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, ADAMS COUNTY, COLORADO

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CAUSE NO. 407 DOCKET NO. 190300211 TYPE: ADDITIONAL WELLS ORDER NO. 407-2899

REPORT OF THE COMMISSION

The Commission heard this matter on August 21, 2019, at Hotel Colorado, 526 Pine Street, Glenwood Springs, Colorado, upon application for an order to approve an additional four horizontal wells, for a total of up to 26 horizontal wells, within the approximate 1,280-acre drilling and spacing unit established by Order No. 407-2483 for the below-described lands (“Application Lands”) for production 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 1 South, Range 68 West, 6^th P.M.

Section 1:        All

Section 12:      All

FINDINGS

The Commission finds as follows:

1. Great Western Operating Company, LLC (Operator No. 10110) (“Great Western” 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 this Rule for the Niobrara and Codell Formations.

6. 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 and Niobrara Formations, with permitted well locations in accordance with the provisions of Order No. 407-1.

7. On June 12, 2017, the Commission entered Order No. 407-2054, which established an approximate 480-acre drilling and spacing unit for the Application Lands and approved up to 12 horizontal wells, with the treated interval of each proposed horizontal well to be no closer than 460 feet from the boundaries of the unit and all horizontal wells to be no closer than 150 feet from the treated interval of another well producing from the same source of supply within the unit. The Order also provides that the vertical or directional wells producing from the Application Lands will remain subject to Order No. 407-87 rather than Order No. 407-2054.

8. On June 11, 2018, the Commission entered Order No. 407-2483 which, among other things, vacated Order No. 407-2054 and established an approximate 1,280-acre drilling and spacing unit for the Application Lands and approved up to 22 horizontal wells, with the productive interval of each proposed horizontal well to be no closer than 460 feet from the boundaries of the unit and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless the Director grants an exception.

9. On January 10, 2019 (corrected on February 1, 2019), Great Western filed with the Commission a verified application (“Application”) pursuant to § 34-60-116, C.R.S., for an order to approve an additional four horizontal wells, for a total of up to 26 horizontal wells, in the approximate 1,280-acre drilling and spacing unit that Order No. 407-2483 established for the Application Lands for production 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.

10. Applicant states that all 26 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. 

11. Great Western 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.

12. Land testimony and exhibits submitted in support of the Application by Jason Lowrey, Senior Landman for Great Western, show that both the mineral and surface interests in the Application Lands are owned in fee, and that Great Western owns a leasehold interest in the Application Lands and has a right to drill in the Application Lands.

13. Geologic testimony and exhibits submitted in support of the Application by Willis Wilcoxon, Geologist for Great Western, show that the Niobrara Formation is present throughout the Application Lands, is approximately 380 to 460 feet thick, and is a fine-grained marine rock comprised of interlayered shale, marls, and chalks. The geologic testimony also shows that the Codell Formation is present throughout the Application Lands, is approximately 17 to 22 feet thick, and is comprised of bioturbated, muddy, fine- to very fine-grained sand layers, interbedded in part with thin shale and silty shale layers. 

14. Engineering testimony and exhibits submitted in support of the Application by Lewis S. Wandke, Senior Engineer at Petrotek Engineering Corporation, on behalf of Great Western, show that Great Western will drill no more than 22 horizontal wells in the Niobrara Formation and no more than eight horizontal wells in the Codell Formation. The engineering testimony further shows that the drainage area for analog horizontal Niobrara Formation wells is estimated to be 55 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 22 horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation. The engineering testimony also shows that the drainage area for analog horizontal Codell Formation wells is estimated to be 149 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 eight horizontal wells producing oil, gas and associated hydrocarbons from the Codell Formation.

15. The engineering testimony further shows that the estimated drainage radius for a Niobrara-Formation well is 65 feet and the estimated drainage radius for a Codell-Formation well is 257 feet. Therefore, a setback of 460 feet from the unit boundaries is appropriate.

16. Supplemental Land testimony and exhibits submitted in support of the Application by Jason Lowrey, Senior Landman for Great Western, show that Adams County is the local governmental agency with siting authority for the Application Lands and that Adams County has approved the siting of the oil and gas locations necessary for the proposed development of the Application Lands. The testimony further demonstrates that in developing the Application Lands, Great Western’s operations will be conducted in a manner that protects and minimizes 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. Great Western agreed to be bound by oral order of the Commission. 

20. 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 an additional four horizontal wells, for a total of up to 26 horizontal wells, in the approximate 1,280-acre drilling and spacing unit that Order No. 407-2483 established for the Application Lands for production 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.

ORDER

IT IS HEREBY ORDERED:

1. An additional four horizontal wells, for a total of up to 26 horizontal wells, in the approximate 1,280-acre drilling and spacing unit that Order No. 407-2483 established for the Application Lands are hereby approved for production from the Niobrara and Codell Formations.

2.         The productive interval of the wellbore of any permitted well in the unit 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 26 horizontal wells in the approximate 1,280-acre drilling and spacing unit that Order No. 407-2483 established for the Application Lands shall be drilled from no more than two multi-well pads within the unit, subject to Rule 318A, unless the Director grants an exception.

4.         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 10th day of September, 2019, as of August 21, 2019.        

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

By___________________________________         

                 Mimi C. Larsen, Secretary