BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

IN THE MATTER OF THE APPLICATION OF BONANZA CREEK ENERGY OPERATING COMPANY LLC FOR AN ORDER TO APPROVE UP TO TEN HORIZONTAL WELLS WITHIN AN APPROXIMATE 640-ACRE  DRILLING AND SPACING UNIT FOR SECTION 14, TOWNSHIP 5 NORTH, RANGE 61 WEST, 6TH P.M. FOR THE NIOBRARA FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 1401-AW-03

 

ORDER NO. 407-917

REPORT OF THE COMMISSION

 

The Commission heard this matter on January 27, 2014, at the Centennial Building, 1313 Sherman Street, Room 318, Denver, Colorado, upon application for an order to approve up to 10 horizontal wells within an approximate 640-acre drilling and spacing unit established for Section 14, Township 5 North, Range 61 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Bonanza Creek Energy Operating Company LLC (“Bonanza” 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.         On August 20, 2012, the Commission entered Order No. 407-703 which, among other things, established an approximate 640-acre drilling and spacing unit, and approved one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the unit boundaries and no closer than 1,200 feet from the treated interval of any other wellbore located in the unit.  Section 14, Township 5 North, Range 61 West, 6th P.M. is subject to this Order for the Niobrara Formation.

 

5.         On November 27, 2013, Bonanza, by its attorneys, filed with the Commission pursuant to § 34-60-116, C.R.S., a verified application (“Application”) for an order to approve a total of ten horizontal wells within an approximate 640-acre drilling and spacing unit established for the below-described lands (“Application Lands”) for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 460 feet from the unit boundaries, and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:

 

Township 5 North, Range 61 West 6th P. M. 

Section 14:      All

 

            6.         Applicant states the proposed wells shall be located on no more than two multi-well pads per governmental half-section, subject to Rule 318A, or on adjacent lands with surface owner consent.

 

7.         On January 13, 2013, Bonanza, by its attorneys, 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.

 

8.         Land Testimony and exhibits submitted in support of the Application by Caroline Heuring, Land Technician for Bonanza, showed that Bonanza holds oil and gas leasehold interests in the Niobrara Formation in the Application Lands.

 

9.         Geologic Testimony and exhibits submitted in support of the Application by Dana Strunk, Petroleum Geologist for Bonanza, included an analysis of cross-sections from Niobrara Formation wells located in the vicinity of the Application Lands. Additional testimony further indicated that the Niobrara Formation underlying the Application Lands is just over 280 feet thick and is of generally uniform thickness underlying the Application Lands.

 

10.       Engineering Testimony and exhibits submitted in support of the Application by Edward M. Polishuk, Senior Reservoir Engineer for Bonanza, showed that the estimated drainage areas for analogous horizontal wells to the Niobrara Formation in the Application Lands are expected to be not greater than 65 acres.  Additional testimony concluded that granting the proposed order will permit the successful development of an otherwise marginally economic resource, and prevent waste by ensuring the pool as a whole may be efficiently and economically developed.

 

11.       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.

 

12.       Bonanza agreed to be bound by oral order of the Commission. 

 

13.       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 approve up to 10 horizontal wells within an approximate 640-acre drilling and spacing unit established for Section 14, Township 5 North, Range 61 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

            IT IS HEREBY ORDERED:

 

1.            An additional 9 horizontal wells, for a total of up to 10 horizontal wells within an approximate 640-acre drilling and spacing unit established for the below-described lands, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of the horizontal wellbore to be 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, without exception being granted by the Director:

 

                    Township 5 North, Range 61 West, 6th P.M.

                    Section 14:          All

 

2.            The proposed wells shall be located on no more than two multi-well pads per governmental half-section, subject to Rule 318A, or on adjacent lands with surface owner consent.

 

            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   21st   day of February, 2014, as of January 27, 2014.      

           

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary