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 Formation, WATTENBERG FIELD, WELD COUNTY, COLORADO
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CAUSE NO. 407
DOCKET NO. 190700489
TYPE: SPACING
ORDER NO. 407-2944 & 535-1259 |
REPORT OF THE COMMISSION
The Commission heard this matter on October 30, 2019, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) amend Order No. 535-4 to limit its applicability to the Greasewood #07-17H Well (API No. 05-123-34996) within the approximate 640-acre drilling and spacing unit established for Section 17, Township 6 North, Range 61 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; (2) amend Order No. 535-4 to limit its applicability to the Greasewood #10-20H Well (API No. 05-123-33650) within the approximate 640-acre drilling and spacing unit established for Section 20, Township 6 North, Range 61 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; (3) vacate Order Nos. 407-828 and 535-388; and (4) establish an approximate 640-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve up to five horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the productive interval of any 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:
Township 6 North, Range 61 West, 6th P.M.
Section 17: W½
Section 20: W½
FINDINGS
The Commission finds as follows:
1. HighPoint Operating Corporation (Operator No. 10071) (“HighPoint” or “Applicant”) 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 22, 2011 (Corrected April 4, 2013), the Commission entered Order No. 535-4 which, among other things, established 74 approximate 640-acre drilling and spacing units, and approved one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Sections 17 and 20, Township 6 North, Range 61 West, 6th P.M. are subject to this Order for the Niobrara Formation.
7. On January 23, 2012, the Commission entered Order No. 407-532 which, among other things, approved a well location exception from Rule 318A Greater Wattenberg Area drilling windows for the Greasewood #07-17H Well, to be drilled from a surface location of 501 feet FNL and 200 feet FWL in the NW¼NW¼ of Section 17, Township 6 North, Range 61 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Section 17, Township 6 North, Range 61 West, 6th P.M. is subject to this Order for the Niobrara Formation.
8. On July 29, 2013, the Commission entered Order Nos. 407-828 and 535-388 which approved an additional seven (7) horizontal wells, for a total of up to eight (8) horizontal wells, within an approximate 640-acre drilling and spacing unit established for Section 17, Township 6 North, Range 61 West, 6th P.M. for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and established an approximate 640-acre drilling and spacing unit for Section 17, Township 6 North, Range 61 West, 6th P.M., and approved up to four horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Codell Formation. Section 17, Township 6 North, Range 61 West, 6th P.M. is subject to this Order for the Codell and Niobrara Formations.
9. On October 28, 2013, the Commission entered Order No. 407-871 which, among other things, pooled all interests in an approximate 640-acre drilling and spacing unit established for Section 20, Township 6 North, Range 61 West, 6th P.M., to accommodate the Greasewood 10-20H Well, for the development and operation of the Niobrara Formation, effective as of the earlier of the date of the Application, or the date that any of the costs specified in C.R.S 34-60-116(7)(b)(II) are first incurred for the drilling of the Greasewood 10-20H Well, for the development and operation of the Niobrara Formation.
10. On October 28, 2013, the Commission entered Order No. 407-877 which, among other things, approved up to eight horizontal wells within an approximate 640-acre drilling and spacing unit established by Order Nos. 407-779 and 535-4 for Section 20, Township 6 North, Range 61 West, 6th P.M., for the production of oil, gas, and related hydrocarbons of the Niobrara Formation.
11. On December 16, 2013, the Commission entered Order No. 407-895 which pooled all interests within an approximate 640-acre drilling and spacing unit established for Section 17, Township 6 North, Range 61 West, 6th P.M. to accommodate the Greasewood #07-17H Well, for the development and operation of the Niobrara Formation.
12. On July 24, 2017, the Commission entered Order No. 407-2116 which denied an application for an Order to amend Order No. 407-871 which pooled all interests within an approximate 640-acre drilling and spacing unit established for Section 20, Township 6 North, Range 61 West, 6th P.M., to accommodate the Greasewood 10-20H Well.
13. The Greasewood #07-17H Well (API No. 05-123-34996) is the only horizontal well drilled and completed pursuant to Order No. 535-4 within the approximate 640-acre drilling and spacing unit established for Section 17, Township 6 North, Range 61 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Applicant confirms that it is the operator of the Greasewood #07-17H Well, and that no additional wells shall be drilled under Order No. 535-4, for the approximate 640-acre drilling and spacing unit for Section 17, Township 6 North, Range 61 West, 6th P.M.
14. The Greasewood #10-20H Well (API No. 05-123-33650) is the only horizontal well drilled and completed pursuant to Order No. 535-4 within the approximate 640-acre drilling and spacing unit established for Section 20, Township 6 North, Range 61 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Applicant confirms that it is the operator of the Greasewood #10-20H Well, and that no additional wells shall be drilled under Order No. 535-4, for the approximate 640-acre drilling and spacing unit for Section 20, Township 6 North, Range 61 West, 6th P.M.
