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, WELD COUNTY, COLORADO |
) ) ) ) ) ) ) |
CAUSE NO. 407
DOCKET NO. 190700525
TYPE: SPACING
ORDER NO. 407-2945 |
REPORT OF THE COMMISSION
The Commission heard this matter 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) maintain an approximate 640-acre drilling and spacing unit established by Order No. 407-374 for Section 11, Township 6 North, Range 61 West, 6th P.M., only for the existing production of oil, gas, and associated hydrocarbons from the Niobrara Formation for the Frank Trust 11-11H Well (API No. 05-123-32426); 2) vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-378 for Section 14, Township 6 North, Range 61 West, 6th P.M.; 3) vacating an approximate 1,280-acre drilling and spacing unit established by Order No. 407-1747 for Sections 2 and 11, Township 6 North, Range 61 West, 6th P.M.; and 4) establish two approximate 960-acre drilling and spacing units for the below-described lands (“Application Lands”) and approve up to 10 horizontal wells within each unit, for production from the Niobrara and Codell Formations, 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:
Drilling and Spacing Unit (“DSU”) No. 1
Township 6 North, Range 61 West, 6th P.M.
Section 11: All
Section 14: N˝
DSU No. 2
Township 6 North, Range 61 West, 6th P.M.
Section 14: S˝
Section 23: All
FINDINGS
The Commission finds as follows:
1. Bison Oil & Gas II, LLC (Operator No. 10661) (“Bison” 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 this Rule for the Niobrara and Codell Formations.
6. On July 8, 2010, the Commission issued Order No. 407-374, which established eleven approximate 640-acre drilling and spacing units for lands in Townships 6 and 7 North, Ranges 60 and 61 West, 6th P.M., and approved up to two horizontal wells within each unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with a bottomhole location and the horizontal leg of any permitted well to be no closer than 460 feet from the boundaries of the unit, without exception being granted by the Director.
7. On October 21, 2010, the Commission issued Order No. 407-378, which modified Order No. 407-374 to include Section 14, Township 6 North, Range 61 West, 6th P.M., for production from the Niobrara Formation.
8. On October 23, 2010, the Commission approved a Form 2 Application for Permit-to-Drill the Frank Trust 11-11H Well (API No. 05-123-32426) in the drilling and spacing unit established for Section 11, Township 6 North, Range 61 West, 6th P.M. On March 28, 2011, the Frank Trust 11-11H Well was spud, and ultimately completed to the Niobrara Formation.
9. On July 19, 2016, the Commission issued Order No. 407-1747, which, among other things, maintained an approximate 640-acre drilling and spacing unit established by Order No. 407-374 for Section 11, Township 6 North, Range 61 West, 6th P.M., only for the existing production of oil, gas, and associated hydrocarbons from the Niobrara Formation for the Frank Trust 11-11H Well, and established an approximate 1,280-acre drilling and spacing unit for Sections 2 and 11, Township 6 North, Range 61 West, 6th P.M., and approved a total of up to 28 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations. Section 11 of the Application Lands is subject to this order.
10. On April 30, 2019, amended May 20, 2019, Bison, by its attorneys, filed with the Commission a verified application (“Application”) pursuant to § 34-60-116, C.R.S., for an order to: 1) maintain an approximate 640-acre drilling and spacing unit established by Order No. 407-374 for Section 11, Township 6 North, Range 61 West, 6th P.M., only for the existing production of oil, gas, and associated hydrocarbons from the Niobrara Formation for the Frank Trust 11-11H Well (API No. 05-123-32426); 2) vacate an approximate 640-acre drilling and spacing unit established by Order No. 407-378 for Section 14, Township 6 North, Range 61 West, 6th P.M.; 3) vacating an approximate 1,280-acre drilling and spacing unit established by Order No. 407-1747 for Sections 2 and 11, Township 6 North, Range 61 West, 6th P.M.; and 4) establish two approximate 960-acre drilling and spacing units for the Application Lands and approve up to 10 horizontal wells within each unit, for production from the Niobrara and Codell Formations, 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.
11. Applicant states that all horizontal wells will be drilled from no more than one multi-well pad on the surface of each drilling and spacing unit , or on adjacent lands with consent of the landowner, unless the Director grants an exception.
12. Bison 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.
13. Land testimony and exhibits submitted in support of the Application by Heath Lovell, Senior Staff Landman for Bison, show that Bison holds oil and gas interests and has a right to drill in the Application Lands.
