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 NIOBRARA AND CODELL FORMATIONS, WATTENBERG FIELD, BOULDER COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 171000694

 

TYPE:  SPACING

 

ORDER NO. 407-2517

 

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on July 30, 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado upon application for an order to establish an approximate 1280-acre drilling and spacing unit for Sections 35 and 36, Township 1 North, Range 69 West, 6th P.M., and approve one horizontal well 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.         8 North LLC (Operator No. 107575) (“8 North” or “Applicant”) 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 35 and 36, Township 1 North, Range 69 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, among other things, established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formations. Sections 35 and 36, Township 1 North, Range 69 West, 6th P.M., are subject to this Order for the Niobrara and Codell Formations.

 

6.         August 31, 2017, amended September 19, 2017, 8 North, by its attorneys, filed with the Commission a verified application (“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 to approve one horizontal well 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 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 1 North, Range 69 West, 6th P.M.

Section 35:      All

Section 36:      All

 

7.        Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than one multi-well pad, subject to Rule 318A, without exception being granted by the Director.

 

8.         On October 6, 2017, 8 North, 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.

 

9.         On October 16, 2017, Boulder County and the City of Lafayette filed a protest.  On December 6, 2017, 8 North filed a motion to dismiss the protest filed by Boulder County and the City of Lafayette.  On December 13, 2017, Boulder County and the City of Lafayette filed a response to 8 North’s motion to dismiss.  On December 18, 2017, 8 North filed a reply in support of its motion to dismiss.  On January 2, 2018, the Hearing Officer entered an order granting 8 North’s motion to dismiss. Boulder County and the City of Lafayette did not file an exception to the order granting the motion to dismiss.

 

10.       On December 5, 2017, the Town of Erie filed a protest.  On December 20, 2017, 8 North filed a motion to dismiss the protest filed by the Town of Erie.  On January 10, 2018 the Town of Erie withdrew its protest.

 

            11.       Land testimony and exhibits submitted in support of the Application by Jason Rayburn, Staff Landman for Extraction Oil and Gas, Inc. (“Extraction”), of which 8 North is a wholly owned subsidiary, showed that 8 North holds oil and gas leasehold interests and has a right to drill in the Application Lands.

 

12.       Geologic testimony and exhibits submitted in support of the Application by Alicia Branch, Geologic Consultant at Extraction, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 338 to 346 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Niobrara Formation is a sequence of chalks, marls and limestones and is a common source of supply.  Geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 17 to 22 feet thick, and is generally of uniform thickness throughout the Application Lands.  Further testimony showed that the Codell Formation is a shallow marine tight-sandstone formation.

 

13.       Engineering testimony and exhibits submitted in support of the Application by Neel L. Duncan, Vice President of Operations for Integrated Petroleum Technologies, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 73.1 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. Engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated at 283.6 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 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.       8 North agreed to be bound by oral order of the Commission.

 

16.       Based on the facts stated in the verified Application, the protests having been either withdrawn or dismissed, 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 Sections 35 and 36, Township 1 North, Range 69 West, 6th P.M., and approve one horizontal well within the 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 one horizontal well within the unit is hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:

 

Township 1 North, Range 69 West, 6th P.M.

Section 35:      All

Section 36:      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 within the unit, unless the Director grants an exception.

 

3.         All wells permitted under this Order shall be drilled from no more than one multi-well pad 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 August, 2018, as of July 30, 2018.       

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By_____________________________________

Julie Spence Prine, Secretary