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 CODELL, NIOBRARA, CARLILE, AND GREENHORN FORMATIONS, WATTENBERG FIELD, WELD AND LARIMER COUNTIES, COLORADO |
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CAUSE NO. 407
DOCKET NO. 170100036
TYPE: SPACING
ORDER NO. 407-1900
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REPORT OF THE COMMISSION
The Commission heard this matter on March 20, 2017, at the Larimer County Conference Center at The Ranch, First National Bank Building, 5280 Arena Circle, Loveland, Colorado, upon application for an order to establish an approximate 771.229-acre drilling and spacing unit for portions of Section 30, Township 6 North, Range 67 West, 6th P.M., and portions of Sections 25 and 26, Township 6 North, Range 68 West, 6th P.M., and approve up to ten horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Codell, Niobrara, Carlile, and Greenhorn Formations.
FINDINGS
The Commission finds as follows:
1. Great Western Operating Company, LLC (Operator No. 10110) (“Great Western” or “Applicant”) 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 permitted well locations in accordance with the provisions of Order No. 407-1. Section 30, Township 6 North, Range 67 West, 6th P.M., and Sections 25 and 26, Township 6 North, Range 68 West, 6th P.M., are subject to this Order.
5. On April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Section 30, Township 6 North, Range 67 West, 6th P.M., and Sections 25 and 26, Township 6 North, Range 68 West, 6th P.M., are subject to this Rule for the production of oil, gas, and associated hydrocarbons from the Niobrara, Codell, Carlile and Greenhorn Formations.
6. On January 7, 2013, the Commission entered Order No. 407-742, as corrected, which, among other things, vacated certain 80-acre drilling and spacing units established by Order No. 407-87 for portions of Sections 19 and 30, Township 6 North, Range 67 West, 6th P.M., and established two 320-acre and 480-acre drilling and spacing units for portions of Sections 19 and 30, Township 6 North, Range 67 West, 6th P.M., approving up to four horizontal wells within each unit for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formation, with the treated interval of the horizontal wellbores to be 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.
7. On September 16, 2013, the Commission entered Order No. 407-851 which, among other things, established an approximate 480-acre horizontal drilling and spacing unit for portions of Sections 19 and 30, Township 6 North, Range 67 West, 6th P.M., and approved up to 12 horizontal wells within the unit for the production of oil, gas, and associated hydrocarbons from the Codell-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.
8. On September 15, 2014, the Commission entered Order No. 407-1104 which, among other things, vacated an approximate 320-acre drilling and spacing unit established by Order No. 407-472 for Section 30, Township 6 North, Range 67 West, 6th P.M., vacated Order No. 407-851 in its entirety, and modified Order No. 407-742 to reflect a corrected acreage of 450 acres for the drilling and spacing unit established for Sections 19 and 30, Township 6 North, Range 67 West, 6th P.M. The SE¼ of Section 30, Township 6 North, Range 67 West, 6th P.M. is subject to Order No. 407-1104.
9. On December 1, 2016, Great Western, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) establish an approximate 771.229-acre drilling and spacing unit for the below described lands (“Application Lands”), and authorizing the drilling of ten horizontal wells within the proposed unit, for the production of oil, gas and associated hydrocarbons from the Codell, Niobrara, Carlile and Greenhorn Formations, with the treated intervals of any horizontal well permitted under this Application located not less than 460 feet from unit boundaries and not less than 150 feet from any other well producing or drilling from the Codell, Niobrara, Carlile and Greenhorn Formations, without exception being granted by the Director; and 2) allowing Order No. 407-1104 to remain effective until Applicant moves to vacate such order upon the drilling of the first well in the 771.229 acre drilling and spacing unit:
Township 6 North, Range 67 West, 6th P.M.
Section 30: S½
Township 6 North, Range 68 West, 6th P.M.
Section 25: S½
Section 26: SE¼
Applicant stated that the wells will be drilled from no more than two multi-well pads.
