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 IN THE NIOBRARA AND CODELL FORMATIONS, WATTENBERG FIELD, WELD County, Colorado. |
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CAUSE NO. 407
DOCKET NO. 180100093
TYPE: SPACING
ORDER NO. 407-2475
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REPORT OF THE COMMISSION
The Commission heard this matter on June 11, 2018, at the Lindou Auditorium Michener Library, University of Northern Colorado (UNC), 501 20th Street, Greeley, Colorado, upon application for an order to establish an approximate 640-acre drilling and spacing unit for certain lands in Sections 31 and 32, Township 7 North, Range 66 West, 6th P.M., Weld County, Colorado, and approving up to eight horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.
FINDINGS
The Commission finds as follows:
1. Bayswater Exploration & Production, LLC (Operator No. 10261) (“Bayswater” 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, 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 31 and 32, Township 7 North, Range 66 West, 6th P.M. are subject to this Rule for the Niobrara and Codell Formations.
5. There are vertical and directional wells within the above-described 640-acre drilling and spacing unit producing from, inter alia, the Niobrara and Codell Formations. Applicant is the Operator of certain of these wells, which Applicant intends to continue to produce pursuant to applicable rules and spacing orders. For those vertical and directional wells which Applicant is not the operator, Applicant states those wells will not be affected by the proposed spacing unit and order and will remain subject to applicable Commission rules and orders such that proceeds from the sale of oil or gas from those wells shall continue to be distributed based on the applicable rules and orders.
6. On October 16, 2011, the Commission approved a Form 2 Application for Permit-to-Drill for the Rotharmel 11-32H horizontal well (API No. 05-123-34546), and thereby administratively approved a wellbore spacing unit (“WSU”) covering the N˝ of Section 32, Township 7 North, Range 66 West, 6th P.M. for the development and production of the Rotharmel 11-32H well pursuant to Commission Rule 318A. Applicant requests that the WSU for the Rotharmel 11-32H well be maintained, and that proceeds from the sale of oil or gas from the well continue to be distributed based on the approved WSU.
7. On November 30, 2017, Bayswater, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 640-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to eight horizontal wells to be drilled in the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations, with the productive interval of the wellbore to be located being no closer than 150 feet from the treated interval of any other wellbore producing from the Niobrara and Codell Formations, and no closer than 460 feet from the unit boundaries, without exception being granted by the Director:
Township 7 North, Range 66 West, 6th P.M.
Section 31: N˝
Section 32: N ˝
Applicant stated that the proposed wells shall be located on no more than one multi-well pad within the drilling and spacing unit, or at a legal location on adjacent lands, subject to Rule 318A, unless the Director grants an exception.
8. On January 8th, 2018, Bayswater, 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.
9. Land testimony and exhibits submitted in support of the Application by Blake Leavitt Landman for Bayswater, showed that Bayswater holds oil and gas interests and has a right to drill in the Application Lands.
10. Geologic testimony and exhibits submitted in support of the Application by David Brewster, Senior Vice President of Exploration for Bayswater showed that the Niobrara and Codell Formations are consistently present throughout the Application Lands, and that the Niobrara is approximately 262 to 278 feet thick within the Application Lands, and that the Codell is approximately 20 to 24 feet thick within the Application Lands.
11. Engineering testimony and exhibits submitted in support of the Application by John Arsenault, Senior Vice President for Reservoir Engineering for Bayswater, showed that the estimated drainage area for the proposed Codell and Niobrara Formation wells are estimated to be a maximum of 212 acres and 78 acres, respectively, and an approximate 640 acre spacing unit is therefore not less than the maximum area that can be efficiently, economically, and effectively drained by 8 horizontal well producing oil, gas and associated hydrocarbons from the benches of the Codell and Niobrara Formations.
12. The above-referenced testimony and exhibits show that granting the Application will allow for more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.
13. Bayswater agreed to be bound by oral order of the Commission.
14. 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 N˝ of Sections 31 and 32, Township 7 North Range 66 West, 6th P.M., Weld County, Colorado, for the development and 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 7 North, Range 66 West, 6th P.M.
Section 31: N˝
Section 32: N˝
2. The productive interval of the wellbore will be located no closer than 460 feet from the unit boundaries, 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. The proposed wells shall be located on no more than one multi-well pad within the drilling and spacing unit, or at a legal location on adjacent lands, subject to Rule 318A, 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 30 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 29th day of June, 2018, as of June 11, 2018
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By ____________________________________
Julie Spence Prine, Secretary