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, ADAMS COUNTY, COLORADO
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CAUSE NO. 407
DOCKET NO. 171000658
TYPE: SPACING
ORDER NO. 407-2546
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REPORT OF THE COMMISSION
The Commission heard this matter on September 17, 2018, at the Garfield County Sheriff's Annex – Rifle, 106 County Road 333-A, Rifle, Colorado upon application for an order to establish an approximate 1,167.84-acre drilling and spacing unit for Sections 18 and 19, Township 1 South, Range 65 West, 6th P.M., and approve up to 16 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. Petroshare Corp. (Operator No. 10454) (“Petroshare” 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 18 and 19, Township 1 South, Range 65 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.
5. On August 25, 2017, Petroshare, 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 1,167.84-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 16 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 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 South, Range 65 West, 6th P.M.
Section 18: All
Section 19: All
6. Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than two multi-well pads subject to Rule 318A, without exception being granted by the Director.
7. On October 4, 2017, Petroshare, 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.
8. On October 16, 2017, Extraction Oil and Gas, Inc. (“Extraction”) filed a protest. On August 23, 2018, Extraction withdrew its protest. On October 16, 2017, Confluence DJ LLC (“Confluence”) filed a protest. On April 9, 2018, Confluence and Petroshare filed a joint motion seeking to, among other things, withdraw the Confluence protest in this matter. On April 12, 2018, the Hearing Officer entered an order granting the joint motion.
9. Land testimony and exhibits submitted in support of the Application by Brian H. Wert, Senior Landman for Petroshare, showed that Petroshare holds oil and gas leasehold interests and has a right to drill in the Application Lands.
10. Geologic testimony and exhibits submitted in support of the Application by Frederick J. Witsell, President of Petroshare, showed that the Niobrara Formation is present throughout the Application Lands and is approximately 410 feet thick. The geologic testimony further showed that Codell Formation is present throughout the Application Lands and is approximately 14 to 16 feet thick.
11. Engineering testimony and exhibits submitted in support of the Application by Barry Voigt, consultant Reservoir Engineer for Petroshare, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 96 acres, and an approximate 1,167.84-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 further showed that the drainage area for analog horizontal Codell Formation wells is estimated at 260 acres, and an approximate 1,167.84-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.
12. 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.
13. Petroshare agreed to be bound by oral order of the Commission.
14. Based on the facts stated in the verified Application, the protests having been withdrawn, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to establish an approximate 1,167.84-acre drilling and spacing unit for Sections 18 and 19, Township 1 South, Range 65 West, 6th P.M., and approve up to 16 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 1,167.84-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 16 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 South, Range 65 West, 6th P.M.
Section 18: All
Section 19: 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 within the unit, unless the Director grants an exception.
3. All wells permitted under this Order shall be drilled from no more than two 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 1st day of October, 2018, as of September 17, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Julie Spence Prine, Secretary