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. 180700507
TYPE: SPACING
ORDER NO. 407-2593 |
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 portions of Sections 1 and 12, Township 1 South, Range 66 West, 6th P.M., and Sections 6 and 7, Township 1 South, Range 65 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. Verdad Resources, LLC, (Operator No. 10651) (“Verdad” 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 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 1 and 12, Township 1 South, Range 66 West, 6th P.M., and Sections 6 and 7, Township 1 South, Range 65 West, 6th P.M., with the permitted well locations in accordance with the provisions of Order No. 407-1.
5. On April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Sections 1 and 12, Township 1 South, Range 66 West, 6th P.M., and Sections 6 and 7, Township 1 South, Range 65 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.
6. On May 2, 2018, Verdad, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 1,280-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 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
1 South, Range 66 West, 6th P.M.
Section 1: E˝
Section 12: E˝
Township 1 South, Range 65 West, 6th P.M.
Section 6: W˝
Section 7: W˝
Applicant stated that the proposed wells shall be located on no more than two 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 July 10, 2018, Verdad, 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. Land testimony and exhibits submitted in support of the Application by Frederick E. Rowe, IV, Land Manager for Verdad, showed that Verdad owns a leasehold interest and has a right to drill in the Application Lands.
8. Geologic testimony and exhibits submitted in support of the Application by Kurt Rucker, Geologist for Verdad, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 420 feet thick, and is generally of uniform thickness throughout the Application Lands. The geologic testimony also showed that the Codell Formation is a sandstone reservoir, is present throughout the Application Lands, is approximately 16 thick, and is generally of uniform thickness throughout the Application Lands.
9. Engineering testimony and exhibits submitted in support of the Application by L. Arthur Beecherl, Vice President of Operations for Verdad, showed that Verdad is planning to drill 12 wells in the Niobrara Formation and four horizontal wells in the Codell Formation. Engineering testimony also showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 101 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 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 202 acres, and an appropriate 1,280-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.
10. 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.
11. Verdad agreed to be bound by oral order of the Commission.
12. 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 establish an approximate 1,280-acre drilling and spacing unit for Sections 1 and 12, Township 1 South, Range 66 West, 6th P.M., and Sections 6 and 7, Township 1 South, Range 65 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 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 1: E˝
Section 12: E˝
Township 1 South, Range 65 West, 6th P.M.
Section 6: W˝
Section 7: W˝
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 two 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 12th day of October, 2018, as of September 17, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Julie Spence Prine, Secretary