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. 180400323
TYPE: SPACING
ORDER NO. 407-2449
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REPORT OF THE COMMISSION
The Commission heard this matter on April 30, 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln St., Denver, Colorado, upon application for an order to establish an approximate 1,680-acre drilling and spacing unit for portions of Section 31, and all of Sections 19 and 30, Township 1 North, Range 68 West, 6th P.M., and approve up to 36 horizontal wells in the approximate 1,680-acre drilling and spacing unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.
FINDINGS
The Commission finds as follows:
1. Crestone Peak Resources Operating LLC (Operator No. 10633) (“Crestone Peak” 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 April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Sections 19, 30, and 31, Township 1 North, Range 68 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.
5. On October 31, 2017, the Commission entered Order No. 407-2209 which, among other things, established an approximate 1,000-acre drilling and spacing unit for Section 31: N½, N½N½S½, Section 32: N½, N½N½S½ and Section 33: NW¼, N½N½SW¼, Township 1 North, Range 68 West, 6th P.M., and approved a total of up to 12 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, providing that the productive interval of the wellbore shall be no closer than 150 feet from the productive interval of any other wellbore producing from the Codell and Niobrara Formations, and no closer than 460 feet from the northern, southern, and western unit boundaries and 150 feet from the eastern unit boundary, unless an exception is granted by the Director, providing that the wells 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, and further providing that all horizontal wells shall be drilled in an east-west orientation.
6. On March 1, 2018, Crestone Peak, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to establish an approximate 1,680-acre drilling and spacing unit for the below-described lands (“Application Lands”), and to approve up to 36 new horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, with the productive interval of any horizontal well shall be no closer than 460 feet from the northern, eastern and western boundaries of the unit (regardless of lease lines within the unit), no closer than 150 feet from the southern boundary of the unit (regardless of lease lines within the unit), and not less than 150 feet from the productive interval of another well within the unit, unless an exception is granted by the Director:
Township 1 North, Range 68 West, 6th P.M.
Section 19: All
Section 30: All
Section 31: N½; N½N½S½
Applicant stated that all wells approved under this Order shall be drilled from no more than two well pads in the unit, or adjacent thereto, unless an exception is granted by the Director.
7. On March 1, 2018, Extraction Oil and Gas, Inc. by its attorneys, filed an Application in Docket No. 180400351 to vacate the 1000-acre drilling and spacing unit established by Order No. 407-2209 for the N½, N½N½S½ of Sections 31 and 32, Township 1 North, Range 68 West, 6th P.M. and the NW¼, N½N½SW¼, Section 33, Township 1 North, Range 68 West, 6th P.M., and establish an approximate 600-acre drilling and spacing unit for Section 32: N½, N½N½S½ and Section 33: NW¼, N½N½SW¼, Township 1 North, Range 68 West, 6th P.M. The intent of Docket No. 180400351 was to remove any lands in Section 31, Township 1 North, Range 68 West from the originally approved 1,000-acre drilling and spacing unit in Order No. 407-2209.
8. On April 9, 2018, Extraction requested a continuance of Docket No. 180400351 to the June 11, 2018 hearing. Extraction did not object to Crestone’s application in Docket No. 180400323 and Crestone did not object to Extraction’s application in Docket No. 180400351. Additionally, no protests were filed to Docket No. 180400351.
9. On April 19, 2018, Extraction, by its counsel, confirmed that it had no objection to the vacatur of the approximate 1000-acre drilling and spacing unit established by Order No. 407-2209.
10. On March 23, 2018, amended April 24, 2018, Crestone Peak, by its attorneys, filed with the Commission a written request to approve the Application on the merits of the verified Application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the Application.
11. Land testimony and exhibits submitted in support of the Application by Shea Kauffman, Land Manager for Crestone Peak, showed that both the mineral and surface interests in the Application Lands is in majority fee ownership, and that Crestone Peak owns 72% leasehold ownership interest in the Application Lands. Land testimony by Robert T. Spencer, Senior Land Negotiator for Creston showed that the horizontal wells in the unit will be drilled on north-south or south-north orientation.
12. Geoscience testimony and exhibits submitted in support of the Application by William Rucker, Geologist for Crestone Peak, showed the Niobrara Formation is present throughout the Application Lands and averages approximately 420 feet thick, and the Codell Formation is present throughout the Application Lands and averages approximately 20 feet thick.
13. Engineering testimony and exhibits submitted in support of the Application by Chris Wong, Senior Reservoir Engineer for Crestone Peak, demonstrated that the average normalized drainage area for Niobrara wells with a lateral length of 13,200’, 7,600’, and 5,300’ is 68.9, 39.7 and 27.7 acres, respectively within an approximate 1,680-acre drilling and spacing unit for the Niobrara Formation and average normalized drainage area for Codell wells with a lateral length of 13,200’, 7,600’, and 5,300’ is 274.0, 157.8, and 110.0 acres, respectively within an approximate 1,680-acre drilling and spacing unit for the Codell Formation. The proposed 1,680-acre drilling and spacing unit is not smaller than the maximum area that can be economically and efficiently drained by the requested 36 horizontal wells drilled in the established unit for the Codell and Niobrara Formations, and the proposed 640-acre drilling and spacing unit, with the requested setbacks, for up to 36 horizontal wells in the Codell and Niobrara Formations in the Application Lands, will promote efficient drainage, protect correlative rights, and prevent waste.
14. 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.
15. Crestone Peak agreed to be bound by oral order of the Commission.
16. 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 vacate the approximate 1000-acre drilling and spacing unit established by Order No. 407-2209 for the N½, N½N½S½ of Sections 31 and 32, Township 1 North, Range 68 West, 6th P.M. and the NW¼, N½N½SW¼, Section 33, Township 1 North, Range 68 West, 6th P.M., and establish an approximate 1,680-acre drilling and spacing unit for portions of Section 31, and all of Sections 19 and 30, Township 1 North, Range 68 West, 6th P.M., and approve up to 36 horizontal wells in the approximate 1,680-acre drilling and spacing unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.
ORDER
IT IS HEREBY ORDERED:
1. The approximate 1000-acre drilling and spacing unit established by Order No. 407-2209 for the N½, N½N½S½ of Sections 31 and 32, Township 1 North, Range 68 West, 6th P.M. and the NW¼, N½N½SW¼, Section 33, Township 1 North, Range 68 West, 6th P.M. is hereby vacated.
2. An approximate 1,680-acre drilling and spacing unit is hereby established for the below-described lands, and up to 36 horizontal wells are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, with the productive interval of any horizontal well shall be no closer than 460 feet from the northern, eastern and western boundaries of the unit (regardless of lease lines within the unit), no closer than 150 feet from the southern boundary of the unit (regardless of lease lines within the unit), and not less than 150 feet from the productive interval of another well within the unit, unless an exception is granted by the Director:
Township 1 North, Range 68 West, 6th P.M.
Section 19: All
Section 30: All
Section 31: N½; N½N½S½
3. The horizontal wells approved under this Order shall be located on no more than two well pads within the unit, or on adjacent lands, subject to Rule 318A, unless the Director grants an exception.
4. All horizontal wells in the unit shall be drilled in a north-south or south-north 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 24th day of May, 2018, as of April 30, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ____________________________________
Julie Spence Prine, Secretary