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 180300190
TYPE: ADDITIONAL WELLS
ORDER NO. 407-2436 |
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, upon application for an order to approve a total of up to 40 horizontal wells within an approximate 2,560-acre drilling and spacing unit established by Order No. 407-1954 for Sections 27, 28, 29, and 30, Township 5 North, Range 66 West, 6th P.M., for the production of the oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
FINDINGS
The Commission finds as follows:
1. SRC Energy Inc. (Operator No. 10311) (“SRC” 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 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 underlying certain lands, with the permitted well locations in accordance with the provisions of Order No. 407-1. Sections 27, 28, 29, and 30, Township 5 North, Range 66 West, 6th P.M., are subject to this Order for the production of the oil, gas, and associated hydrocarbons from 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 27, 28, 29, and 30, Township 5 North, Range 66 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.
6. On May 1, 2017, the Commission entered Order No. 407-1954, which, among other things, established an approximate 2,560-acre drilling and spacing unit for Sections 27, 28, 29, and 30, Township 54 North, Range 66 West, 6th P.M., and authorized the drilling of up to 26 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, with the treated interval of the wellbore to be located no closer than 460 feet from the boundary of the unit, and not less than 150 feet from the treated interval of any well being drilled or producing from the Niobrara and Codell Formations, without exception being granted by the Director.
7. On July 24, 2017, the Commission entered Order No. 407-2113, which among other things, amended Order No. 407-1954 to allow not less than 100 feet from the productive interval of another well within the unit, unless an exception is granted by the Director, for any of the allowed horizontal wells within the approximate 2,560-acre drilling and spacing unit established for the Application Lands, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.
Township 5 North, Range 66 West, 6th P.M.
Section 27: All
Section 28: All
Section 29: All
Section 30: All
Applicant stated that any horizontal wells to be drilled under this Application will be drilled from no more than two multi-well pads within the unit or adjacent lands with the consent of the landowner, unless the Director grants an exception.
9. On April 9, 2018, SRC, 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 Kaitlyn Tobin, Landman for SRC, showed that SRC holds oil and gas leasehold interests and has a right to drill in the Application Lands. Land testimony also showed that any horizontal wells to be drilled pursuant this Order will be drilled in an east-west orientation.
11. Geoscience testimony and exhibits submitted in support of the Application by Thomas Birmingham, Vice President, Exploration for SRC, showed the Niobrara Formation is present throughout the Application Lands, and is approximately 260 to 310 feet thick. Further testimony showed that the Niobrara Formation is a sequence of chalks, limestones, and marls, and is a common source of supply. Geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 18 to 25 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Codell Formation is a relatively shallow marine sandstone and is a common source of supply.
40. Engineering testimony and exhibits submitted in support of the Application by Brett Hall, Petroleum Engineer for SRC, showed that SRC plans to drill wells that are 7,700 feet in length and wells that are 12,500 feet in length. Engineering testimony also showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 56.3 acres for wells that are 7,700 feet in length, 91.5 acres for wells that are 12,500 feet in length, and an approximate 2,560-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 further showed that the drainage area for analog horizontal Codell Formation wells is estimated at 126.7 acres for wells that are 7,700 feet in length, 205.7 acres for wells that are 12,500 feet in length, and an approximate 2,560-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.
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. SRC agreed to be bound by oral order of the Commission.
15. 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 approve a total of up to 40 horizontal wells within an approximate 2,560-acre drilling and spacing unit established by Order No. 407-1954 for Sections 27, 28, 29, and 30, Township 5 North, Range 66 West, 6th P.M., for the production of the oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
ORDER
IT IS HEREBY ORDERED:
1. A total of up to 40 horizontal wells within an approximate 2,560-acre drilling and spacing unit established by Order No. 407-1954 for the below described lands are hereby approved for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:
Township 5 North, Range 66 West, 6th P.M.
Section 27: All
Section 28: All
Section 29: All
Section 30: All
2. Order Nos. 407-1954 and 407-2113 are hereby amended to provide that the productive interval of any horizontal wellbore shall be no closer than 150 feet from the western boundary of the unit, no closer than 460 feet from the eastern, northern and southern boundaries of the unit, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless the Director grants an exception.
3. All wells permitted under this Order shall be drilled from no more than two multi-well pads within the Application Lands within the unit or on lands adjacent thereto, subject to Rule 318A, unless the Director grants an exception.
4. All wells permitted under this Order shall be drilled in an east-west orientation.
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 23rd day of May, 2018, as of April 30, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By_____________________________________
Julie Spence Prine, Secretary