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, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 190300229
TYPE: SPACING
ORDER NO. 407-2877 |
REPORT OF THE COMMISSION
The Commission heard this matter on July 31, 2019, at the University of Colorado, School of Public Affairs, 1380 Lawrence Street, Second Floor Terrace Room, Denver, Colorado, upon 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 production from the Niobrara and Codell Formations, with the productive interval of any wellbore to be located no closer than 150 feet from the north and south unit boundaries, 460 feet from the east and west unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore within the unit, unless the Director grants an exception:
Township 7 North, Range 66 West, 6th P.M.
Section 18: All
Section 19: All
FINDINGS
The Commission finds as follows:
1. PDC Energy, Inc. (Operator No. 69175) (“PDC” 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. Pursuant to § 34-60-106(2.5)(a), C.R.S., the Commission shall regulate oil and gas operations in a reasonable manner to protect and minimize adverse impacts to public health, safety, and welfare, the environment, and wildlife resources, and shall protect against adverse environmental impacts on any air, water, soil, or biological resource resulting from oil and gas operations.
5. On April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. The Application Lands are subject to Rule 318A.
6. On October 1, 2012, the Commission entered Order No. 407-719, which, among other things, pooled an approximate 320-acre designated horizontal wellbore spacing unit for the Thornton 19X-404 Well (API No. 05-123-35168), consisting of the S½ of Section 19, Township 7 North, Range 66 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations. PDC excludes from its Application the Thornton 19X-404 Well and asserts that the production and payments from the Thornton 19X-404 Well should be maintained under the authority of Order No. 407-719 and other applicable Commission orders and rules.
7. On July 10, 2018, the Commission entered Order No. 407-2496, which, among other things, pooled two approximate 666-acre designated horizontal wellbore spacing units; two approximate 335-acre designated horizontal wellbore spacing units; and two approximate 667-acre designated horizontal wellbore spacing units for the Thornton A-29-30HN Well (API# 05-123-43605), the Thornton B-29-30HC Well (API# 05-123-43611), the Thornton C-29-30HN Well (API# 05-123-43610), the Thornton D-29-30HN Well (API# 05-123-43604), the Thornton E-29-30HC Well (API# 05-123-43597), and the Thornton F-29-30HN Well (API# 05-123-43593) (“Wells”), consisting of the S½S½ of Section 19, the S½S½ of Section 20, the N½N½ of Section 29, the N½N½ of Section 30, Township 7 North, Range 66 West, 6th P.M., the N½N½ of Section 29, the N½N½ of Section 30, Township 7 North, Range 66 West, 6th P.M., the N½ of Section 29, and the N½ of Section 30, Township 7 North, Range 66 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations. PDC excludes from its Application the Thornton A-29-30HN Well, the Thornton B-29-30HC Well, the Thornton C-29-30HN Well, the Thornton D-29-30HN Well, the Thornton E-29-30HC Well, and the Thornton F-29-30HN Well and asserts that the production and payments from these wells should be maintained under the authority of Order No. 407-2496 and other applicable Commission orders and rules.
8. On January 10, 2019, PDC, 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 1,280-acre drilling and spacing unit for the Application Lands and approve up to 16 horizontal wells within the unit, for production from the Niobrara and Codell Formations, with the productive interval of any wellbore to be located no closer than 150 feet from the north and south unit boundaries, 460 feet from the east and west unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore within the unit, unless the Director grants an exception.
9. Applicant states that all horizontal wells will be drilled from no more than two multi-well pads within the drilling unit, or on adjacent lands with consent of the landowner, subject to Rule 318A, unless an exception is granted by the Director. Applicant further states that all permitted wells will be drilled in a north/south orientation.
10. PDC filed with the Commission a written request to approve the Application based on the merits of the verified Application and on supporting exhibits. Sworn written testimony and exhibits were submitted in support of the Application.
11. On February 25, 2019, Bayswater Exploration & Production, LLC (“Bayswater”) and Extraction Oil & Gas Inc. (“Extraction”) both filed a protest. On June 12, 2019, the protests of Bayswater and Extraction were both withdrawn.
