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 OPERATION FOR THE NIOBRARA AND CODELL FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 190900570
TYPE: SPACING
ORDER NO. 407-2928 |
REPORT OF THE COMMISSION
The Commission heard this matter on September 25, 2019, at the Margaret Carpenter Recreation Center, 11151 Colorado Boulevard, Thornton, Colorado, upon application for an order to establish an approximate 640-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to 27 horizontal wells within the unit, for production from the Niobrara and Codell Formations, with the productive interval of the wellbore to be located no closer than 460 feet from the boundaries of the proposed unit, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless an exception is granted by the Director:
Township 7 North, Range 64 West, 6th P.M.
Section 8: All
FINDINGS
The Commission finds as follows:
1. Confluence DJ LLC, (Operator No. 10518) (“Confluence” 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. There are established and pending vertical wells within the above-described 640-acre drilling and spacing unit. Applicant asserts that these wells will not be impacted by the establishment of the proposed 640-acre drilling and spacing unit.
7. On June 26, 2019, Confluence, 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 640-acre drilling and spacing for the below-described Application Lands and approve up to 27 horizontal wells within the unit, for production from the Niobrara and Codell 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.
8. Applicant stated that all horizontal wells will be drilled from no more than two multi-well pads located within the unit, or on lands adjacent thereto with permission of the land landowner.
9. Confluence, by its attorneys, 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.
10. Land testimony and exhibits submitted in support of the Application by William E. Nicas, Senior Vice President of Land and Business Development for Confluence, showed that Confluence owns or holds oil and gas leasehold interests and has a right to drill in the Application Lands.
11. Geologic testimony and exhibits submitted in support of the Application by Robert H. Sterling, Senior Vice President of Geoscience for Confluence, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 220 to 295 feet thick, and is generally of uniform thickness throughout the Application Lands. The geologic testimony further showed that the Niobrara Formation is made up of a sequence of limestones, chalks, and marls, and has three potentially productive zones. The geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 17 to 22 feet thick, and is made up of a sequence of siltstones and sandstones.
12. Engineering testimony and exhibits submitted in support of the Application by John P. Seidle, Senior Reservoir Engineer at MHA testifying for Confluence, showed that Confluence proposes to drill 21 horizontal wells in the Niobrara Formation and six horizontal wells in the Codell Formation. The engineering testimony further showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 23 acres for a one-mile horizontal well, that the drainage area for analog horizontal Codell Formation wells is estimated at 90 acres for a one-mile horizontal well, and an approximate 640-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 21 one-mile horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation and six one-mile horizontal wells producing oil, gas, and associated hydrocarbons from the Codell Formation. The engineering testimony also showed that the proposed wells will be economic.
13. Supplemental Regulatory testimony and exhibits submitted in support of the Application by William E. Nicas, Senior Vice President of Land and Business Development for Confluence, showed that Weld County is the local government agency with siting authority for the Application Lands and that 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 regulatory testimony further demonstrates that in the developing the Application Lands, Confluence’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 resource resulting from oil and gas operations.
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. Confluence agreed to be bound by oral order of the Commission.
17. Based on the facts stated in the verified Application, the protest 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 640-acre drilling and spacing for the Application Lands, and approve up to 21 horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation and six horizontal wells producing oil, gas, and associated hydrocarbons from the Codell Formation, 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 an exception is granted by the Director.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 640-acre drilling and spacing unit for the Application Lands is hereby established, and at total of up to 21 new horizontal wells in the Niobrara Formation and six new horizontal wells in the Codell Formation within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.
2. The productive interval of the wellbore 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 approved under this Order shall be located on no more than two multi-well pads within the drilling and spacing unit, or at a legal location on adjacent lands, 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 27th day of September 2019, as of September 25, 2019.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By___________________________________
Mimi C. Larsen, Secretary