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, FORT HAYS, CODELL, AND CARLILE FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 180900687
TYPE: SPACING
ORDER NO. 407-2605
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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 seven drilling and spacing units for portions of Sections 14, 15, 16, 21, 22, 23, 27, 28, 33, and 34, Township 3 North, Range 64 West, 6th P.M., portions of Sections 20, 28, 29, and 31, Township 3 North, Range 63 West, 6th P.M., and for portions of Section 6, Township 2 North, Range 63 West, 6th P.M., and approve up to 15 horizontal wells within proposed Drilling and Spacing Units (“DSU”) Nos. 1, 2, 3, 4, and 5; up to seven horizontal wells within proposed DSU No. 10; and up to 23 horizontal wells within proposed DSU No. 11, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort. Hays, Codell, and Carlile Formations.
FINDINGS
The Commission finds as follows:
1. Noble Energy, Inc. (Operator No. 100322) (“Noble” 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, 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 14, 15, 16, 21, 22, 23, 27, 28, 33, and 34, Township 3 North, Range 64 West, 6th P.M., Sections 20, 28, 29, and 31, Township 3 North, Range 63 West, 6th P.M., and Section 6, Township 2 North, Range 63 West, 6th P.M., are subject to this Rule for the Niobrara, Fort Hays, Codell, and Carlile Formations.
5. On February 9, 1992, the Commission entered Order No. 407-87 which, among other things, established 80-acre drilling and spacing units for vertical and directional wells for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations. Sections 14, 15, 16, 21, 22, 23, 27, 28, 33, and 34, Township 3 North, Range 64 West, 6th P.M., Sections 20, 28, 29, and 31, Township 3 North, Range 63 West, 6th P.M., and Section 6, Township 2 North, Range 63 West, 6th P.M., are subject to this Order for the Niobrara and Codell Formations.
6. On August 1, 2018, the Commission entered Order No. 1-210, which among other things, stayed the filing of all applications in certain lands, except for applications filed by Noble, until such time as the Commission rules on the Noble Application for a Comprehensive Drilling Plan filed in Docket No. 180700613. Sections 14, 15, 16, 21, 22, 23, 27, 28, 33, and 34, Township 3 North, Range 64 West, 6th P.M.; Sections 20, 28, 29, and 31, Township 3 North, Range 63 West, 6th P.M.; and Section 6, Township 2 North, Range 63 West, 6th P.M.; are subject to this Order.
7. On July 19, 2018, amended August 10, 2018, Noble, by its attorneys, filed a verified Application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish seven drilling and spacing units for the below-described lands (“Application Lands”), and approve up to 15 horizontal wells within proposed Drilling and Spacing Units (“DSU”) Nos. 1, 2, 3, 4, and 5; seven horizontal wells within proposed DSU No. 10; and 23 horizontal wells within proposed DSU No. 11, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, with the productive interval of any wellbore to be located no closer 200 feet from the northern and southern boundaries of the units, no closer than 300 feet from the eastern and western boundaries of the units, 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 3 North, Range 64 West, 6th P.M.
Section 16: All
Section 21: All
DSU No. 1 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 28: All
Section 33: All
DSU No. 2 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 15: All
Section 22: All
DSU No. 3 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 27: All
Section 34: All
DSU No. 4 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 14: All
Section 23: All
DSU No. 5 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 26: All
Section 35: All
DSU No. 6 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 13: All
Section 24: All
Section 25: N½
DSU No. 7 (1,600 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 25: S½
Section 36: All
DSU No. 8 (960 acres, more or less)
Township 3 North, Range 63 West, 6th P.M.
Section 19: All
Section 30: All
DSU No. 9 (1,280 acres, more or less)
Township 3 North, Range 63 West, 6th P.M.
Section 31: W½
Township 2 North, Range 63 West, 6th P.M.
Section 6: W½
DSU No. 10 (640 acres, more or less)
Township 3 North, Range 63 West, 6th P.M.
