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 FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

ORDER NO. 407-480

 

 

REPORT OF COMMISSION

 

                        The Commission heard this matter on September 19, 2011, at  the Broomfield City & County Building, One Descombes Drive, Broomfield, Colorado  80020, upon application for an order to:  (1) establish an approximate 640-acre wellbore spacing unit for Section 25, Township 6 North, Range 63 West, 6th P.M., and approve eight horizontal wells within the wellbore spacing unit; (2) approve a variance from Rule 318A.f. to authorize a total of up to nine producing completions for the NW¼ and NE¼ of said Section 25; and 3) approve setbacks for wells drilled under the Application to require the treated interval of the wellbore should be no closer than 460 feet from the boundaries of the unit, for the production of oil, gas, and related hydrocarbons of the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.    Noble Energy, Inc. (“Noble” 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 December 19, 1983, the Commission issued Order No. 407-1 (amended on March 29, 2000 in accordance with Order No. 407-17, entered November 18, 1985), which among other things, established 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Codell Formation underlying certain lands, including Section 25, Township 6 North, Range 63 West, 6th P.M., with the drilling and spacing unit to be designated by the operator drilling the first well in the quarter section (or the Director, if the operator fails to designate).  The permitted well shall be located in the center of either 40-acre tract within the drilling and spacing unit with a tolerance of 200 feet in any direction.  The operator shall have the option to drill an additional well on the undrilled 40-acre tract in each 80-acre drilling and spacing unit.

 

5.  On February 19, 1992, the Commission issued Order No. 407-87 (amended August 20, 1993), which among other things, established 80-acre drilling and spacing units for the production of oil and/or gas from the Codell and Niobrara Formations underlying certain lands, including Section 25, Township 6 North, Range 63 West, 6th P.M., with the permitted well locations in accordance with the provisions of Order No. 407-1.

 

6.  On April 27, 1998, the Commission adopted Rule 318A., which among other things, allowed certain drilling locations to be utilized to drill or twin a well, deepen a well or recomplete a well and to commingle any or all of the Cretaceous Age Formations from the base of the Dakota Formation to the surface.  Pursuant to Rule 318A.j., Rule 318A. supersedes all prior Commission drilling and spacing orders affecting well location and density requirements of Greater Wattenberg Area wells.  Rule 318A.d. provides that an operator may allocate production to any drilling and spacing unit with respect to a particular Cretaceous Age Formation consistent with the provisions of Rule 318A.  Section 25, Township 6 North, Range 63 West, 6th P.M. is subject to Rule 318A., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.  Rule 318A.f. provides that there shall be no more than eight producing completions in the Niobrara Formation in any 160-acre governmental quarter section.

 

7.  On July 21, 2011, Noble, by its attorneys, filed with the Commission a verified application (the “Application”) for an order to:  (1) establish an approximate 640-acre wellbore spacing unit for the below-listed lands (the “Application Lands”), and approve eight horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

                                       

Township 6 North, Range 63 West, 6th P.M.

Section 25:

All

 

(2) approve a variance from Rule 318A.f. to authorize a total of up to nine producing completions for the NW¼ and NE¼ of said Section 25, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; (3) approve exception locations for the horizontal wells to be drilled under the Application from the Rule 318A.a. surface drilling locations for good cause, which includes a surface use agreement, or alternatively, the consent of the surface owner, with two multi-well pads to be used for the eight horizontal wells to be drilled from the W½ of said Section 25; and (4) approve setbacks for wells drilled under the Application to require the treated interval of the wellbore should be no closer than 460 feet from the boundaries of the unit.

 

Noble states that the Application is not requesting the change of any established 80-acre drilling and spacing units or the established distribution of proceeds for any existing vertical Niobrara Formation wells.  Noble will allocate and distribute proceeds from the proposed horizontal wells within the wellbore spacing unit on a 640-acre basis.

 

8.  On September 7, 2011, Noble, by its attorney, 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 shows that Noble owns 100% of the minerals in the Application Lands. The testimony further revealed that Noble has withdrawn its request for a variance of setbacks for  AA25-69HN Well, with an intended bottomhole location in the NE¼ NE¼ of said Section 25, which was originally requested to be located within the 460 foot setback allowed under Rule 318A.  Consequently, the remaining request is for eight horizontal wells instead of the original nine, and there is no request for an exception location because all eight wells will comply with the 460 foot setback requirement.

 

                        10.  Geology testimony and exhibits submitted in support of the Application shows the total thickness of the Niobrara Formation across the Application Lands ranges from 220 to 281 feet with an average thickness of 225 feet.

 

11.  Engineering testimony and exhibits submitted in support of the Application requests the Commission to exercise administrative notice of the testimony presented in Docket No. 1108-RM-02 on August 8, 2011 with regard to amendments to Rule 318A, in which the Commission among other things, eliminated the limitation on eight wells per quarter-quarter section in the GWA. The two quarter sections in the N½ of Section 25 will have more than 8 completions if this Application is approved. Additional engineering testimony supports this request.

