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, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 180900622

 

TYPE: SPACING

 

ORDER NO. 407-2600

 

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 amend Order No. 407-2238 to exclude the SW¼ of Section 1, Township 5 North, Range 65 West, 6th P.M. from the approximate 800-acre drilling and spacing unit previously established by Order No. 407-2238 for portions of Sections 1, 2, and 3, Township 5 North, Range 65 West, 6th P.M. for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations, and approve up to five new horizontal wells within the revised unit for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Noble Energy, Inc. (Operator No. 100322) (“Noble” 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 2 and 3, Township 5 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 Niobrara and Codell Formations, with permitted well locations in accordance with the provisions of Order No. 407-1. Sections 2 and 3, Township 5 North, Range 65 West, 6th P.M., are subject to this Order for the Niobrara and Codell Formations.

 

6.         On October 30, 2017, the Commission entered Order No. 407-2238 which, among other things, established an approximate 800-acre drilling and spacing unit for the SW¼ of Section 1, the S½ of Section 2, and the S½ of Section 3, Township 5 North, Range 65 West, 6th P.M., and approved up to five 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 located in the unit, unless the Director grants an exception, and providing that the proposed wells shall be located on no more than two new multi-well pads within the drilling and spacing unit, or on lands adjacent thereto, subject to Rule 318A, unless the Director grants an exception.

 

7.         On June 6, 2018, Noble filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to amend Order No. 407-2238 to exclude the SW¼ of Section 1, Township 5 North, Range 65 West, 6th P.M. from the approximate 800-acre drilling and spacing unit previously established by Order No. 407-2238 for the SW¼ of Section 1, the S½ of Section 2, and the S½ of Section 3, Township 5 North, Range 65 West, 6th P.M., so as to establish an approximate 640-acre drilling and spacing unit for the below described lands (“Application Lands”) and to approve up to five new 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 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:

 

Township 5 North, Range 65 West, 6th P.M.

Section 2:        S½

Section 3:        S½

 

Applicant stated that any horizontal wells to be drilled under this Application will be drilled from no more than two multi-well pads on the surface of the drilling unit, or on adjacent lands with consent of the landowner, unless the Director grants an exception.

 

8.         On August 27, 2018, Noble, 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.

 

9.         Land testimony and exhibits submitted in support of the Application by Ryan Antonio, Land Manager for Noble, showed that Noble has a leasehold interest with the right to drill in the Application Lands.

 

10.       Geologic testimony and exhibits submitted in support of the Application by Mitchell Modlich, Senior Geologist for Noble, showed that the Niobrara Formation is present throughout the Application Lands and is approximately 257 to 268 feet thick. The geologic testimony also showed that the Codell Formation is present throughout the Application Lands and is approximately 17 to 18 feet thick.

 

11.       Engineering testimony and exhibits submitted in support of the Application by Seth Prince, Reservoir Engineer III for Noble, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated to be 78 acres per well. The engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated to be 74 acres per well. The engineering testimony concluded that 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 five horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

12.       In addition, the engineering testimony showed that the average drainage radius for wellbores in the Niobrara Formation is estimated to be 202 feet. The engineering testimony also showed that the average drainage radius for wellbores in the Codell Formation is estimated to be 192 feet. Thus, the requested setback of 460 feet from the unit boundaries is appropriate.

 

13.       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.

 

14.       Noble agreed to be bound by oral order of the Commission.

 

15.       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 amend Order No. 407-2238 to exclude the SW¼ of Section 1, Township 5 North, Range 65 West, 6th P.M., from the approximate 800-acre drilling and spacing unit previously established by Order No. 407-2238 for portions of Sections 1, 2, and 3, Township 5 North, Range 65 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations, and approve up to five new horizontal wells within the revised unit for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Order No. 407-2238 is hereby amended to exclude the SW¼ of Section 1, Township 5 North, Range 65 West, 6th P.M. from the approximate 800-acre drilling and spacing unit previously established by Order No. 407-2238 for the SW¼ of Section 1, the S½ of Section 2, and the S½ of Section 3, Township 5 North, Range 65 West, 6th P.M., so as to establish an approximate 640-acre drilling and spacing unit for the below described lands, and up to five new horizontal wells within the unit are hereby approved for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations:

 

Township 5 North, Range 65 West, 6th P.M.

Section 2:        S½

Section 3:        S½

 

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 within the unit, unless the Director grants an exception.

 

3.         All wells permitted under this Order will be drilled from no more than two multi-well pads within the Application Lands, or on adjacent lands with surface owner consent, 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