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, ADAMS COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 180700524

 

TYPE: SPACING

 

ORDER NO. 407-2576

 

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 an approximate 640-acre drilling and spacing unit established by Order No. 407-2055 for Section 32, Township 1 South, Range 66 West, 6th P.M.; and 2) establish an approximate 1,280-acre drilling and spacing unit for Sections 32 and 33, Township 1 South, Range 66 West, 6th P.M., and approve up to 24 horizontal wells in the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Great Western Operating Company, LLC (Operator No. 10110) (“Great Western” 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 32 and 33, Township 1 South, Range 66 West, 6th P.M. are subject to Rule 318A 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 and Niobrara Formations underlying certain lands, with permitted well locations in accordance with the provisions of Order No. 407-1.

 

6.         On June 12, 2017, the Commission entered Order No. 407-2055 which, among other things, established an approximate 640-acre drilling and spacing unit for Section 32, Township 1 South, Range 66 West, 6th  P.M., and approved up to 24 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, providing that the productive interval of the wellbores 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 from the same source of supply within the unit, unless the Director grants an exception, and providing that all wells permitted under the Order shall be drilled from no more than two multi-well pads within the Application Lands or on lands adjacent thereto, subject to Rule 318A, unless the Director grants an exception.

 

7.         On July 24, 2017, the Commission entered Order No. 407-2110 which, among other things, pooled all interests in an approximate 640-acre designated horizontal wellbore spacing unit established for portions of Sections 28, 29, 32, and 33, Township 1 South, Range 66 West, 6th P.M., and subjected all nonconsenting interests to the cost recovery provisions of §34-60-116(7), C.R.S., for the drilling of the PC South 1S-66-2928-20NH Well, for the development and operation of the Niobrara Formation. Order No. 407-2110 is wellbore-specific and does not affect this Application.

 

8.         On May 16, 2018, Applicant filed a verified application (“Application”) for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-2055 for Section 32, Township 1 South, Range 66 West, 6th P.M.; and 2) establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve the drilling of up to 24 horizontal wells within the proposed unit, for production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, with the productive interval of any horizontal well shall be no closer than 460 feet from the boundaries of the unit and not less than 150 feet from the productive interval of another well producing from the same formation within the unit:

 

Township 1 South, Range 66 West, 6th P.M.

Section 32:      All

Section 33:      All

 

Applicant requests any permitted wells drilled under this Application should be located on no more than one multi-well pad within the drilling and spacing unit, or on adjacent lands with surface owner consent, unless the Director grants an exception.

 

10.       On June 28, 2018, Great Western, 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 Matthew Acree, Senior Landman for Great Western, showed that Great Western 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 Willis Wilcoxon, Geologist for Great Western, showed that the Niobrara Formation is present throughout the Application Lands, and ranges from approximately 390 to 417 feet in thickness, and that the Codell Formation is present throughout the Application Lands, and ranges from approximately 15 to 18 feet in thickness. 

 

13.       Engineering testimony and exhibits submitted in support of the Application by Lewis Wandke, Senior Engineer for Petrotek Engineering Corporation retained by Great Western, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 33 acres, the drainage area for analog horizontal Codell Formation wells is estimated at 101 acres, for a total requested well count of up to 24 horizontal wells.  Accordingly, 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 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.       Great Western agreed to be bound by oral order of the Commission.

 

16.       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 an approximate 640-acre drilling and spacing unit established by Order No. 407-2055 for Section 32, Township 1 South, Range 66 West, 6th P.M.; and 4) establish an approximate 1,280-acre drilling and spacing unit for Sections 32 and 33, Township 1 South, Range 66 West, 6th P.M., and approve up to 24 horizontal wells in 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. 407-2055 is hereby vacated.

 

2.      An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 24 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 32:      All

Section 33:      All

 

3.         The productive interval of any horizontal well shall be no closer than 460 feet from the boundaries of the unit and not less than 150 feet from the productive interval of another well producing from the same formation within the unit, unless the Director grants an exception.

 

4.         Any permitted wells drilled under the Order 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.

 

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 21st day of August, 2018, as of July 30, 2018.        

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By__________________________________

Julie Spence Prine, Secretary