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. 180100097
TYPE: SPACING
ORDER NO. 407-2551 |
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: 1) vacate an approximate 320-acre drilling and spacing unit established by Order No. 407-1001 for portions of Section 21, Township 7 North, Range 65 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations; and 2) establish an approximate 1,280-acre drilling and spacing unit for Sections 20 and 21, Township 7 North, Range 65 West, 6th P.M., and approve up to 26 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. Bayswater Exploration & Production, LLC (Operator No. 10261) (“Bayswater” 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. Sections 20 and 21, Township 7 North, Range 65 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.
5. On April 28, 2014, the Commission entered Order No. 407-1001 which, among other things, established an approximate 320-acre drilling and spacing unit for portions of Section 21, Township 7 North, Range 65 West, 6th P.M., and approved up to six 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 within the unit, without exception being granted by the Director.
6. On November 30, 2017, Bayswater, by its attorneys, filed with the Commission a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) vacate an approximate 320-acre drilling and spacing unit established by Order No. 407-1001 for portions of Section 21, Township 7 North, Range 65 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations; and 2) establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to 26 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 each 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, unless an exception is granted by the Director:
Township 7 North, Range 65 West, 6th P.M.
Section 20: All
Section 21: All
Applicant stated that all horizontal wells will be drilled from no more than two multi-well pads located within the unit, or at a legal location on adjacent lands, unless an exception is granted by the Director.
7. On January 8th, 2018, Bayswater, 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 January 12, 2018, PDC Energy, Inc. (“PDC”), filed a Protest of Application. On June 28, 2018, the Hearing Officer granted PDC’s Unopposed Motion to Withdraw Protest (dated March 30, 2018). On March 16, 2018, Nickel Road Operating, LLC (“Nickel Road”) filed a Protest of Application. On May 31, 2018, Nickel Road withdrew its Protest of Application.
9. Land testimony and exhibits submitted in support of the Application by Blake Leavitt, Landman for Bayswater, showed that Bayswater 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 David Brewster, Senior Vice President of Exploration for Bayswater, showed that the Niobrara and Codell Formations are present throughout the Application Lands, that the Niobrara Formation is approximately 254 to 266 feet thick and the Codell Formation is approximately 18 to 20 feet thick. Further testimony showed there are three productive zones in the Niobrara Formation; zones A, B, and C.
11. Engineering testimony and exhibits submitted in support of the Application by John Arsenault, Senior Vice President for Reservoir Engineering for Bayswater, showed that the drainage area for 20 analog horizontal Niobrara Formation wells are estimated at 66 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 a horizontal well producing oil, gas and associated hydrocarbons from the Niobrara Formation. Furthermore, testimony and exhibits showed that the drainage area for six analog Codell Formation wells are estimated at 150 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 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. Bayswater agreed to be bound by oral order of the Commission.
14. Based on the facts stated in the verified Application, all protests having been withdrawn, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order to: 1) vacate Order No. 407-1001; and 2) establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to 26 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. Order No. 407-1001 is hereby vacated.
2. An approximate 1,280-acre drilling and spacing unit for the below-described lands is hereby established, and a total of up to 26 horizontal wells within the unit are hereby approved, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations:
Township 7 North, Range 65 West, 6th P.M.
Section 20: All
Section 21: All
3. The productive interval of any 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 located within the unit, unless the Director grants an exception.
4. All wells approved under this Order shall be drilled from no more than two multi-well pad within the Application Lands, or on lands adjacent thereto with landowner consent, 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 2nd day of October, 2018, as of September 17, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By___________________________________
Julie Spence Prine, Secretary