BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF GREAT WESTERN OIL & GAS COMPANY, FOR AN
ORDER TO VACATE AN 80-ACRE UNIT ESTABLISHED BY ORDER 407-87, AND ESTABLISH A
640-ACRE DRILLING AND SPACING UNIT, AND APPROVE UP TO SEVEN WELLS WITHIN THE
UNIT, LOCATED IN SECTION 16, TOWNSHIP 6 NORTH, RANGE 67 WEST, 6TH
P.M., FOR THE CODELL-NIOBRARA FORMATION, WATTENBERG FIELD, WELD COUNTY, COLORADO |
)
)
)
)
)
)
)
)
)
)
) |
CAUSE NO. 407
DOCKET NO. 1301-SP-13
ORDER NO. 407-741
|
REPORT OF THE COMMISSION
The Commission heard this matter on January 7, 2013, at the
Sheraton Denver Downtown Hotel, 1550 Court Place,
Denver, Colorado, upon application for an
order to: 1) vacate the 80-acre drilling and spacing units established by Order
No. 407-87, for lands subject to this Application, located in Section 16,
Township 6 North, Range 67 West, 6th P.M.; and 2) establish an
approximate 640-acre drilling and spacing unit for Section 16, Township 6 North,
Range 67 West, 6th P.M., and
approve up to seven horizontal wells within the unit, for the production of oil,
gas and associated hydrocarbons from the Codell-Niobrara Formation.
FINDINGS
The Commission finds as follows:
1.
Great Western Oil & Gas Company, LLC (“Great Western” 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 March 29, 2000) which, among other things,
established 80-acre drilling and spacing units for the production of oil, gas
and associated hydrocarbons from the Codell Formation, with the unit to be
designated by the operator drilling the first well in the quarter section. The permitted well shall be located
in the center of either 40-acre tract within the 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.
Section 16, Township 6 North, Range 67 West, 6th P.M. is
subject to this Order for the Codell Formation.
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, 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 16, Township 6 North, Range
67 West, 6th P.M. is subject to this Order for the Codell-Niobrara
Formation.
6.
On April 27, 1988, 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 Cretaceous
Age Formations from the base of the Dakota Formation to the surface. Rule 318A.
supersedes all prior Commission drilling and spacing orders affecting well
location and density requirements of Greater Wattenberg Area wells.
On December 5, 2005, Rule 318A was amended, among other things, to allow
interior infill and boundary wells to be drilled and wellbore spacing units to
be established. On August 8, 2011, Rule 318A was again amended, among
other things, to address drilling of horizontal wells. Section 16, Township 6 North, Range
67 West, 6th P.M. is subject to this Order for the Codell-Niobrara
Formation.
7.
On November 2, 2012, Great Western, 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
all approximate 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 Application Lands,
and approve up to seven 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
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:
Township 6 North, Range 67 West, 6th P.M.
Section 16: All
8.
On December 19, 2012, 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.
9.
Land testimony and exhibits submitted in support of the Application by K.
Wade Pollard, Land Manager for Great Western, showed the surface of the
Application Lands is owned in fee, the mineral ownership of the Application
Lands is held in fee, that Great Western owns a partial leasehold ownership
interest in the Application Lands, and that all of the interested parties
received notice of the Application.
10. Geologic
testimony and exhibits submitted in support of the Application by Michael
Mitchell, Senior Geologic Advisor for Great Western, showed the Niobrara
Formation is approximately 238 to 275 feet thick, and the Codell Formation is
approximately 14 to 25 feet thick.
Testimony further showed both the Codell and Niobrara Formations are present,
and of generally uniform thickness throughout the Application Lands.
11.
Engineering
testimony and exhibits submitted in support of the Application by Carlos Ochoa,
Reservoir Engineer for Great Western, showed a single horizontal wellbore (the
Greenspire HN23 Well) has an estimated ultimate recovery (“EUR”) of approximately 250 MBO of
oil and 150 MMCF of gas, an estimated recovery factor of 1.82% per wellbore. Testimony concluded the economics of
the project are sound.
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.
Great Western 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 Hearings Officer review of the Application under Rule
511., the Commission should enter an order
to: 1) vacate the 80-acre drilling and spacing units established by Order No.
407-87, for lands subject to this Application, located in Section 16, Township 6
North, Range 67 West, 6th P.M.; and 2) establish an approximate
640-acre drilling and spacing unit for Section 16, Township 6 North, Range 67
West, 6th P.M., and
approve up to seven horizontal wells within the unit, for the production of oil,
gas and associated hydrocarbons from the Codell-Niobrara Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that the
80-acre drilling and spacing units established by Order No. 407-87 for the
below-described lands, are hereby vacated.
IT IS FURTHER ORDERED, that an approximate
640-acre drilling and spacing unit for the below-described lands, is
hereby established, and up to seven
horizontal wells within the unit, are hereby approved, 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:
Township 6 North, Range 67 West, 6th P.M.
Section 16: All
IT IS FURTHER ORDERED, that all horizontal
wells shall be drilled from one surface location located within the drilling and
spacing unit, subject to the existing surface use agreement and consent by the
surface owner.
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 _____ day of January, 2013, as of January 7, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary