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

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CAUSE NO. 407

 

DOCKET NO. 191000630

 

TYPE: SPACING

 

ORDER NO. 407-2978

 

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 amend Order No. 407-2152, which established an approximate 1,590.50-acre drilling and spacing unit, to exclude the W˝W˝ of Section 29, Township 6 North, Range 65 West, 6th P.M., so as to establish an approximate 1,448.32-acre drilling and spacing unit for the below-described lands (“Application Lands”):

 

Township 6 North, Range 66 West, 6th P.M.

Section 25:      All

Section 26:      E˝E˝

 

Township 6 North, Range 65 West, 6th P.M.

Section 30:      All

  

FINDINGS

 

The Commission finds as follows:

 

1.               SRC Energy Inc., (Operator No. 10311) (“SRC” 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 Rule 318A.

 

6.               On July 24, 2017, the Commission entered Order No. 407-2152 which, among other things, established an approximate 1,590.50-acre drilling and spacing unit covering the Application Lands as well as the W˝W˝ of Section 29, Township 6 North, Range 65 West, 6th P.M., and approved a total of up to 20 horizontal wells within the unit for production from the Niobrara and Codell Formations, with the productive interval of any horizontal wellbore to be 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, without exception being granted by the Director.

 

7.               On July 31, 2019, SRC, by its attorneys, filed with the Commission a verified application (“Application”) pursuant to § 34-60-116, C.R.S., for an order amend Order No. 407-2152, which established an approximate 1,590.50-acre drilling and spacing unit, to exclude the W˝W˝ of Section 29, Township 6 North, Range 65 West, 6th P.M., so as to establish an approximate 1,448.32-acre drilling and spacing unit for the Application Lands.

 

8.               Applicant states that all horizontal wells will be drilled from no more than two multi-well pads within the drilling unit, or on adjacent lands with consent of the landowner, subject to Rule 318A, unless an exception is granted by the Director.

 

9.               SRC 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.            The proposed drilling and spacing unit contains federal minerals. As such, SRC 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.

 

11.            Land testimony and exhibits submitted in support of the Application by Kaitlyn Cass, Landman for SRC, along with the verified Application, show that SRC holds oil and gas interests and has a right to drill in the Application Lands. The testimony and verified Application also show 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 and verified Application further demonstrate that in developing the Application Lands, SRC’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.

 

12.            Geologic testimony and exhibits submitted in support of the Application by Thomas Jacaruso, Senior Staff Geologist for SRC, show that the Niobrara Formation is present throughout the Application Lands, is approximately 275 feet thick, and the faulting that is present in the Application Lands does not prevent horizontal drilling for the Niobrara Formation. The geologic testimony shows that the Niobrara Formation is comprised of interbedded chalks, marls, and limestone. In addition, the geologic testimony shows that the Codell Formation is present throughout the Application Lands, is approximately 20 feet thick, and the faulting that is present in the Application Lands does not prevent horizontal drilling for the Codell Formation. The geologic testimony shows that the Codell Formation is comprised of sandstones, siltstones, and shales.

 

13.            Engineering testimony and exhibits submitted in support of the Application by Brett Hall, Reservoir Engineer for SRC, indicate that SRC plans to drill up to 14 horizontal wells in the Niobrara Formation and up to six horizontal wells in the Codell Formation. Engineering testimony also shows that the estimated drainage area for a Niobrara Formation well is approximately 93.7 acres. Accordingly, an approximate 1,448.32-acre drilling and spacing unit is not less than the maximum area that can be efficiently, economically, and effectively drained by 14 horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation. In addition, engineering testimony shows that the estimated drainage area for a Codell Formation well is 153 acres. Accordingly, an approximate 1,448.32-acre drilling and spacing unit is not less than the maximum area that can be efficiently, economically, and effectively drained by six horizontal wells producing oil, gas, and associated hydrocarbons from the Codell Formation.  

 

14.            The above-referenced verified Application, 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.            SRC agrees to be bound by oral order of the Commission. 

 

17.            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 amend Order No. 407-2152 to exclude the W˝W˝ of Section 29, Township 6 North, Range 65 West, 6th P.M., so as to establish an approximate 1,448.32-acre drilling and spacing unit for the Application Lands and approve a total of up to 20 horizontal wells within the 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 within the unit, unless the Director grants an exception.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Order No. 407-2152 is hereby amended to exclude the W˝W˝ of Section 29, Township 6 North, Range 65 West, 6th P.M., so as to establish an approximate 1,448.32-acre drilling and spacing unit for the Application Lands, and a total of up to 20 horizontal wells within the unit are approved for production from the Niobrara and Codell Formations.  

 

2.         The productive interval of any 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 within the unit, unless the Director grants an exception.

 

3.         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 consent of the landowner, subject to Rule 318A, unless the Director grants an exception.

 

4.         SRC, 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.

 

5.         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 December, 2019, as of November 20, 2019.      

 

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By___________________________________           

                 Mimi C. Larsen, Secretary