15. On April 10, 2019, HighPoint, by its attorneys, filed with the Commission a verified application (“Application”) for an order to: 1) amend Order No. 535-4 to limit its applicability to the Greasewood #07-17H Well (API No. 05-123-34996) within the approximate 640-acre drilling and spacing unit established for Section 17, Township 6 North, Range 61 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; (2) amend Order No. 535-4 to limit its applicability to the Greasewood #10-20H Well (API No. 05-123-33650) within the approximate 640-acre drilling and spacing unit established for Section 20, Township 6 North, Range 61 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; (3) vacate Order Nos. 407-828 and 535-388; and (4) establish an approximate 640-acre drilling and spacing unit for the Application Lands and approve up to five horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the productive interval of any 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.
16. 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.
17. HighPoint 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.
18. Land testimony and exhibits submitted in support of the Application by Teale Stone, Landman for HighPoint, showed that HighPoint owns or holds the right to operate a majority partial undivided leasehold interest and has a right to operate the leasehold in the Application Lands. Land testimony further shows 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, HighPoint’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.
19. Geologic testimony and exhibits submitted in support of the Application by Emily Brehm, Senior Geologist for HighPoint, showed the Niobrara Formation is present throughout the Application Lands and ranges from approximately 310 to 325 feet thick.
20. Engineering testimony and exhibits submitted in support of the Application by Billy Sprague, Reservoir Engineer at HighPoint, show that Applicant intends to drill five wells in the Niobrara Formation. In addition, the engineering testimony shows that the drainage area for analog horizontal Niobrara Formation wells is estimated to be 96 acres per well, and an approximate 640-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically, and effectively drained by five horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation.
21. The proposed drilling and spacing unit contains federal minerals. As such, HighPoint agrees that it, or its successor operator, will submit a Communitization Agreement (“CA”) to the Bureau of Land Management (“BLM”) at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the initial well drilled within the drilling and spacing unit.
22. The above-referenced testimony and exhibits 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.
23. HighPoint agreed to be bound by oral order of the Commission.
24. 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: 1) amend Order No. 535-4 to limit its applicability to the Greasewood #07-17H Well (API No. 05-123-34996) within the approximate 640-acre drilling and spacing unit established for Section 17, Township 6 North, Range 61 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; (2) amend Order No. 535-4 to limit its applicability to the Greasewood #10-20H Well (API No. 05-123-33650) within the approximate 640-acre drilling and spacing unit established for Section 20, Township 6 North, Range 61 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; (3) vacate Order Nos. 407-828 and 535-388; and (4) establish an approximate 640-acre drilling and spacing unit for the Application Lands and approve up to five horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the productive interval of any 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.
ORDER
IT IS HEREBY ORDERED:
1. Order Nos. 535-4 and 407-895, which established and pooled an approximate 640-acre drilling and spacing unit for Section 17, Township 6 North, Range 61 West, 6th P.M., are hereby amended to provide that they are applicable only to the Greasewood #07-17H Well (API No. 05-123-34996). No further wells shall be drilled in the approximate 640-acre drilling and spacing unit established and pooled by Order Nos. 535-4 and 407-895 for Section 17, Township 6 North, Range 61 West, 6th P.M. The Greasewood #07-17H Well shall continue to pay to the approximate 640-acre drilling and spacing unit established and pooled by Order Nos. 535-4 and 407-895. Upon the plugging and abandonment of the Greasewood #07-17H Well, the approximate 640-acre drilling and spacing unit established and pooled by Order Nos. 535-4 and 407-895 for Section 17, Township 6 North, Range 61 West, 6th P.M., shall be deemed vacated.
2. Order Nos. 535-4 and 407-871, which established and pooled an approximate 640-acre drilling and spacing unit for Section 20, Township 6 North, Range 61 West, 6th P.M., are hereby amended to provide that they are applicable only to the Greasewood #10-20H Well (API No. 05-123-33650). No further wells shall be drilled in the approximate 640-acre drilling and spacing unit established and pooled by Order Nos. 535-4 and 407-871 for Section 20, Township 6 North, Range 61 West, 6th P.M. The Greasewood #10-20H Well shall continue to pay to the approximate 640-acre drilling and spacing unit established and pooled by Order Nos. 535-4 and 407-871. Upon the plugging and abandonment of the Greasewood #10-20H Well, the approximate 640-acre drilling and spacing unit established and pooled by Order Nos. 535-4 and 407-871 for Section 20, Township 6 North, Range 61 West, 6th P.M., shall be deemed vacated.
3. Order Nos. 407-828 and 535-388 are hereby vacated.
4. An approximate 640-acre drilling and spacing unit the Application Lands is hereby established and up to five horizontal wells within the unit are hereby approved for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
5. The productive interval of the wellbores 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.
6. 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 surface owner consent, unless the Director grants an exception.
7. HighPoint, or its successor operator, shall submit a CA to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the initial well drilled within the drilling and spacing unit.
8. 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 22nd day of November, 2019, as of October 30, 2019.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Mimi C. Larsen, Secretary