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. 170700444
TYPE: SPACING
ORDER NO. 407-2503
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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 an application for an order to establish two approximate 1,280-acre drilling and spacing units for Sections 5, 6, 7, and 8, Township 7 North, Range 67 West, 6th P.M., and approve up to 20 horizontal wells within each of the proposed units, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.
FINDINGS
The Commission finds as follows:
1. Extraction Oil & Gas, LLC (Operator No. 10459) (“Extraction” 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 herein, 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 5, 6, 7, and 8, Township 7 North, Range 67 West, 6th P.M. are subject to this rule for the Niobrara and Codell Formations.
5. On May 24, 2017, amended January 18, 2018, Extraction, by its attorneys, filed a verified application with the Commission (“Application”) pursuant to §34-60-116, C.R.S., for an order establish two approximate 1,280-acre drilling and spacing units for the below-described lands (“Application Lands”) and to approve up to 20 horizontal wells within each of the units, 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:
Drilling and Spacing Unit (“DSU”) #1
Township 7 North, Range 67 West, 6th P.M.
Section 5: All
Section 8: All
DSU #2
Township 7 North, Range 67 West, 6th P.M.
Section 6: All
Section 7: All
Applicant states that the horizontal wells to be drilled under this Application will be located on no more than eight multi-well pads within the drilling and spacing units, subject to Rule 318A, or at a legal location on adjacent lands, subject to Rule 318A, unless an exception is granted by the Director.
6. On May 21, 2018, Extraction, by and through 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.
7. Land testimony and exhibits presented in support of the Application by Sean P. Flanagan, Landman for Extraction, showed Extraction owns substantial leasehold interests underlying the Amended Application Lands, which include working interests / operating rights for the Niobrara and Codell Formations.
8. Geologic testimony and exhibits submitted in support of the Application by Alicia Branch, Geologist for 8 North, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 279 to 282 feet thick, is generally of uniform thickness throughout the Application Lands, and is a common source of supply underlying the Application Lands. The geologic testimony showed that the Niobrara Formation consists of chalks and marls. Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 22 to 23 feet thick, is generally of uniform thickness throughout the Application Lands, and is a common source of supply underling the Application Lands. The geologic testimony showed that the Codell Formation consists of sandstone
9. Engineering testimony and exhibits submitted in support of the Application by Boyd McMaster, Petroleum Engineer for Extraction, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated from 7-10 acres, and an approximate 1,280-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 from 22-73 acres, and an approximate 1,280-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.
10. The engineering testimony further showed that the estimated drainage radius for a Niobrara-Formation well is 26 feet and the estimated drainage radius for a Codell-Formation well is 163 feet. Therefore, a setback of 300 feet from the unit boundaries is appropriate.
11. 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.
12. Extraction agrees to be bound by the oral order of the Commission.
13. 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 establishing two approximate 1,280-acre drilling and spacing units for Sections 5, 6, 7, and 8, Township 7 North, Range 67 West, 6th P.M., and approve up to 20 horizontal wells within each of the proposed units, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.
ORDER
IT IS HEREBY ORDERED:
1. Two approximate 1,280-acre drilling and spacing units for the below-described lands, are hereby established, and a total of up to 20 horizontal wells within each unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:
Drilling and Spacing Unit (“DSU”) #1
Township 7 North, Range 67 West, 6th P.M.
Section 5: All
Section 8: All
DSU #2
Township 7 North, Range 67 West, 6th P.M.
Section 6: All
Section 7: All
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 producing from the same source of supply within the unit, unless the Director grants an exception.
3. All wells permitted under this Order shall be drilled from no more than eight multi-well pads within the Application 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 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 28th day of June, 2018, as of June 11, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By___________________________________
Julie Spence Prine, Secretary