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. 190300213 TYPE: EXCEPTION LOCATION ORDER NO. 407-2901

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 amend the boundaries of the approximate 640-acre drilling and spacing unit that Order No. 407-1881 established for the below-described lands (“Application Lands”) such that the setback on the northern boundary of the drilling and spacing unit is reduced from 460 feet to 200 feet:

Township 1 South, Range 66 West, 6^th P.M.

Section 17:      W½

Section 20:      W½

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 January 30, 2017, the Commission entered Order No. 407-1881 which, among other things, established an approximate 640-acre drilling and spacing unit for the Application Lands and approved up to 12 horizontal wells within the unit, for production from the Codell and Niobrara Formations, with the productive interval of the wellbore 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.

7. On January 10, 2019, Great Western filed with the Commission a verified application (“Application”) pursuant to § 34-60-116, C.R.S., for an order to amend the boundaries of the approximate 640-acre drilling and spacing unit that Order No. 407-1881 established for the Application Lands such that the productive interval of the wellbores within the unit will be located no closer than 200 feet from the northern unit boundary, no closer than 460 feet from the eastern, western, and southern 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.

8. 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.

9. 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 the right to operate the Application Lands. Land testimony further shows that Applicant will drill no more than nine horizontal wells in the Niobrara Formation, no more than three horizontal wells in the Codell Formation, and that all wells will be drilled in a south-north orientation.

10. 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 425 to 445 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 16 to 19 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.   

11. 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 the estimated drainage area for a Niobrara Formation well in the Application Lands is 56 acres. Accordingly, an approximate 640-acre drilling and spacing unit is not less than the maximum area that can be efficiently, economically, and effectively drained by up to nine horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation. The estimated drainage area for a Codell Formation well in the Application Lands is 153 acres. Accordingly, an approximate 640-acre drilling and spacing unit is not less than the maximum area that can be efficiently, economically, and effectively drained by up to three horizontal wells producing oil, gas, and associated hydrocarbons from the Codell Formation.

12. In addition, the engineering testimony 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. Additionally, the engineering testimony shows that stage spacing distances provide an indirect means of assessing the ability to develop reservoir oriented transversely to the fracture direction and that the stage spacing for a Niobrara Formation well is 150 feet and the stage spacing for a Codell Formation well is 200 feet. Therefore, the requested setbacks of 200 feet from the northern boundaries and 460 feet from the eastern, western, and southern unit boundaries are appropriate given a north-south wellbore orientation.

13. Supplemental Land testimony and exhibits submitted in support of the Application by Jason Lowrey, Senior Landman for Great Western, show that the City of Brighton is the local governmental agency with siting authority for the Application Lands and that the City of Brighton has approved the siting of the oil and gas location 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.

14. 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.

15. 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. 

16. Great Western agreed to be bound by oral order of the Commission. 

17. 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 amend the boundaries of the approximate 640-acre drilling and spacing unit that Order No. 407-1881 established for Application Lands such that the setback on the northern boundary of the drilling and spacing unit is reduced from 460 feet to 200 feet.

ORDER

IT IS HEREBY ORDERED:

1. Order No. 407-1881 is hereby amended to allow the productive interval of the wellbores within the approximate 640-acre drilling and spacing unit established for the Application Lands to be located no closer than 200 feet from the northern unit boundary, no closer than 460 feet from the eastern, western, and southern 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.

2. All horizontal wells will be drilled in a south-north orientation.

3. 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