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. 181200906
TYPE: SPACING
ORDER NO. 407-2748 |
REPORT OF THE COMMISSION
The Commission heard this matter on January 28, 2019, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to establish an approximate 1,280-acre drilling and spacing unit for Sections 23 and 26, Township 1 North, Range 64 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 23 and 26, Township 1 North, Range 64 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 23 and 26, Township 1 North, Range 64 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.
6. On September 24, 2018, Verdad, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”), 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, with the productive interval of the wellbores to be located no closer than 460 feet from 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 1 North, Range 64 West, 6th P.M.
Section 23: All
Section 26: All
Applicant stated that any horizontal wells to be drilled under this Application will be drilled from no more than three multi-well pads on the surface of the drilling unit, or on adjacent lands with consent of the landowner, subject to Rule 318A, unless the Director grants an exception.
7. On November 26, 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.
8. Land testimony and exhibits submitted in support of the Application by Lemar Safi, Landman for Verdad, showed that the mineral interests in the Application Lands are owned in fee and that Verdad owns leasehold or unleased mineral interests in the Application Lands.
9. Geologic testimony and exhibits submitted in support of the Application by Kurt Rucker, Senior Geologist for Verdad, showed that the Niobrara Formation is present throughout the Application Lands and that it, together with the Fort Hays Formation, is approximately 390 feet thick. The geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 11 feet thick, and is a sandstone.
10. Engineering testimony and exhibits submitted in support of the Application by L. Arthur Beecherl, IV, Vice-President of Operations for Verdad, showed that Verdad plans to drill 12 Niobrara Formation wells and four Codell Formation wells. The engineering testimony further showed that, based on analog Niobrara Formation wells, the estimated drainage area for horizontal Niobrara Formation wells in the Application Lands is 89 acres, and an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area that 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, based on analog Codell Formation wells, the estimated drainage area for horizontal Codell Formation wells in the Application Lands is 198 acres, and an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically, and effectively drained by four horizontal wells producing oil, gas, and associated hydrocarbons from the Codell Formation.
11. In addition, the engineering testimony showed that the drainage radius from wellbores in the Niobrara Formation is estimated to be 201.1 feet. The engineering testimony also showed that the drainage radius from wellbores in the Codell Formation is estimated to be 447.3 feet. Thus, the requested setbacks of 460 feet from the unit boundaries are appropriate.
12. 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.
13. Verdad agreed to be bound by oral order of the Commission.
14. Based on the facts stated in the verified Application, no protests having been filed, 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 23 and 26, Township 1 North, Range 64 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 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 North, Range 64 West, 6th P.M.
Section 23: All
Section 26: All
2. 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.
3. All wells permitted under this Order will be drilled from no more than three multi-well pads within the Application Lands, or on adjacent lands with consent of the landowner, 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 25th day of February, 2019, as of January 28, 2019.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Mimi C. Larsen, Secretary