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, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 180400351

 

ORDER NO. 407-2536

 

TYPE: SPACING

 

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 1) vacate one approximate 1,000-acre drilling and spacing unit established by Order No. 407-2209 for portions of Sections 31, 32, and 33, Township 1 North, Range 68 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations; and 2) establish an approximate 600-acre drilling and spacing unit for portions of Sections 32 and 33, Township 1 North, Range 68 West, 6th P.M., and approve up to 12 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.         Extraction Oil & Gas, Inc. (Operator No. 10459) (“Extraction” 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 32 and 33, Township 1 North, Range 68 West, 6th P.M. are subject to this Rule.

 

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 and gas from the Codell-Niobrara Formation, the Niobrara Formation, and the Codell Formation underlying certain lands including Sections 32 and 33, Township 1 North, Range 68 West, 6th P.M., with permitted well locations in accordance with the provisions of Order No. 407-1.

 

            6.         On October 24, 2016, the Commission entered Order No. 407-1794, which established one approximate 1,280-acre drilling and spacing unit for Sections 28 and 33, Township 1 North, Range 68 West, 6th P.M., and approved up to a total of 20 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

7.         On October 31, 2017, the Commission entered Order No. 407-2209, which established an approximate 1,000-acre drilling and spacing unit for portions of Section 31, 32, and 33, Township 1 North, Range 68 West, 6th P.M., and approved up to 12 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 being no closer than 150 feet from the productive interval of any other wellbore producing from the Niobrara and Codell Formations, and no closer than 460 feet from the northern, southern, and western unit boundaries, and no closer than 150 feet from the eastern unit boundary, unless an exception is granted by the Director.

 

8.         On April 30, 2018, the Commission entered Order No. 407-2449, which among other things, vacated an approximate 1,000-acre drilling and spacing unit established by Order No. 407-2209 for portions of Sections 31, 32, and 33, Township 1 North, Range 68 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

9.         On March 1, 2018, Extraction, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order: 1) to vacate one approximate 1,000-acre drilling and spacing unit established by Order No. 407-2209 for the N½ and N½N½S½ of Section 31, the N½ and N½N½S½ of Section 32, and the NW¼ and N½N½SW¼ of Section 33, Township 1 North, Range 68 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations; and 2) to establish an approximate 600-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 12 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 150 feet from the productive interval of any other wellbore located in the unit, no closer than 460 feet from the northern, southern, and western unit boundaries, and no closer than 150 feet from the eastern unit boundary, unless the Director grants an exception:

 

Township 1 North, Range 68 West, 6th P.M.

Section 32:   N½, N½N½S½

Section 33:   NW¼, N½N½SW¼

 

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. Applicant also stated that all horizontal wells will be drilled in an east-west orientation.

 

10.       On May 18, 2018, Extraction, 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 Jason Rayburn, Staff Landman for Extraction, showed that Applicant 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 Jim Folcik, Geoscience Manager for Extraction showed that the Niobrara and Codell Formations are present throughout the Application Lands. Additional geologic testimony showed that the Niobrara Formation is approximately 341 to 358 feet thick and consists of an alternating sequence of chalks and marls.  Geologic testimony further showed that the Codell Formation is approximately 17 to 19 feet thick and is a sandstone.

 

13.       Engineering testimony and exhibits submitted in support of the Application by Neel Duncan, Managing Director, Operations at Integrated Petroleum Technologies, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 10.7 acres, that the drainage area for analog horizontal Codell Formation wells is estimated at 26.5 acres, and that an approximate 600-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically and effectively drained by 12 horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.

 

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.       Since the Commission entered Order No. 407-2449 on April 30, 2018, which among other things, vacated an approximate 1,000-acre drilling and spacing unit established by Order No. 407-2209 for portions of Sections 31, 32, and 33, Township 1 North, Range 68 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations, Extraction’s request to vacate an approximate 1,000-acre drilling and spacing unit established by Order No. 407-2209 is moot.

 

            16.       Extraction agreed to be bound by oral order of the Commission.

 

17.       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 600-acre drilling and spacing unit for portions of Sections 32 and 33, Township 1 North, Range 68 West, 6th P.M., and approve up to 12 horizontal wells 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 600-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 12 horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:

 

Township 1 North, Range 68 West, 6th P.M.

Section 32:      N½, N½N½S½

Section 33:      NW¼, N½N½SW¼

 

2.            The productive interval of the wellbore will be located no closer than 150 feet from the productive interval of any other wellbore located in the unit, no closer than 460 feet from the northern, southern, and western unit boundaries, and no closer than 150 feet from the eastern unit boundary, unless an exception is granted by the Director.

 

3.            The proposed wells will be located on no more than one well pad within the drilling and spacing unit, or at legal location on adjacent lands, subject to Rule 318A, unless the Director grants an exception. 

 

4.            All wells permitted under this Order shall be drilled in an east-west orientation.

 

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 20th day of August, 2018, as of July 30, 2018.       

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By_____________________________________

Julie Spence Prine, Secretary