 

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.  Noble 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) establish an approximate 640-acre wellbore spacing unit for Section 25, Township 6 North, Range 63 West, 6th P.M., and approve eight horizontal wells within the wellbore spacing unit; 2) approve a variance from Rule 318A.f. to authorize a total of up to nine producing completions for the NW¼ and NE¼ of said Section 25; and 3) approve setbacks for wells drilled under the Application to require the treated interval of the wellbore should be no closer than 460 feet from the boundaries of the unit, for the production of oil, gas, and related hydrocarbons  of the Niobrara Formation, for the production of oil, gas, and related hydrocarbons  of the Niobrara Formation.

 

ORDER

 

                        NOW, THEREFORE IT IS ORDERED, that an approximate 640-acre wellbore spacing unit is hereby established for the below-listed lands, and eight horizontal wells within the unit are approved for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

           

Township 6 North, Range 63 West, 6th P.M.

Section 25:

All

 

IT IS FURTHER ORDERED, that a variance from Rule 318A.f. authorizing a total of up to nine producing completions for the NW¼ and NE¼ of said Section 25, is hereby approved for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

IT IS FURTHER ORDERED, that exception locations are approved for the horizontal wells to be drilled under the Application such that they may be located as follows:

 

1)  Wells Ranch USX AA25-63-1HN with a proposed surface hole location of 2019’FSL and 150’ FWL of Section 25, Township 6 North, Range 63 West, 6th P.M., and a proposed bottom hole location of 1050’ FSL and 535’ FEL Section 25, Township 6 North, Range 63 West, 6th P.M. 

 

2)  Wells Ranch USX AA25-64-1HN with a proposed  surface hole location of 2056’ FSL and 150’ FWL of Section 25, Township 6 North, Range 63 West, 6th P.M., and a proposed bottom hole location of 1650’ FSL and 535’ FEL Section 25, Township 6 North, Range 63 West, 6th P.M. 

 

3) Wells Ranch USX AA25-65-1HN with a proposed surface hole location of 2094’ FSL and 150’ FWL of Section 25, Township 6 North, Range 63 West, 6th P.M.,  and a proposed bottom hole location of 2280’ FSL and 535’ FEL Section 25, Township 6 North, Range 63 West, 6th P.M. 

 

4) Wells Ranch USX AA25-65HN with a proposed surface hole location of 2131’ FSL and 150’ FWL of Section 25, Township 6 North, Range 63 West, 6th P.M., and a proposed bottomhole location of 2600’ FNL and 535’ FEL Section 25, Township 6 North, Range 63 West, 6th P.M. 

 

5) Wells Ranch USX AA25-66-1HN with a proposed surface hole location of 2169’ FSL and 150’ FWL of Section 25, Township 6 North, Range 63 West, 6th P.M., and a proposed bottom hole location of 2280’ FNL and 535’ FEL Section 25, Township 6 North, Range 63 West, 6th P.M. 

 

6) Wells Ranch USX AA25-67-1HN with a proposed surface hole location of 1114’ FNL and 302’ FWL of Section 25, Township 6 North, Range 63 West, 6th P.M.,  and a proposed bottom hole location of 1600’ FNL and 535’ FEL Section 25, Township 6 North, Range 63 West, 6th P.M. 

 

7)  Wells Ranch USX AA25-67HN with a proposed surface hole location of 1077’ FNL and 302’ FWL of Section 25, Township 6 North, Range 63 West, 6th P.M.,  and a proposed bottom hole location of 1290’ FNL and 535’ FEL Section 25, Township 6 North, Range 63 West, 6th P.M. 

 

8) Wells Ranch USX AA25-68-1HN Well with a proposed surface hole location of 1039’ FNL and 302’ FWL of Section 25, Township 6 North, Range 63 West, 6th P.M.,  and a proposed bottom hole location of 950’ FNL and 535’ FEL Section 25, Township 6 North, Range 63 West, 6th P.M.

 

 IT IS FURTHER ORDERED, that the treated interval of the wellbores drilled under this Order shall be no closer than 460 feet from the boundaries of the unit.                  

 

                        IT IS FURTHER ORDERED, that nothing in this Order shall change any established 80-acre drilling and spacing units or the established distribution of proceeds for any existing vertical Niobrara Formation wells.  Noble shall allocate and distribute proceeds from the proposed horizontal wells within the wellbore spacing unit on a 640-acre basis.

 

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

           

                        IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

 

                        IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 30 days after the date this Order is mailed by the Commission.

                       

                        IT IS FURTHER ORDERED, that 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 September, 2011, as of September 19, 2011.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________         

                                                                                    Peter J. Gowen, Acting Secretary

 

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

September 23, 2011