10. On January 9, 2017, Great Western, 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.
11. On January 13, 2017, Kerr-McGee Oil & Gas Onshore LP (“Kerr-McGee”) filed a protest. On March 1, 2017, Kerr-McGee withdrew its protest.
12. Land testimony and exhibits submitted in support of the Application by Michael Tucker, Senior Landman for Great Western, showed that Grizzly Petroleum Company, LLC holds oil and gas leasehold interests in the Application Lands, and that Great Western is authorized to operate Grizzly Petroleum’s interests and has a right to drill in the Application Lands.
13. Applicant stated that Great Western currently operates the Raindance FD #19-21HN Well (API No. 05-123-37633) within the Application Lands pursuant to Order No. 407-1104 for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation and that the current allocation of proceeds for the Raindance FD #19-21HN Well should be maintained until Applicant moves to vacate Order No. 407-1104 upon the drilling of the first well in the 771.229-acre drilling and spacing unit.
14. Geologic testimony and exhibits submitted in support of the Application by Willis Wilcoxon, Geologist for Great Western, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 312 to 315 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 18.5 to 19.5 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony further showed that the Carlile Formation is present throughout the Application Lands, is approximately 17 to 21 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony further showed that the Greenhorn Formation is present throughout the Application Lands, is approximately 81 to 90 feet thick, and is generally of uniform thickness throughout the Application Lands.
15. Engineering testimony and exhibits submitted in support of the Application by Lewis Wandke, Senior Engineer for Petrotek Engineering Corporation retained by Great Western showed that Great Western is planning to drill 10 horizontal wells in the Niobrara, Codell, Carlile and Greenhorn Formations. Engineering testimony further showed that the drainage area for analog approximately 12,280-foot-long horizontal Niobrara Formation wells is estimated at 63 acres, the drainage area for analog approximately 12,280-foot-long horizontal Codell Formation wells is estimated at 212 acres, the drainage area for analog approximately 12,280-foot-long horizontal Carlile Formation wells is estimated at 272 acres, the drainage area for analog approximately 12,280-foot-long horizontal Greenhorn Formation wells is estimated at 164 acres, and an approximate 771.229-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 10 horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara, Codell, Carlile and Greenhorn Formations.
16. 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.
17. Great Western agreed to be bound by oral order of the Commission.
18. Based on the facts stated in the verified Application, the Kerr-McGee protest having been withdrawn, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to establish an approximate 771.229-acre drilling and spacing unit for portions of Section 30, Township 6 North, Range 67 West, 6th P.M., and portions of Sections 25 and 26, Township 6 North, Range 68 West, 6th P.M., and approve up to ten horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Codell, Niobrara, Carlile, and Greenhorn Formations.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 771.229-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to ten horizontal wells within the unit are hereby approved for the production of oil, gas and associated hydrocarbons from the Codell, Niobrara, Carlile, and Greenhorn Formations:
Township 6 North, Range 67 West, 6th P.M.
Section 30: S½
Township 6 North, Range 68 West, 6th P.M.
Section 25: S½
Section 26: SE¼
2. The productive interval of each wellbore shall 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 within the unit, unless the Director grants an exception.
3. The wells shall be drilled from no more than two multi-well pads, unless the Director grants an exception.
4. The Raindance FD #19-21HN Well (API No. 05-123-37633) shall be plugged and abandoned prior to the completion of the first horizontal well drilled in the 771.229-acre drilling and spacing unit established by this Order, or the first horizontal well drilled in the 1,715.781-acre drilling and spacing unit established by Order No. 407-1898, whichever occurs first. The current allocation of proceeds for the Raindance FD #19-21HN Well (API No. 05-123-37633) shall be maintained until the well is plugged and abandoned. Upon the plugging and abandonment of the Raindance FD #19-21HN Well (API No. 05-123-37633), Order No. 407-1104 shall be deemed vacated.
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 March, 2017, as of March 20, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Peter Gowen, Acting Secretary