Section 20: All
Section 28: W½
Section 29: All
DSU No. 11 (1,600 acres, more or less)
Applicant stated that all horizontal wells will be drilled from no more than two multi-well pads for DSU No. 10, and no more than three multi-well pads for DSU Nos. 1, 2, 3, 4, 5, and 11, to be located within the unit, or at a legal location on adjacent lands, unless an exception is granted by the Director. Applicant further stated that all wells will be drilled in a north-south or south-north orientation.
8. The Application Lands are included as part of Applicant’s pending application in Docket No. 180700613 before the Commission for a Comprehensive Development Plan under Rule 216, and Applicant states that the Application Lands are to be developed consistent with and pursuant to the Commission order ultimately issued for that application.
9. On August 27, 2018, Applicant, 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.
10. Land testimony and exhibits submitted in support of the Application by Ryan Antonio, Attorney-in-Fact for Noble, showed that Noble holds oil and gas leasehold interests and has a right to drill in the Application Lands.
11. Geologic testimony and exhibits submitted in support of the Application by Errol Lawrence, Senior Geologist for Petrotek Engineering Corporation, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 230 to 280 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 14 to 18 feet thick, and is generally of uniform thickness throughout the Application Lands.
12. Engineering testimony and exhibits submitted in support of the Application by Lewis Wandke, Senior Engineer for Petrotek Engineering Corporation, showed that the upscaled drainage areas for approximate 7,520 foot Niobrara and Codell laterals (as proposed in DSU #8) are approximately 50 acres and 99 acres, respectively; the upscaled drainage areas for approximate 10,160 foot Niobrara and Codell laterals (as proposed in DSUs # 1-6 and 9-12) are approximately 67 acres and 134 acres, respectively; and the upscaled drainage areas for 12,800 foot Niobara and Codell laterals (as proposed in DSU #7) are approximately 84 acres and 169 acres, respectively. Further testimony affirmed that the aggregate size of all the DSU’s 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, Fort. Hays, Codell, and Carlile Formations. The engineering evidence provided drainage schematics for the Niobrara and Codell formations, and calculated fracture half-length values of 93 feet for the Niobrara formation and 232 feet for the Codell formation, demonstrating that Noble’s requested setbacks of 200 feet from the northern and southern boundaries of the proposed units, and 300 feet from the eastern and western boundaries of the proposed units will protect correlative rights while reducing waste. Finally, the 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.
13. On August 31, 2018, PDC Energy, Inc. (“PDC”) filed a Protest of Application, specifically protesting DSU Nos. 6, 7, 8, and 9. PDC did not protest DSU Nos. 1, 2, 3, 4, 5, 10, or 11 (“Uncontested DSUs”). No other protests were received with respect to the Uncontested DSUs.
14. On September 5, 2018, Noble filed a Motion to Bifurcate, requesting the Hearing Officer bifurcate the Application into two separate requests for relief, such that the relief sought for the Uncontested DSUs be considered separately and remain docketed for the September 17-18, 2018 Commission Hearing, and the relief sought for those DSUs contested by PDC, being DSU Nos. 6, 7, 8, and 9, be considered as a separate hearing.
15. On September 12, 2018, the Hearing Officer granted Noble’s Motion for Bifurcation and ruled that Docket No. 180900687 is to be bifurcated into the following separate requests for relief:
A. A request to be considered on the consent agenda for an order to establish seven drilling and spacing units for the below-described lands, and approve up to 15 horizontal wells within proposed Drilling and Spacing Units (“DSU”) Nos. 1, 2, 3, 4, and 5; up to seven horizontal wells within proposed DSU No. 10; and up to 23 horizontal wells within proposed DSU No. 11, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations:
Township 3 North, Range 64 West, 6th P.M.
Section 16: All
Section 21: All
DSU No. 1 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 28: All
Section 33: All
DSU No. 2 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 15: All
Section 22: All
DSU No. 3 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 27: All
Section 34: All
DSU No. 4 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 14: All
Section 23: All
DSU No. 5 (1,280 acres, more or less)
Township 3 North, Range 63 West, 6th P.M.
Section 31: W½
Township 2 North, Range 63 West, 6th P.M.
Section 6: W½
DSU No. 10 (640 acres, more or less)
Township 3 North, Range 63 West, 6th P.M.
Section 20: All
Section 28: W½
Section 29: All
DSU No. 11 (1,600 acres, more or less)
B. A request to be considered at a future hearing for an order establishing four drilling and spacing units, for the below-described lands, and approving 15 horizontal wells within proposed DSU Nos. 6, 7, 8, and 9, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, which is subject to the PDC Protest:
Township 3 North, Range 64 West, 6th P.M.
Section 26: All
Section 35: All
DSU No. 6 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 13: All
Section 24: All
Section 25: N½
DSU No. 7 (1,600 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 25: S½
Section 36: All
DSU No. 8 (960 acres, more or less)
Township 3 North, Range 63 West, 6th P.M.
Section 19: All
Section 30: All
DSU No. 9 (1,280 acres, more or less)
16. Noble agreed to be bound by oral order of the Commission.
17. The above-referenced testimony and exhibits submitted by Noble show that granting the requested relief with respect to DSU Nos. 1, 2, 3, 4, 5, 10 and 11 will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights. The Commission did not consider or reach a conclusion regarding the testimony submitted for DSU Nos. 6, 7, 8, and 9 as a result of the Order bifurcating the requested relief.
18. Based on the facts stated in the verified Application, as bifurcated, having received no protests to the Uncontested DSUs, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order establishing seven drilling and spacing units for portions of Sections 14, 15, 16, 21, 22, 23, 27, 28, 33, and 34, Township 3 North, Range 64 West, 6th P.M., portions of Sections 20, 28, 29, and 31, Township 3 North, Range 63 West, 6th P.M., and for portions of Section 6, Township 2 North, Range 63 West, 6th P.M., and approve up to 15 horizontal wells within proposed DSU Nos. 1, 2, 3, 4, and 5; up to seven horizontal wells within proposed DSU No. 10; and up to 23 horizontal wells within proposed DSU No. 11, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort. Hays, Codell, and Carlile Formations.
ORDER
IT IS HEREBY ORDERED:
1. Seven drilling and spacing units for the below-described lands are hereby established, and a total of up to 15 horizontal wells within proposed DSU Nos. 1, 2, 3, 4, and 5; up to seven horizontal wells within proposed DSU No. 10; and up to 23 horizontal wells within proposed DSU No. 11, are hereby approved, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort. Hays, Codell, and Carlile Formations.
Township 3 North, Range 64 West, 6th P.M.
Section 16: All
Section 21: All
DSU No. 1 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 28: All
Section 33: All
DSU No. 2 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 15: All
Section 22: All
DSU No. 3 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 27: All
Section 34: All
DSU No. 4 (1,280 acres, more or less)
Township 3 North, Range 64 West, 6th P.M.
Section 14: All
Section 23: All
DSU No. 5 (1,280 acres, more or less)
Township 3 North, Range 63 West, 6th P.M.
Section 31: W½
Township 2 North, Range 63 West, 6th P.M.
Section 6: W½
DSU No. 10 (640 acres, more or less)
Township 3 North, Range 63 West, 6th P.M.
Section 20: All
Section 28: W½
Section 29: All
DSU No. 11 (1,600 acres, more or less)
2. The productive interval of any wellbore will be located no closer than 200 feet from the north and south unit boundaries, no closer than 300 feet from the east and west unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located within the unit, unless Director grants an exception.
3. All wells approved under this Order shall be drilled from no more than two multi-well pads for DSU No. 10 and no more than three multi-well pads for DSU Nos. 1, 2, 3, 4, 5, and 11, to be located on the surface of the drilling unit, or on adjacent 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 north-south or south-north 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 16th day of October, 2018, as of September 17, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By___________________________________
Julie Spence Prine, Secretary