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. 190900582
TYPE: SPACING
ORDER NO. 407-2931 |
REPORT OF THE COMMISSION
The Commission heard this matter on September 25, 2019, at the Margaret Carpenter Recreation Center, 11151 Colorado Blvd, Thornton, Colorado, upon application for an order to: 1) vacate Order No. 407-2321; 2) vacate Order No. 407-2763; and 3) establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) for production from the Niobrara and Codell Formations, and approve 24 horizontal wells within the unit, with the productive interval of the wellbore to be located 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:
Township 7 North, Range 65 West, 6th P.M.
Section 3: All
Section 4: All
FINDINGS
The Commission finds as follows:
1. Nickel Road Operating, LLC (Operator No. 10669), together with Nickel Road FW, LLC, an affiliate of Nickel Road Operating, LLC, under common ownership and control (together, “Nickel Road” 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 29, 2018, the Commission entered Order No. 407-2321 which, among other things, established an approximate 640-acre drilling and spacing unit for the S˝ of Sections 3 and 4, Township 7 North, Range 65 West, 6th P.M., and approved a total of up to 12 horizontal wells for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of the wellbores to be located no closer than 460 feet from the unit boundaries, and not less than 150 feet from the productive interval of any other wellbore producing from the same source of supply within the unit, unless an exception is granted by the Director, and providing that the wells permitted under the order shall be located on no more than two multi-well pads within the Application Lands, subject to Rule 318A, unless an exception is granted by the Director.
7. On March 11, 2019, the Commission entered Order No. 407-2763 which, among other things, established an approximate 640-acre drilling and spacing unit for the N˝ of Sections 3 and 4, Township 7 North, Range 65 West, 6th P.M., and approved a total of up to 10 horizontal wells for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of the wellbores to be located no closer than 460 feet from the unit boundaries, and not less than 150 feet from the productive interval of any other wellbore producing from the same source of supply within the unit, unless an exception is granted by the Director, and providing that the wells permitted under the order shall be located on no more than four multi-well pads within or adjacent to the Application Lands, subject to Rule 318A, unless an exception is granted by the Director.
8. On June 27, 2019, Nickel Road, by its attorneys, filed with the Commission a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) vacate Order No. 407-2321; 2) vacate Order No. 407-2763; and 3) establish an approximate 1,280-acre drilling and spacing unit for the Application Lands for production from the Niobrara and Codell Formations, and approve 24 horizontal wells within the unit, with the productive interval of the wellbore to be located 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. Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than two multi-well pads on the surface of the drilling unit, or on adjacent lands with consent of the landowner, unless the Director grants an exception.
10. Nickel Road, by its attorneys, filed with the Commission a written request to approve the Application based on the merits of the verified Application and one supporting exhibits. Sworn written testimony and exhibits were submitted in support of the Application.
11. Land testimony and exhibits submitted in support of the Application by Blake Leavitt, Land Manager for Nickel Road, showed that both the mineral and surface interests in the Application Lands are owned in fee, and that Nickel Road owns a partial undivided leasehold ownership interest and has a right to drill in the Application Lands.
12. Weld County is the local governmental agency with siting authority for the Application Lands and 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 demonstrated that in developing the Application Lands, Nickel Road’s operations will reasonably protect and minimize adverse impacts to public health, safety, and welfare, the environment, and wildlife resources and will reasonably protect against adverse environmental impacts on any air, water, soil, or biological resources.
13. Geologic testimony and exhibits submitted in support of the Application by Christopher Tincher, Geologist and Managing Partner for Nickel Road, showed that the Niobrara Formation is present throughout the Application Lands and ranges from approximately 270 to 285 feet thick and the Codell Formation is present throughout the Application Lands and ranges from approximately 18 to 21 feet thick. The geologic testimony showed that the Niobrara Formation consists of a sequence of chalks, marls, and limestones deposited in the Western Interior Seaway during Cretaceous time. The Niobrara Formation overlies the thinner Codell Sandstone and is overlain by the Sharon Springs member of the Pierre Shale. The Niobrara Formation is both a hydrocarbon source rock and reservoir. The Codell Sandstone is a sandstone reservoir.
14. Engineering testimony and exhibits submitted in support of the Application by Andrew Haney, Reservoir Engineer and President of Nickel Road, showed that the Applicant is requesting 16 horizontal wells in the Niobrara Formation, and 8 horizontal wells in the Codell Formation. Engineering testimony further showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 45 acres for a two-mile horizontal well, that the drainage area for analog horizontal Codell Formation wells is estimated at 72 acres for a two-mile horizontal well, and an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 16 horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara Formation, and 8 horizontal wells producing oil, gas, and associated hydrocarbons from the Codell Formation. The engineering testimony also showed that the proposed well will be economic.
15. 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.
16. 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.
17. Nickel Road agreed to be bound by oral order of the Commission.
18. 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: 1) vacate Order No. 407-2321; 2) vacate Order No. 407-2763; and 3) establish an approximate 1,280-acre drilling and spacing unit for the Application Lands for production from the Niobrara and Codell Formations, and approve 24 horizontal wells within the unit, with the productive interval of the wellbore to be located 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.
ORDER
IT IS HEREBY ORDERED:
1. Order No. 407-2321 is hereby vacated.
2. Order No. 407-2763 is hereby vacated.
3. An approximate 1,280-acre drilling and spacing unit for the Application Lands is hereby established, and 16 horizontal wells in the Niobrara Formation, and 8 horizontal wells in the Codell Formation are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.
4. The productive interval of the wellbore will be located 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.
5. The proposed wells shall be located on 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.
6. 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 3rd day of October, 2019, as of September 25, 2019.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By___________________________________
Mimi C. Larsen, Secretary