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. 180600408
TYPE: SPACING
ORDER NO. 407-2584 |
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 1,908-acre drilling and spacing unit for portions of Sections 25, 26, and 27, Township 4 North, Range 67 West, 6th P.M., and approve up to 44 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. SRC Energy Inc. (Operator No. 10311) (“SRC” 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 25, 26, and 27, Township 4 North, Range 67 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.
5. On April 12, 2018, SRC, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 1,908-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 44 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 4 North, Range 67 West, 6th P.M.
Section 25: All
Section 26: All
Section 27: All
Applicant stated that the proposed wells shall be located on no more than four multi-well pads within the drilling and spacing unit, or at a legal location on adjacent lands, subject to Rule 318A, unless the Director grants an exception.
6. On May 17, 2018, SRC, 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, PDC Energy, Inc. (“PDC”) filed a protest. On August 3, 2018, PDC withdrew its protest.
8. Land testimony and exhibits submitted in support of the Application by Kaitlyn Tobin, Landman for SRC, showed that SRC owns a leasehold interest and has a right to drill in the Application Lands.
9. Geologic testimony and exhibits submitted in support of the Application by Thomas Birmingham, Vice President, Exploration for SRC, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 260 to 300 feet thick. Geologic testimony further showed that the Niobrara Formation is made up of chalks and marlstone, and is a common source of supply. The geologic testimony also showed that the Codell Formation is a sandstone reservoir, is present throughout the Application Lands, is approximately 22 to 27 feet thick, and is a common source of supply.
10. Engineering testimony and exhibits submitted in support of the Application by Brett Hall, Reservoir Engineer for SRC, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 33.15 acres, and an approximate 1,908-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. The engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated at 116.72 acres, and an appropriate 1,908-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.
11. 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.
12. SRC agreed to be bound by oral order of the Commission.
13. Based on the facts stated in the verified Application, the protest 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 1,908-acre drilling and spacing unit for Sections 25, 26, and 27, Township 4 North, Range 67 West, 6th P.M., and to approve up to 44 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 1,908-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 44 horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:
Township 4 North, Range 67 West, 6th P.M.
Section 25: All
Section 26: All
Section 27: 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 located in the unit, unless the Director grants an exception.
3. The proposed wells shall be located on no more than four multi-well pads 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 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