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, WATTENBURG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 180700567
TYPE: SPACING
ORDER NO. 407-2599 |
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 amended application for an order to establish an approximate 640-acre drilling and spacing unit for portions of Sections 19 and 30, Township 1 North, Range 65 West, 6th P.M., and approve up to eight 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”), 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 19 and 30, Township 1 North, Range 65 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 19 and 30, Township 1 North, Range 65 West, 6th P.M., with the permitted well locations in accordance with the provisions of Order No. 407-1.
6. On July 19, 2016, the Commission entered Order No. 407-1759, which pooled all interests in an approximate 320-acre designated horizontal wellbore spacing unit established for the Johnson 01N-65W-30-8N Well, for portions of Section 30, Township 1 North, Range 65 West, 6th P.M., and approved cost-recovery under Section 34-60-116(7)(b)(II), C.R.S., against any nonconsenting owners in the Johnson 01N-65W-30-8N Well, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation. The Johnson 01N-65W-30-8N Well shall continue to be operated, and proceeds distributed, under the applicable Commission Rules and Orders.
7. On July 24, 2017, the Commission entered Order No. 407-2150, which pooled all interests in an approximate 320-acre designated horizontal wellbore spacing unit established for the Lehl 30-7 Well, for portions of Section 30, Township 1 North, Range 65 West, 6th P.M., and approved cost-recovery under Section 34-60-116(7)(b)(II), C.R.S., against any nonconsenting owners in the Lehl 30-7 Well, for the production of oil, gas, and associated hydrocarbons from the Codell Formation.
8. On March 19, 2018, the Commission entered Order No. 407-2414, which pooled all interests in two approximate 400-acre designated horizontal wellbore spacing units for portions of Sections 13 and 24, Township 1 North, Range 66 West, 6th P.M., and for portions of Sections 18 and 19, Township 1 North, Range 65 West, 6th P.M., and approved cost-recovery under Section 34-60-116(7)(b)(II), C.R.S., against any nonconsenting owners in the Azul 13-24HZ Well (API No. 05-123-46106) and the Azul 13-25HZ Well (API No. 05-123-46100), for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
9. On March 19, 2018, the Commission entered Order No. 407-2415, which pooled all interests in an approximate 400-acre designated horizontal wellbore spacing unit for portions of Sections 13 and 24, Township 1 North, Range 66 West, 6th P.M., and for portions of Sections 18 and 19, Township 1 North, Range 65 West, 6th P.M., and approved cost-recovery under Section 34-60-116(7)(b)(II), C.R.S., against any nonconsenting owners in the Azul 13-30HZ Well (API No. 05-123-46114), for the production of oil, gas, and associated hydrocarbons from the Codell Formation.
10. On May 31st, 2018, amended June 14, 2018, Verdad, by its attorneys, filed with the Commission a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 640-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to eight horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations, with the treated interval of any well within the unit to be located no closer than 300 feet from the northern and southern unit boundaries, no closer than 460 feet from the eastern and western unit boundaries, and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:
Township 1 North, Range 65 West, 6th P.M.
Section 19: W½
Section 30: W½
Applicant stated that all horizontal wells will be drilled from no more than two multi-well pads located within the unit, or at a legal location on adjacent lands, unless an exception is granted by the Director.
11. On July 9, 2018, Verdad, and amended on August 29, 2018, 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.
12. Land testimony and exhibits submitted in support of the Application by Rick Rowe, Land Manager for Verdad, showed that Verdad holds oil and gas leasehold interests and has a right to drill in the Application Lands. Further testimony, provided by Lemar Safi, Landman for Verdad, showed that the horizontal wells in the unit will be drilled on south-north or north-south orientation.
13. Geologic testimony and exhibits submitted in support of the Application by Kurt Rucker, Geologist for Verdad, showed that the Niobrara and Codell Formations are present throughout the Application Lands, that the Niobrara including the Niobrara Forty Hays member is approximately 380 feet thick, that the Codell is approximately 19 feet thick, and that the formations are generally of uniform thickness throughout the Application Lands. Finally, the geologic testimony affirmed that the Fort Hays and Carlile Formations are not intentional target formations for the planned wells, but should be included in the drilling and spacing unit in the event a wellbore deviates outside of the target formation.
14. Engineering testimony and exhibits submitted in support of the Application by L. Arthur Beecherl IV, Vice-President of Operations for Verdad, showed that the drainage area for analogous horizontal and Niobrara and Codell Formation wells are not greater than 101 acres for the Niobrara Formation, and 202 acres for the Codell Formation, and an approximate 640-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically, and effectively drained by 8 horizontal wells producing oil, gas and associated hydrocarbons from the respective benches of the Niobrara and Codell Formations.
15. 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.
16. Verdad agreed to be bound by oral order of the Commission.
17. 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 640-acre drilling and spacing unit for portions of Sections 19 and 30, Township 1 North, Range 65 West, 6th P.M., and approve up to eight 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 640-acre drilling and spacing unit for the below-described lands is hereby established, and a total of up to eight 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 North, Range 65 West, 6th P.M.
Section 19: W½
Section 30: W½
2. The productive interval of any wellbore shall be no closer than 300 feet from the northern and southern unit boundaries, no closer than 460 feet from the eastern and western unit boundaries, and no closer than 150 feet from the treated interval of any other any other wellbore located within the unit, unless the Director grants an exception.
3. All wells approved under this Order shall be drilled from no more than two multi-well pads within the unit, or on lands adjacent thereto with landowner consent, subject to Rule 318A, unless the Director grants an exception.
4. All horizontal wells in the unit shall be drilled in a south-north or north-south orientation.
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