14. Geologic testimony and exhibits submitted in support of the Application by Ian Hogan, as Vice President of Exploration and Geoscience for Bison, show that the Niobrara Formation is present throughout the Application Lands, is approximately 295 feet thick, and is generally of uniform thickness throughout the Application Lands. The geologic testimony shows that the Niobrara Formation is a sequence of chalks and marls, and has two potentially productive intervals, the those being the B and C chalk benches. In addition, the geologic testimony shows that the Codell Formation is present throughout the Application Lands, is approximately five feet thick, and is generally of uniform thickness throughout the Application Lands. The geologic testimony shows that the Codell Formation is a marine sandstone.
15. The geoscience testimony further showed that horizontal, Niobrara-Formation wells are planned for the Niobrara Formation B and C chalk benches, with five wells planned for each of the chalk benches. The geoscience testimony further showed that the drainage area for analog horizontal Niobrara Formation wells normalized for 960-acre drilling and spacing unit is estimated at 98 acres, and an approximate 960-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by ten horizontal wells producing oil, gas and associated hydrocarbons from the B and C chalk benches of the Niobrara Formation. The geoscience testimony further showed that the drainage area for analog horizontal Codell Formation wells normalized for 960-acre drilling and spacing unit is estimated at 78 acres, and an approximate 960-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Niobrara Formation.
16. The geoscience testimony further showed that the calculated drainage radius for a Niobrara-Formation well is approximately 269.5 feet. The geoscience testimony further showed that the calculated drainage radius for a Codell-Formation well is approximately 214.5 feet. Therefore, the proposed unit-boundary setbacks are appropriate.
17. Engineering testimony by Elizabeth Wilson, Senior Staff Reserves and Business Development Engineer showed that horizontal wells drilled in the Niobrara Formation and in the Codell Formation would be economical.
18. Regulatory testimony and exhibits submitted in support of the Application by Abigail Wenk, Corporate Secretary and Manger of Compliance for Bison, show that Weld County is the local governmental 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 developing the Application Lands, Bison’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 resources.
19. 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.
20. 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.
21. Bison agreed to be bound by oral order of the Commission.
22. Based on the facts stated in the verified Application, no protests having been filed, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to: 1) maintain an approximate 640-acre drilling and spacing unit established by Order No. 407-374 for Section 11, Township 6 North, Range 61 West, 6th P.M., only for the existing production of oil, gas, and associated hydrocarbons from the Niobrara Formation for the Frank Trust 11-11H Well (API No. 05-123-32426); 2) vacate Order No. 407-378 and the approximate 640-acre drilling and spacing unit established by Order No. 407-378 for Section 14, Township 6 North, Range 61 West, 6th P.M.; 3) vacate Order No. 407-1747; and 4) establish two approximate 960-acre drilling and spacing units for the Application Lands for production from the Niobrara and Codell Formations, and approve up to 10 horizontal wells within each unit for production from the Niobrara Formation only, 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 No. 407-374 is hereby amended to provide that the drilling and spacing unit established for Section 11, Township 6 North, Range 61 West, 6th P.M., shall be applicable only to the Frank Trust 11-11H Well (API No. 05-123-32426). No further wells shall be drilled in the approximate 640-acre drilling and spacing unit created by Order No. 407-374 for Section 11, Township 6 North, Range 61 West, 6th P.M. The Frank Trust 11-11H Well shall continue to pay to the approximate 640-acre drilling and spacing unit created by Order No. 407-374 for Section 11, Township 6 North, Range 61 West, 6th P.M. Upon the plugging and abandonment of the Frank Trust 11-11H Well, the approximate 640-acre drilling and spacing unit created by Order No. 407-374 for Section 11, Township 6 North, Range 61 West, 6th P.M., shall be deemed vacated.
2. Order No. 407-378 and the approximate 640-acre drilling and spacing unit established by Order No. 407-378 for Section 14, Township 6 North, Range 61 West, 6th P.M., for production from the Niobrara Formation, are hereby vacated.
3. Order No. 407-1747 is hereby vacated.
4. Two approximate 960-acre drilling and spacing units for the Application Lands are hereby established for production from the Niobrara and Codell Formations, and a total of up to ten horizontal wells are approved for each drilling and spacing unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation only.
5. 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.
6. The proposed wells shall be located on no more than one multi-well pad within each drilling and spacing unit, or at a legal location on adjacent lands, subject to Rule 318A, unless the Director grants an exception.
7. 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 6th day of November, 2019, as of October 30, 2019.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By___________________________________
Mimi C. Larsen, Secretary