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
|
) ) ) ) ) ) )
|
CAUSE NO. 407
DOCKET NO. 180600377
TYPE: SPACING
ORDER NO. 407-2583 |
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 1,280-acre drilling and spacing unit for Sections 8 and 9, Township 2 North, 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, 1988, the Commission adopted Rule 318A, the Greater Wattenberg Special Well Location, Spacing and Unit Designation Rule. Sections 8 and 9, Township 2 North, Range 66 West, 6th P.M. are subject to this Rule for the Niobrara and Codell Formations.
5. On March 7, 2018, Extraction, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”), 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, with the productive interval of the wellbores to be located no closer than 460 feet from 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:
Township 2 South, Range 66 West, 6th P.M.
Section 8: All
Section 9: All
Applicant stated that any horizontal wells to be drilled under this Application will be drilled from no more than one multi-well pad on the surface of the drilling unit, or on adjacent lands with consent of the landowner, unless the Director grants an exception.
6. On July 9, 2018, supplemented on 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.
7. On May 23, 2018, James H. Kettler and Vicki R. Kettler (the “Kettlers”) protested Extraction’s Application. On May 23, 2018, Wendy Smart protested Extraction’s Application. At the initial prehearing conference held on August 16, 2018, the Hearing Officer converted both the Kettlers’ protest and Ms. Smart’s protest to Rule 510 statements.
8. Land testimony and exhibits submitted in support of the Application Pamela Kingery, Land Advisor with Extraction, showed that the minerals and surface of the Applications Lands are owned in fee and that Extraction owns leasehold interest and is an owner with the right to drill in the Application Lands.
9. Geology 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 and is approximately 252 to 265 feet thick. The geologic testimony showed that the Niobrara Formation consists of a sequence of chalks and marls. Geologic testimony further showed that the Codell Formation is present throughout the Application Lands and is approximately 13 to 15 feet thick. The geologic testimony showed that the Codell Formation is a sandstone. Finally, the geologic testimony showed the Niobrara and Codell Formations are a common source of supply underlying the Application Lands.
10. Engineering testimony and exhibits submitted in support of the Application by Spencer Crouch, Development Engineer for Extraction, showed that Extraction plans to drill four horizontal Codell Formation wells and 12 horizontal Niobrara Formation wells. In addition, the engineering testimony showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 104 acres, and an approximate 1,280-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 Formation. The engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated at 201 acres, and an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically, and effectively drained by four horizontal wells producing oil, gas, and associated hydrocarbons from the Codell Formation.
11. In addition, the engineering testimony showed that the average drainage distance from wellbores in the Niobrara Formation is estimated to be 234 feet. The engineering testimony also showed that the average drainage distance from wellbores in the Codell Formation is estimated to be 454 feet. Thus, the requested setbacks of 460 feet from the unit boundaries are appropriate.
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, all protests having been converted to Rule 510 statements, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order to establish an approximate 1,280-acre drilling and spacing unit for Sections 8 and 9, Township 2 North, 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. An approximate 1,280-acre drilling and spacing unit for the below-described lands is hereby established, and 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 2 South, Range 66 West, 6th P.M.
Section 8: All
Section 9: All
2. The productive interval of the wellbores shall 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.
3. All wells permitted under this Order will 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 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