12. Land testimony and exhibits submitted in support of the Application by Nicholas Lebsock, Regional Landman for PDC, show that PDC holds oil and gas interests and has a right to drill in the Application Lands. Land testimony further shows that PDC will drill 10 horizontal wells targeting the Niobrara Formation and six horizontal wells targeting the Codell Formation.
13. Geologic testimony and exhibits submitted in support of the Application by Nathan Marolf, Development Geologist for PDC, show that the Niobrara Formation is present throughout the Application Lands, is approximately 320 to 330 feet thick, and is generally of uniform thickness throughout the Application Lands. The geologic testimony shows that the Niobrara Formation is comprised of chalks, marlstones, and limestone. In addition, the geologic testimony shows that the Codell Formation is present throughout the Application Lands, is approximately 20 feet thick, and is generally of uniform thickness throughout the Application Lands. The geologic testimony shows that the Codell Formation is comprised of fine-grained marine interbedded clay and sand deposits.
14. Engineering testimony and exhibits submitted in support of the Application by Jon Yetkin, Reservoir Engineer for PDC, show that PDC will drill 10 horizontal wells targeting the Niobrara Formation and six horizontal wells targeting the Codell Formation. Engineering testimony further shows that the estimated drainage area for a horizontal Niobrara Formation well in the Application Lands is 76 acres. Accordingly, an approximate 1,280-acre drilling and spacing unit is not less than the maximum area that can be efficiently, economically, and effectively drained by 10 horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation. In addition, the geologic testimony shows that the estimated drainage area for a horizontal Codell Formation well in the Application Lands is 155 acres. Accordingly, an approximate 1,280-acre drilling and spacing unit is 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 Codell Formation.
15. Engineering testimony also shows that, based on microseismic data, hydraulic fracture growth does not extend past the heel and toe of the wellbores. Therefore, the proposed setbacks of 150 feet from the north and south unit boundaries are appropriate given a north-south wellbore orientation.
16. Supplemental Land testimony and exhibits submitted in support of the Application by Nicholas Lebsock, Regional Landman for PDC, show that Weld County is the local governmental agency with siting authority for the Application Lands. Weld County has waived its right to render a disposition regarding its surface permitting prior to the Commission’s approval of the proposed drilling and spacing unit. The testimony further demonstrates that in developing the Application Lands, PDC’s operations will reasonably protect and minimize adverse impacts to public health, safety, and welfare, the environment, and wildlife resources and will protect against adverse environmental impacts on any air, water, soil, or biological resources.
17. The above-referenced testimony and exhibits show that granting the Application will regulate oil and gas operations in a reasonable manner to protect and minimize adverse impacts to public health, safety, and welfare, the environment, and wildlife resources and will protect against adverse environmental impacts on any air, water, soil, or biological resource resulting from oil and gas operations.
18. The above-referenced testimony and exhibits further 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.
19. PDC agreed to be bound by oral order of the Commission.
20. Based on the facts stated in the verified Application, the protests having been withdrawn, 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 the Application Lands and approve up to 16 horizontal wells within the unit, for production from the Niobrara and Codell Formations, with the productive interval of any wellbore to be located no closer than 150 feet from the north and south unit boundaries, 460 feet from the east and west unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore within the unit, unless the Director grants an exception.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 1,280-acre drilling and spacing unit for the Application Lands is hereby established, and up to 16 horizontal wells within the unit are approved for production from the Niobrara and Codell Formations.
2. The productive interval of any wellbore will be located no closer than 150 feet from the north and south unit boundaries, 460 feet from the east and west unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore within the unit, unless the Director grants an exception.
3. All horizontal wells in the unit will be drilled in a north-south orientation.
4. 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 consent of the landowner, subject to Rule 318A, unless the Director grants an exception.
5. No oil and gas operations may be conducted in the Application Lands without an approved Oil and Gas Location Assessment permit(s) (Form 2A) and approved Applications for Permits to Drill (Form 2). The determination of whether an oil and gas location satisfies § 34-60-106(2.5)(a), C.R.S. shall be made by Commission permitting staff in the course of its review and determination of the Form 2A. The Commission’s approval of this drilling and spacing unit does not equate to approval of any proposed Form 2A for an oil and gas location or Form 2.
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 6th day of August, 2019, as of July 31, 2019.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By___________________________________
Mimi C. Larsen, Secretary