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 IN THE WATTENBERG GAS SPACED AREA, THE CODELL-NIOBRARA SPACED AREA, AND THE WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NOS. 232, 407, 493

                        and 496

 

ORDER NOS. 232-117, 407-162,

                        493-35, and 496-9

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission on November 21, 1994 at 8:30 a.m. in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified amended application of North American Resources Company for an order amending Cause No. 407 to establish a 160-acre drilling and spacing unit for production from the Codell and Niobrara Formations, to establish a 160-acre drilling and spacing unit for production from the Sussex and Shannon Formations, to allow an existing "J" Sand well to be recompleted at an exception location for commingled production from the Codell, Niobrara, Sussex, and Shannon Formations, to allow a substitute well to be drilled at an exception location for production from the "J" Sand Formation, and to approve an allocation method for a well for production from the "J" Sand, Codell, Niobrara, Sussex, and Shannon Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.      North American Resources Company, 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.

 

4.      In Cause No. 232, the Commission established 320-acre drilling and spacing units for the production of gas from the "J" Sand in the Wattenberg Field with one well allowed for each unit to be located in the NE1/4 and SW1/4 and no closer than 990 feet to the boundaries of the quarter section.  On August 21, 1979, the Commission issued Order No. 232-20 which allowed a second well to be drilled on each 320-acre unit, including Section 4, Township 2 North, Range 67 West, 6th P.M.

 

5.      In Order No. 407-1, the Commission established 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Codell Formation.  Wells shall be located in the center of the 40-acre tract or quarter-quarter section with a tolerance of 200 feet in any direction.  In Order Nos. 407-10 and 407-13, the Commission amended Order No. 407-1 to include production from the Niobrara Formation for certain lands and to allow the downhole commingling of production from the Codell and Niobrara Formations, including Section 4, Township 2 North, Range 67 West, 6th P.M.

 

6.      In Order Nos. 407-66 and 232-37, the Commission, among other things, allowed wells drilled, completed, or recompleted in the Codell and/or Niobrara Formations, where the production is commingled or dually completed with the "J" Formation, to be approved administratively, with additional rules established for well locations, unit designations and production allocation methods, for certain lands, including Section 4, Township 2 North, Range 67 West, 6th P.M.

 

7.      Testimony presented at the administrative hearing indicated that a substitute well would be drilled at an exception location for production from the "J" Sand Formation, at a legal location in accordance with Cause No. 407, but no closer than 1800 feet from another "J" Sand Formation well.  Additional testimony indicated that the Sheley No. 1 Well currently producing from the "J" Sand Formation at a legal location in the SW1/4 of Section 4, Township 2 North, Range 67 West, 6th P.M. would be plugged back after a period of testing not to exceed eighteen (18) months and recompleted for commingled production from the Codell, Niobrara, Sussex, and Shannon Formations.

 

8.      The applicant also seeks approval to drill a maximum of four wells in each 160-acre drilling and spacing unit for production from the Codell, Niobrara, Sussex, and Shannon Formations, at locations no closer than 920 feet from any such other well.  In addition, the downhole commingling of production from the "J" Sand, Codell, Niobrara, Sussex, and Shannon Formations is requested, and the approval of an allocation method for the 320-acre drilling and spacing unit consisting of the S1/2 of Section 4 for production from the "J" Sand Formation, and for the 160-acre drilling and spacing unit consisting of the SW1/4 of Section 4 for production from the Codell, Niobrara, Sussex, and Shannon Formations.

 

9.      Having been heard by the Hearing Officers and recommended for approval based on testimony that existing wellbores should be used to obtain production from shallower zones, and that a new well is necessary to test the estimated "J" Sand drainage, to obtain existing "J" Sand Formation reserves, and prevent waste, an order of the Commission should be entered. The order should allow a substitute "J" Sand well to be drilled at an exception location but in accordance with Cause No. 407, the Sheley No. 1 Well to be recompleted at an exception location for production from the Codell, Niobrara, Sussex, and Shannon Formations after a period not to exceed eighteen (18) months, a maximum of four wells to be drilled on the 160-acre drilling and spacing unit for production from the Codell, Niobrara, Sussex, and Shannon Formations, the downhole commingling of production from the "J" Sand, Codell, Niobrara, Sussex, and Shannon Formations, and approval of an allocation method for the "J" Sand Formation.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED, that 160-acre drilling and spacing units are hereby established for production of oil, gas, and associated hydrocarbons from the Codell, Niobrara, Sussex, and Shannon Formations in the SW1/4 of Section 4, Township 2 North, Range 67 West, 6th P.M.  The permitted well shall be located in the center of any of the 40-acre tracts within the unit, with a tolerance of 200 feet in any direction.  The operator shall have the option to drill additional wells at a similar location on any undrilled 40-acre tract in the unit.

 

IT IS FURTHER ORDERED, that an exception is hereby granted to the spacing pattern established in Cause No. 232, for a well to be drilled and completed for production from the "J" Sand Formation in the SW1/4 of Section 4, Township 2 North, Range 67 West, 6th P.M., at a location which would be in accordance with the legal location under Cause No. 407, with approval granted for downhole commingling of production from the "J" Sand, Codell, Niobrara, Sussex, and Shannon Formations in such well.

 

IT IS FURTHER ORDERED, that after a period of testing not to exceed eighteen (18) months, at the option of the applicant, either the "J" Sand Formation in the Sheley No. 1 Well in the SW1/4 SW1/4 of Section 4, Township 2 North, Range 67 West, 6th P.M. or the new above-referenced well shall be plugged back, such that only one well shall produce from the "J" Sand Formation in the SW1/4 of Section 4.

 

IT IS FURTHER ORDERED, that an exception is granted to the spacing pattern established above, for the Sheley No. 1 Well in the SW1/4 SW1/4 of Section 4, Township 2 North, Range 67 West, 6th P.M., to be recompleted at its exception location for downhole commingling of production from the "J" Sand, Codell, Niobrara, Sussex, and Shannon Formations, with said well being the permitted well for production from the Codell, Niobrara, Sussex, and Shannon Formations in the SW1/4 SW1/4 of Section 4.

 

IT IS FURTHER ORDERED, that the proposed method is hereby approved for the allocation of production from the "J" Sand Formation for the 320-acre drilling and spacing unit consisting of the S1/2 of Section 4, and from the Codell, Niobrara, Sussex, and Shannon Formation for the 160-acre drilling and spacing unit consisting of the SW1/4 of Section 4.

 

IT IS FURTHER ORDERED, that should a commercial well be completed at the location set forth above, the Commission shall, upon application of any interested person, take such action as will offset any advantage which the person securing the exception may have over other procedures by reason of the drilling of the well as an exception location.

 

IT IS FURTHER ORDERED, that the provisions in the above order shall become effective forthwith.

 

Entered this 30th day of December, 1994, as of November 21, 1994.

 

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By

Patricia C. Beaver, Secretary

 

Dated at Suite 380

1580 Logan Street

Denver, Colorado  80203

December 27, 1994