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. 181200918

 

TYPE: ADDITIONAL WELLS

 

ORDER NO. 407-2752

 

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 approve a total of up to 20 horizontal wells within an approximate 1,280-acre drilling and spacing unit established by Order No. 407-2552 for Sections 4 and 5, Township 7 North, Range 66 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.            Edge Energy II, LLC (Operator No. 10671) (“Edge” 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 4 and 5, Township 7 North, Range 66 West, 6th P.M., are subject to Rule 318A.

 

5.            On May 29, 2012, the Commission entered Order No. 407-657, which established an approximate 640-acre drilling and spacing unit for Section 4, Township 7 North, Range 66 West, 6th P.M., and approved up to four horizontal wells within the unit, for the production of gas and associated hydrocarbons from the Niobrara Formation. Section 4, Township 7 North, Range 66 West, 6th P.M., is subject to this order for the Niobrara Formation.

 

6.            On July 30, 2018, the Commission entered Order No. 407-2552, which vacated an approximate 640-acre drilling and spacing unit established by Order No. 407-657 for Section 4, Township 7 North, Range 66 West, 6th P.M., and established an approximate 1,280-acre drilling and spacing unit for Sections 4 and 5, Township 7 North, Range 66 West, 6th P.M., and approved a total of up to twelve 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 located no closer than 460 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore producing from the same common source of supply within the unit, unless the Director grants an exception.

 

7.            On October 10, 2018, Edge filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to approve a total of up to 20 horizontal wells within an approximate 1,280-acre drilling and spacing unit established by Order No. 407-2552 for the below described lands (“Application Lands”) for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, 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 7 North, Range 66 West, 6th P.M.

Section 4:        All

Section 5:        All

 

Applicant stated that the permitted horizontal wells will be drilled from no more than four 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.

 

8.            On December 14, 2018, Edge, 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 Erik Larsen, Landman for Edge, showed that Edge is an owner with the right to drill in the Application Lands.

                                                                               

10.          Geologic testimony and exhibits submitted in support of the Application by Marshall Deacon, Geologist for Edge, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 290 to 300 feet thick, and consists of interbedded chalks and marls. Further geologic testimony showed that the Codell Formation is present throughout the Application Lands, is approximately 24 feet thick, and is comprised of sandstone, muddy sandstone, and mudstone.

 

11.          Engineering testimony and exhibits submitted in support of the Application by Ben Turner, Engineer for Edge, showed that Edge plans to drill 14 Niobrara Formation wells and six Codell Formation wells. Further engineering testimony showed that the drainage area for each horizontal Niobrara Formation well is estimated to be 37 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 14 horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation. Further testimony showed that the drainage area for each horizontal Codell Formation well is estimated to be 127 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 six horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

12.          In addition, the engineering testimony showed that the estimated drainage radius is 278 feet for a Codell Formation well and 81 feet for a Niobrara Formation well. Thus, the requested setbacks 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.          Edge 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 approve a total of up to 20 horizontal wells within an approximate 1,280-acre drilling and spacing unit established by Order No. 407-2552 for Sections 4 and 5, Township 7 North, Range 66 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.   

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         A total of up to 20 horizontal wells within an approximate 1,280-acre drilling and spacing unit established by Order No. 407-2552 for the below described lands are hereby approved for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations:

 

Township 7 North, Range 66 West, 6th P.M.

Section 4:        All

Section 5:        All

 

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 in the unit, unless the Director grants an exception.

 

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