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. 180300233
TYPE: SPACING
ORDER NO. 407-2554 |
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 Order No. 407-799; and 2) establish an approximate 1,920-acre drilling and spacing unit for Sections 27 and 34, Township 1 South, Range 66 West, 6th P.M., and Section 3, Township 2 South, Range 66 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. 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 27 and 34, Township 1 South, Range 66 West, 6th P.M., and Section 3, Township 2 South, Range 66 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, the Codell Formation, and the Niobrara Formation underlying certain lands, including Sections 27 and 34, Township 1 South, Range 66 West, 6th P.M., and Section 3, Township 2 South, Range 66 West, 6th P.M., with the permitted well locations in accordance with the provisions of Order No. 407-1.
6. On June 17, 2013, the Commission entered Order No. 407-799, which vacated the 80-acre drilling and spacing units established by Order No. 407-87 as to Section 34, Township 1 South, Range 66 West, 6th P.M., and established an approximate 640-acre drilling and spacing unit for the same Section 34, and approved up to 16 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and up to 4 horizontal wells for the production of oil, gas, and associated hydrocarbons for the Codell Formation, with the treated interval of each well within the unit no closer than 460 feet from the unit boundaries, and no closer than 150 feet from the treated interval of any other wellbore located within the unit, without exception being granted by the Director.
7. On March 8, 2018, Extraction, by its attorneys, filed a verified amended application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) vacate Order No. 407-799 which established an approximate 640-acre drilling and spacing unit for Section 34, Township 1 South, Range 66 West, 6th P.M., and for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 1,920-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 Formation, 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 granted by the Director:
Township 1 South, Range 66 West, 6th P.M.
Section 27: All
Section 34: All
Township 2 South, Range 66 West, 6th P.M.
Section 3: All
Applicant stated that the wells be drilled from one multi-well pad located in the unit or from a legal location on adjacent lands, without exception granted by the Director.
8. On July 9, 2018, supplemented August 27, 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.
9. Land testimony and exhibits submitted in support of the Application by Pamela Kingery, Land Advisor for Extraction, showed that Extraction 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 Alicia Branch, Geologist for Extraction, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 262 to 290 feet thick, is generally of uniform thickness throughout the Application Lands, and consists of chalks and marls. Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 13 to 15 feet thick, is generally of uniform thickness throughout the Application Lands, and consists of sandstone.
11. Engineering testimony and exhibits submitted in support of the Application by Spencer Crouch, Development Engineer for Extraction, showed that Extraction is planning to drill 12 horizontal wells in the Niobrara Formation and four horizontal wells in the Codell Formation. The testimony also showed that based on the drainage area for analog horizontal Niobrara-Formation wells, the drainage area for a proposed Niobrara-Formation 14,920-foot horizontal well is estimated at 160 acres, and an approximate 1,920-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 12 horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara Formation. Engineering testimony further showed that showed that based on the drainage area for analog horizontal Codell-Formation wells, the drainage area for a proposed Codell-Formation 14,920-foot horizontal well is estimated at 311 acres, and an approximate 1,920-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by four horizontal wells 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. Extraction agreed to be bound by oral order of the Commission.
14. 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: 1) vacate Order No. 407-799; and 2) establish an approximate 1,920-acre drilling and spacing unit for Sections 27 and 34, Township 1 South, Range 66 West, 6th P.M., and Section 3, Township 2 South, Range 66 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. Order No. 407-799 is hereby vacated.
2. An approximate 1,920-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 66 West, 6th P.M.
Section 27: All
Section 34: All
Township 2 South, Range 66 West, 6th P.M.
Section 3: All
3. 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 located in the unit, unless the Director grants an exception.
4. All wells permitted under this Order shall be drilled from no more than one multi-well pad within the Application Lands or from a legal location on adjacent 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