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. 180400310
TYPE: SPACING
ORDER NO. 407-2485
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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 1) vacate two approximate 640-acre drilling and spacing units established by Order Nos. 407-780 and 407-812 as to only the NW¼ of Section 9, Township 6 North, Range 66 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 721-acre drilling and spacing unit for certain portions of Sections 7, 8, and 9, Township 6 North, Range 66 West, 6th P.M., and approve up to 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. 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 April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Sections 7, 8, and 9, Township 6 North, Range 66 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.
5. On February 19, 1992 (amended August 20, 1993), the Commission entered Order No. 407-87, which established 80-acre drilling and spacing units for the production of oil, gas, and associated hydrocarbons from the Codell-Niobrara Formations. Sections 7, 8, and 9, Township 6 North, Range 66 West, 6th P.M., are subject to this Order for the Niobrara and Codell Formations.
6. On May 6, 2013, the Commission entered Order No. 407-780, which established an approximate 640-acre drilling and spacing unit for Section 9, Township 6 North, Range 66 West, 6th P.M., and approved up to 20 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 460 feet from the boundaries of the proposed unit and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director. Section 9, Township 6 North, Range 66 West, 6th P.M., is subject to this Order for the Niobrara Formation.
7. On June 17, 2013, the Commission entered Order 407-812, which established an approximate 640-acre drilling and spacing unit for Section 9, Township 6 North, Range 66 West, 6th P.M., and approved up to four horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 460 feet from the boundaries of the proposed unit and no closer than 150 feet from the treated interval of any other wellbore located in the unit, unless an exception is granted by the Director. Section 9, Township 6 North, Range 66 West, 6th P.M., is subject to this Order for the Niobrara Formation.
8. On February 28, 2018, amended March 26, 2018, SRC, by its attorneys, filed a verified application with the Commission (“Application”) pursuant to §34-60-116, C.R.S., for an order to vacate two approximate 640-acre drilling and spacing units established by Order Nos. 407-780 and 407-812 as to only the NW¼ of Section 9, Township 6 North, Range 66 West, 6th P.M., for production from the Niobrara Formation and 2) establish an approximate 721-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to eight 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 the wellbore to be located no closer than 460 feet from boundaries of the proposed unit, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless an exception is granted by the Director:
Township 6 North, Range 66 West, 6th P.M.
Section 7: NE¼
Section 8: N½
Section 9: NW¼; W½NE
Applicant stated that the horizontal wells to be drilled under this Application will be located on no more than two multi-well pads within the drilling and spacing unit, subject to Rule 318A, or at a legal location on adjacent lands, subject to Rule 318A, unless an exception is granted by the Director.
9. Applicant stated that it is the operator of producing wells located in the NW¼ of the Application Lands for the Niobrara and Codell Formations, as well as existing permits. Prior to drilling, Applicant plans to plug and abandon those wells and vacate said permits.
10. 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.
11. Land testimony and exhibits submitted in support of the Application by Kaitlyn Tobin, Landman for SRC, showed that SRC owns an unleased mineral interest and has a right to drill in the Application Lands. Furthermore, the land testimony indicated the wellbore orientation of each well drilled under this Application will be drilled in an east/west direction.
12. Geologic testimony and exhibits submitted in support of the Application by Thomas Birmingham, Vice President, Exploration for SRC, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 270 to 295 feet thick, and is generally of uniform thickness throughout the Application Lands. The geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 20 to 24 feet thick, and is generally of uniform thickness throughout the Application Lands.
13. Engineering testimony and exhibits submitted in support of the Application by Brett Hall, Reservoir Engineer for SRC, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 85.8 acres, and an approximate 721-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 Formation. The engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated at 189.2 acres, and an approximate 721-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 Codell Formation.
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. SRC 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 enter an order to 1) vacate two approximate 640-acre drilling and spacing units established by Order Nos. 407-780 and 407-812 as to only the NW¼ of Section 9, Township 6 North, Range 66 West, 6th P.M., for production from the Niobrara Formation; and 2) establish an approximate 721-acre drilling and spacing unit for certain portions of Sections 7, 8, and 9, Township 6 North, Range 66 West, 6th P.M., and approve up to eight horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
ORDER
IT IS HEREBY ORDERED:
1. Two approximate 640-acre drilling and spacing units established by Order Nos. 407-780 and 407-812 are hereby vacated as to only the NW¼ of Section 9, Township 6 North, Range 66 West, 6th P.M., for production oil, gas, and associated hydrocarbons from the Niobrara Formation.
2. An approximate 721-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 6 North, Range 66 West, 6th P.M.
Section 7: NE¼
Section 8: N½
Section 9: NW¼; W½NE
3. 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 producing from the same source of supply within the unit, unless the Director grants an exception.
4. All wells permitted under this Order shall be drilled from no more than two multi-well pads within the Application Lands, subject to Rule 318A, unless the Director grants an exception.
5. Applicant will plug and abandon all producing wells and vacate all active permits located in the NW¼ of Township 6 North, Range 66 West, 6th P.M., for the Niobrara and Codell Formations prior to drilling.
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 5th day of July, 2018, as of June 11, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By___________________________________
Julie Spence Prine, Secretary