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, FORT HAYS, CODELL, AND CARLILE FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 190900605
TYPE: SPACING
ORDER NO. 407-2971 |
REPORT OF THE COMMISSION
The Commission heard this matter on November 20, 2019, at the University of Northern Colorado, University Center Ball Room, 2101 10th Avenue, Greeley, Colorado, upon application for an order to: 1) vacate Order No. 535-36 as to the W˝ of Section 16, Township 7 North, Range 63 West, 6th P.M., and 2) establish an approximate 1,594.8-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve 16 horizontal wells within the unit, for production from the Niobrara, Fort Hays, Codell, and Carlile Formations:
Township 7 North, Range 63 West,
6th P.M.
Section 16: W˝
Section 17: All
Section 18: Lots 1-4, E˝W˝, E˝ [All]
FINDINGS
The Commission finds as follows:
1. Noble Energy, Inc. (Operator No. 100322) (“Noble” 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 the Rule for the Niobrara, Fort Hays, Codell, and Carlile Formations.
6. On June 27, 2011, the Commission entered Order No. 535-36, which, among other things, established an approximate 640-acre drilling and spacing unit for Section 16, Township 7 North, Range 63 West, 6th P.M., and approved one horizontal well within the unit, for the production of gas and associated hydrocarbons from the Niobrara Formation. The W˝ of Section 16 of the Application Lands is subject to Order No. 535-36. No horizontal well has been drilled pursuant to Order No. 535-36.
7. On July 9, 2012, the Commission entered Order No. 407-677, which, among other things, pooled all interests in an approximate 150.04-acre designated wellbore spacing unit consisting of the S˝S˝ of Section 18, Township 7 North, Range 63 West, 6th P.M., for the drilling of the Bashor AC18-62HN Well (API No. 05-123-35093), for the development and operation of the Niobrara Formation. The S˝S˝ of Section 18 of the Application Lands is subject to this Order No. 407-677.
8. On June 27, 2019, Noble, 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. 535-36 as to the W˝ of Section 16, Township 7 North, Range 63 West, 6th P.M., and 2) establish an approximate 1,594.8-acre drilling and spacing unit for the Application Lands and approve 16 horizontal wells within the unit, for production from the Niobrara, Fort Hays, Codell, and Carlile Formations.
9. Applicant states that all horizontal wells 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. Applicant further stated that all horizontal wells will be drilled in an east-west orientation.
10. Applicant simultaneously proposed a Rule 216 Comprehensive Drilling Plan at Docket No. 191000612 (“CDP”), which includes the proposed unit covering the Application Lands. Applicant’s proposed CDP contemplates reduced setbacks within the interior boundaries of the CDP Area such that the treated interval of any well drilled within a drilling and spacing unit or wellbore spacing unit within the interior boundaries of the CDP shall be located no closer than two hundred (200) feet from the unit boundary at the heel and toe of each well and three hundred (300) feet from the unit boundary on each lateral side of a well, with an inter-well setback of not less than 150 feet from the treated interval of a well producing from the Niobrara and Codell Formations, unless an exception is granted by the Director or Commission. Applicant is not requesting a reduction in setbacks from the exterior boundaries of the CDP Area. Accordingly, the treated interval of any well adjacent to the exterior boundaries of the CDP Area shall remain at 460 feet from the unit boundary. The Application Lands lie entirely within the proposed CDP. Accordingly, the setbacks set forth under the CDP Application will apply to development of the Application Lands.
11. Noble 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.
12. Land testimony and exhibits submitted in support of the Application by Ryan D. Antonio, Land Manager for Noble, show that Noble holds oil and gas interests and has a right to drill in the Application Lands.
13. The land testimony also showed that the Application Lands contain two approved wellbore spacing units (“WSU”) established pursuant to Commission Rule 318A. The Walcker AC17-64HN Well (API No. 05-123-35071) and the Bashor AC 18-62HN Well (API No. 05-123-35093) have been drilled in these WSUs and are currently producing. The Walcker AC17-64HN Well and the Bashor AC 18-62HN Well will not be included in the drilling and spacing unit proposed for the Application Lands, and will remain subject to applicable Commission rules, regulations, and orders.
14. Geologic testimony and exhibits submitted in support of the Application by Errol Lawrence, as Senior Geologist at Petrotek Engineering testifying for Noble, show that the Niobrara Formation is present throughout the Application Lands, is approximately 170 to 200 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. The geologic testimony also shows that the Fort Hays Formation is present throughout the Application Lands, is approximately 80 to 100 feet thick, and is generally of uniform thickness throughout the Application Lands. The geologic testimony shows that the Fort Hays Formation is a limestone formation at the base of the Niobrara Formation. In addition, the geologic testimony shows that the Codell Formation is present throughout the Application Lands, is approximately 10 to 18 feet thick, and is generally of uniform thickness throughout the Application Lands. The geologic testimony shows that the Codell Formation is a marine sandstone. The geologic testimony also shows that the Carlile Formation is present throughout the Application Lands, is approximately 50 to 60 feet thick, and is generally of uniform thickness throughout the Application Lands. The geologic testimony shows that the Carlile Formation is a non-productive, clay-rich marine shale. Moreover, the geologic testimony states that the primary targets are the Niobrara and Codell Formations, and the Fort Hays Formation and Carlile Formation are included to accommodate potential deviation of wells into those formations.
15. Engineering testimony and exhibits submitted in support of the Application by Lewis Wandke, Senior Engineer at Petrotek Engineering testifying for Noble, showed that Noble plans to drill 16 horizontal wells (with no more than ten horizontal wells to be completed in the Codell Formation), with each well having a productive interval approximately 12,800 feet in length. The engineering testimony also showed that the drainage area for analog horizontal Niobrara Formation wells extrapolated for a well with a productive interval approximately 12,800 feet in length is estimated at 62 acres, and an approximate 1,594.8-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by six horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara Formation. The engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells extrapolated for a well with a productive interval approximately 12,800 feet in length is estimated at 157 acres, and an approximate 1,594.8-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 Codell Formation. The engineering testimony showed that horizontal wells drilled in the Niobrara Formation and in the Codell Formation would be economical.
16. The engineering testimony further showed that the calculated fracture half-length for a Niobrara-Formation well is 54 feet, and the calculated fracture half-length for a Codell-Formation well is 236 feet. Therefore, the unit-boundary setbacks proposed in the CDP are appropriate.
17. Regulatory testimony and exhibits submitted in support of the Application by Ryan D. Antonio, Land Manager for Noble, 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, Noble’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.
18. 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.
19. 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.
20. Noble agreed to be bound by oral order of the Commission.
21. 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) vacate Order No. 535-36 in its entirety; and 2) establish an approximate 1,594.8-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve up to 16 horizontal wells (with no more than ten horizontal wells to be completed in the Codell Formation) within the unit, for production from the Niobrara, Fort Hays, Codell, and Carlile Formations, with the productive interval of the wellbore to be located in a manner consistent with a final approved CDP.
ORDER
IT IS HEREBY ORDERED:
1. Order No. 535-36 is hereby vacated.
2. An approximate 1,594.8-acre drilling and spacing unit for the Application Lands is hereby established, and a total of up to 16 horizontal wells (with no more than ten horizontal wells to be completed in the Codell Formation) within the unit are approved, for the production of oil, gas and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations.
3. The setbacks for the productive interval of the wellbore will be determined by the final approved CDP.
4. The proposed wells shall be located on no more than two multi-well pads within the drilling and spacing unit, or at a legal location on lands outside the drilling and spacing unit, unless the Director grants an exception.
5. All horizontal wells in the drilling and spacing unit shall be drilled in an east-west orientation.
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 2nd day of December, 2019, as of November 20, 2019.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By___________________________________
Mimi C. Larsen, Secretary