BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 180400285

 

TYPE: SPACING

 

ORDER NO. 407-2513

 

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 1280-acre drilling and spacing unit for Section 7, Township 7 North, Range 64 West, 6th P.M. and Section 12, Township 7 North, Range 65 West, 6th P.M., and approve up to 27 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.         Confluence DJ LLC (Operator No. 10518) (“Confluence” 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. Section 7, Township 7 North, Range 64 West, 6th P.M. and Section 12, Township 7 North, Range 65 West, 6th P.M. are subject to this Rule for the Niobrara and Codell Formations.

 

            5.         On February 13, 2018, Confluence, by its attorneys, filed with the Commission a verified application pursuant to §34-60-116, C.R.S., for an order to establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve up to 27 horizontal wells within the proposed 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 the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:

 

Township 7 North, Range 64 West, 6th P.M.

Section 7:        All

 

Township 7 North, Range 65 West, 6th P.M.

Section 12:      All

 

Applicant states that the wells permitted under this Order will be drilled from no more than two well pads within the proposed unit or adjacent thereto, subject to Rule 318A, unless an exception is granted by the Director.

 

6.         On March 23, 2018, Confluence, 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.

 

7.         Land testimony and exhibits submitted in support of the Application by William E. Nicas, Senior Vice President of Land and Business Development for Confluence DJ LLC, showed that both the mineral and surface interests in the Application Lands are owned in fee, and that Confluence has a partial undivided leasehold interest in the Application Lands.

 

8.         Geologic testimony and exhibits submitted in support of the Application by Robert H. Sterling, Senior Vice President Geoscience for Confluence Resources LP, showed that the Niobrara and Codell Formations are present throughout the Application Lands, that total thickness of the Niobrara Formation underlying the Application Lands ranges from 220 feet to 295 feet and the total thickness of the Codell Formation underlying the Application Lands ranges from approximately 17 feet to 22 feet. 

 

9.         Engineering testimony and exhibits submitted in support of the Application by John P. Seidle, Vice President of MHA Petroleum Consultants LLC, showed that the drainage area of a 2-mile horizontal Niobrara well on the Application Lands is estimated to be 35 acres, and an approximate 1280-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. The engineering testimony also showed that the drainage area of a 2-mile horizontal Codell well on the Application Lands is estimated to be 137 acres, and approximate 1280-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.

 

10.       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.

 

11.       Confluence agreed to be bound by oral order of the Commission. 

 

12.       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 1280-acre drilling and spacing unit for Section 7, Township 7 North, Range 64 West, 6th P.M. and Section 12, Township 7 North, Range 65 West, 6th P.M., and to approve up to 27 horizontal wells within the proposed unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

 

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and up to 27 horizontal wells within the proposed unit, are hereby approved, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations:

Township 7 North, Range 64 West, 6th P.M.

Section 7:        All

 

Township 7 North, Range 65 West, 6th P.M.

Section 12:      All

 

2.         The productive interval of any horizontal well within the unit shall be no closer than 460 feet from the boundaries of 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.

 

            3.         All horizontal wells permitted under this Order shall be drilled from no more than two wellpads from the surface of the drilling and spacing unit, or at a legal location on adjacent lands, subject to Rule 318A, unless an exception is granted by the Director.

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 3rd day of July, 2018, as of June 11, 2018.

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

 

By: ____________________________________     

     Julie Spence Prine, Secretary