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 AND CODELL FORMATIONS, UNNAMED FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 180400345
TYPE: SPACING
ORDER NO. 535-1004 |
REPORT OF THE COMMISSION
The Commission heard this matter on April 30, 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) vacate the approximate 640-acre drilling and spacing unit established by Order No. 535-74 for Section 32, Township 8 North, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate the approximate 640-acre drilling and spacing unit established by Order No. 535-176 for Section 31, Township 8 North, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations; and 3) establish an approximate 1280-acre drilling and spacing unit for Sections 31 and 32, Township 8 North, Range 64 West, 6th P.M. and to approve up to 27 horizontal wells within the proposed unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
FINDINGS
The Commission finds as follows:
1. Confluence DJ LLC (Operator No. 10518), (“Confluence” 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. Rule 318.a. provides that “a well to be drilled two thousand five hundred (2,500) feet or greater shall be located not less than six hundred (600) feet from any lease line, and shall be located not less than one thousand two hundred (1,200) feet from any other producible or drilling oil or gas well when drilling to the same common source of supply, unless authorized by order of the Commission upon hearing.” Section 32, Township 8 North, Range 64 West, 6th P.M. is subject to Rule 318.a for the Codell Formation.
5. On September 19, 2011, the Commission entered Order No. 535-74 which, among other things, established two approximate 640-acre drilling and spacing units for Sections 20 and 32, Township 8 North, Range 64 West, 6th P.M., and approved one horizontal well within each unit for the production of oil, gas, and related hydrocarbons of the Niobrara Formation.
6. On July 9, 2012, the Commission entered Order No. 535-176 which, among other things, established 12 approximate 640-acre drilling and spacing units, including Section 31, Township 8 North, Range 64 West, 6th P.M., and approved up to four horizontal wells within each unit, for the production of oil, gas, and related hydrocarbons for the Codell and Niobrara Formations.
Township 8 North, Range 64 West, 6th P.M.
Section 31: All
Section 32: All
Applicant states that the wells permitted under this Order will be drilled from no more than two well pads within the proposed unit or on adjacent lands, unless an exception is granted by the Director.
8. On March 23, 2018, Confluence, 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.
9. Land testimony and exhibits submitted in support of the Application by William E. Nicas, Senior Vice President of Land and Business Development for Confluence DJ LLC, showed that both the mineral and surface interests in the Application Lands are owned in fee, and that Confluence has a partial undivided leasehold interest in the Application Lands.
10. Geoscience testimony and exhibits submitted in support of the Application by Robert H. Sterling, Senior Vice President Geoscience for Confluence Resources LP, showed that the Codell and Niobrara Formations are present throughout the Application Lands, that total thickness of the Codell Formation underlying the Application Lands ranges from approximately 17 feet to 22 feet, and total thickness of the Niobrara Formation underlying the Application Lands ranges from 220 feet to 295 feet.
11. Engineering testimony and exhibits submitted in support of the Application by John P. Seidle, Vice President of MHA Petroleum Consultants LLC, demonstrated that a 2-mile horizontal Niobrara well on the proposed DSU is economic, a 2-mile horizontal Codell well on the proposed DSU is economic, the drainage area of a 2-mile horizontal Niobrara well on the Application Lands is estimated to be 35 acres, the drainage area of a 2-mile horizontal Codell well on the Application Lands is estimated to be 137 acres, and that the proposed 1280-acre drilling and spacing unit, with the requested setbacks, for a horizontal well in the Niobrara and Codell Formations in the Application Lands will promote efficient drainage, protect correlative rights, and prevent waste.
12. 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.
13. Confluence agreed to be bound by oral order of the Commission.
14. 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 640-acre drilling and spacing unit established by Order No. 535-74 for Section 32, Township 8 North, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) vacate the approximate 640-acre drilling and spacing unit established by Order No. 535-176 for Section 31, Township 8 North, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations; and 3) establish an approximate 1280-acre drilling and spacing unit for Sections 31 and 32, Township 8 North, Range 64 West, 6th P.M. and to approve up to 27 horizontal wells within the proposed unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
ORDER
IT IS HEREBY ORDERED:
1. The approximate 640-acre drilling and spacing unit established by Order No. 535-74 for Section 32, Township 8 North, Range 64 West, 6th P.M., is hereby vacated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation;
2. The approximate 640-acre drilling and spacing unit established by Order No. 535-176 for Section 31, Township 8 North, Range 64 West, 6th P.M., is hereby vacated, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations;
3. An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and up to 27 horizontal wells within the proposed unit, are hereby approved, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations:
Township 8 North, Range 64 West, 6th P.M.
Section 31: All
Section 32: All
4. The productive interval of any horizontal well within the unit shall be no closer than 460 feet from the boundaries of the unit and not less than 150 feet from the productive interval of another well within the unit, unless an exception is granted by the Director.
5. All horizontal wells permitted under this Order shall be drilled from no more than two wellpads from the surface of the proposed drilling and spacing unit, or on adjacent lands, with the consent of the landowner, unless an exception is granted by the Director.
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 22nd day of May, 2018, effective as of April 30, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ____________________________________
Julie Spence Prine, Secretary