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 CODELL AND NIOBRARA FORMATIONS, WATTENBERG FIELD, ADAMS COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 1403-SP-2013

 

ORDER NO. 407-996

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on April 28, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to: 1) vacate the approximate 80-acre drilling and spacing units established by Order No. 407-87 for Section 19, Township 1 South, Range 66 West, 6th P.M.; and 2) establish an approximate 640-acre drilling and spacing unit for Section 19, Township 1 South, Range 66 West, 6th P.M., and approve one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Carrizo Oil and Gas, Inc. (“Carrizo” 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 February 19, 1992, the Commission entered Order No. 407-87 (amended August 20, 1993) which, among other things, established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the permitted well locations in accordance with the provisions of Order No. 407-1.  Section 19, Township 1 South, Range 66 West, 6th P.M. is subject to this Order for the Codell and Niobrara Formations.

 

5.         On April 27, 1988 (As of February 1, 2014), the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule.  Section 19, Township 1 South, Range 66 West, 6th P.M. is subject to Rule 318A for the Codell and Niobrara Formations.

 

6.         On January 16, 2014, Carrizo, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to: 1) vacate the 80-acre drilling and spacing units established by Order No. 407-87 for the below-described lands (“Application Lands”); and 2) establish an approximate 640-acre drilling and spacing unit for the below-described lands Application Lands, and approve one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of the 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, without exception being granted by the Director:  

 

                                    Township 1 South, Range 66 West, 6th P.M.

                                    Section 19:      All

                                                             

Carrizo stated there are currently no producing wells located within the Application Lands.

 

7.         On April 15, 2014, Carrizo, 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 Craig E. Wiest, Land Manager - Western US for Carrizo, showed that Carrizo has a right to drill in the Application Lands. 

 

9.         Geologic testimony and exhibits submitted in support of the Application by Paul Fears, DJ Basin Geologist for Carrizo, showed the Niobrara and Codell Formations are productive, are of fairly uniform thickness, and are contiguous throughout the Application Lands.  These conclusions are supported by spacing locator maps, type logs, cross sections, gross thickness isopachs, and subsea structure maps that depict both formations in the area of the Application Lands.

 

10.       Engineering testimony and exhibits submitted in support of the Application by Stephen C. Peters, Manager of Reservoir Engineering for Carrizo, showed that economics are sound for Carrizo’s proposed horizontal well within the Application lands, either to the Codell or the Niobrara Formation, as supported by analysis of comparative wells in the area.

 

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        Carrizo 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: 1) vacate the approximate 80-acre drilling and spacing units established by Order No. 407-87 for Section 19, Township 1 South, Range 66 West, 6th P.M.; and 2) establish an approximate 640-acre drilling and spacing unit for Section 19, Township 1 South, Range 66 West, 6th P.M., and approve one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         The approximate 80-acre drilling and spacing units established by Order No. 407-87 for Section 19, Township 1 South, Range 66 West, 6th P.M., are hereby vacated.

 

2.         An approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established, and one horizontal well within the unit, is hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of the 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, without exception being granted by the Director:  

 

                                    Township 1 South, Range 66 West, 6th P.M.

                                    Section 19:      All

 

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   23rd  day of May, 2014, as of April 28, 2014.                     

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary