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 IN THE WATTENBERG FIELD,
WELD COUNTY, COLORADO |
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CAUSE NOS. 407 &
535
ORDER NOS. 407-779 &
535-4
CORRECTED |
This cause came on for hearing before the Commission heard this matter on
February 22, 2011, in Suite 801, The Chancery Building, 1120 Lincoln Street,
Denver, Colorado, for an order to establish 74 approximate 640-acre drilling and
spacing units for certain lands in Townships 4, 5 and 6 North, Ranges 61 and 62,
6th P.M., and allow one horizontal well in each unit, for the production of oil, gas and associated
hydrocarbons from the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1.
EOG Resources, Inc. (“EOG”), 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 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 to, among other things, allow
interior infill and boundary wells to be drilled and wellbore spacing units to
be established. The below-described
lands (“Application Lands”) are subject to this Rule for the Niobrara Formation:
Township
4 North, Range 61 West, 6th P.M.
Sections: 1 through
5, 7, 8, 10 through 12, 14, 15, and 17 through 23
Township
4 North, Range 62 West, 6th P.M.
Sections: 1
through 4 and 9 through 15
Township
5 North, Range 61 West, 6th P.M.
Sections: 19
through 21, 25 through 30, and 33 through 36
Township
5 North, Range 62 West, 6th P.M.
Sections: 22,
23, 25 through 27, and 34 through 36
Township 6 North, Range 61 West, 6th P.M.
Sections: 7, 8, 17
through 21, and 28 through 30
Township
6 North, Range 62 West, 6th P.M.
Sections:
1 through 3, 10 through 15, 22 through 27, 34, and 35
5.
On November 24, 2010, EOG, by its attorneys, filed with the Commission a
verified application (the “Application”) to establish 78 approximate 640-acre
drilling and spacing units for the Application Lands, for the production of oil,
gas and associated hydrocarbons from the Niobrara Formation, and allow one
horizontal well in each of the units, with the initial perforation of the
Niobrara Formation and ultimate bottomhole location no closer than 600 feet from
the boundaries of the unit:
Township
4 North, Range 61 West, 6th P.M.
Sections: 1 through
5, 7, 8, 10 through 12, 14, 15, and 17 through 23
Township
4 North, Range 62 West, 6th P.M.
Sections: 1
through 4 and 9 through 15
Township
5 North, Range 61 West, 6th P.M.
Sections: 19
through 21, 25 through 30, and 33 through 36
Township
5 North, Range 62 West, 6th P.M.
Sections: 22,
23, 25 through 27, and 34 through 36
Township
6 North, Range 61 West, 6th P.M.
Sections: 7, 8, 17
through 21, and 28 through 30
Township
6 North, Range 62 West, 6th P.M.
Sections:
1 through 3, 10 through 15, 22 through 27, 34, and 35
6.
On February 3, 2011, EOG, 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 as is provided for by Rule 511. Sworn written testimony and exhibits
were submitted in support of the Application.
7.
On February 4, 2011, an Amended Notice of Hearing was served on the
interested parties and published, which allowed any protests/interventions to be
filed by Feb. 16, 2011.
8.
On February 14, 2011, EOG, by its attorneys, filed a written request with
the Commission to withdraw the below-listed lands from the Application:
Township 6 North, Range 61 West, 6th P.M.
Section: 8
Township 6 North, Range 62 West, 6th P.M.
Sections: 1, 2 and
12
9.
Land testimony and exhibits
submitted in support of the Application by
Jason McLaren, Landman for EOG, showed that EOG has either fully or partially
leased the mineral interests in the Application Lands. A majority of the surface and
mineral ownership in the Application Lands
is owned in fee. There are portions
of the Application Lands, both
surface ownership and mineral ownership that are owned by the State of Colorado
and the federal government.
10.
Geology testimony and exhibits
submitted in support of the Application by
John Melby, Petroleum Geologist for EOG, showed that the Niobrara
Formation shows a regional dip of approximately 25 feet to 50 feet per mile to
the west. The total thickness of the
Niobrara Formation ranges from approximately 253 feet to 285 feet under the
proposed spaced area with the thickest area in the northern portion of the
proposed spaced area. Type logs and
cross sections show that the Niobrara Formation exists under the entirety of the
Application Lands. The Niobrara
Formation within the Application Lands consists of two members, the Smoky Hill
Chalk and Ft. Hayes Limestone.
11.
Engineering testimony and exhibits submitted in support of the Application by
Osman Apaydin, Reservoir Engineer for EOG, showed that the production history
on, or adjacent to, the Application Lands is limited to mostly vertical wells of
different vintages. Niobrara
Formation vertical well oil production performance is highly variable. Vertical wells completed in 2005
through 2007 have an average estimated ultimate recovery of about 3,300 bbls. This yield a one to five acre average
drainage area. The projected
estimated ultimate recovery of the vertical wells in the area show that vertical
development program does not result in consistent and efficient exploitation of
the resource potential. Further, the
Niobrara Formation may be a high-rate fracture play only, or may have additional
matrix contribution to the complex fracture network. EOG has been extensively testing
multiple completion techniques at the Hereford Field, in order to maximize
recoverable reserves. Using the
Hereford Field production as an analogy for production from the Application
Lands, estimated ultimate recovery estimates for the drilled horizontal wells in
the Hereford Field, with limited production history, vary between 130,000 to
285,000 bbls. Estimated original oil
in place is between 2,600,000 and 5,700,000 bbls.
This range yields estimated drainage areas between 92 acres to 202 acres.
The estimated drainage area calculations presented assume that there is matrix
contribution and if Niobrara development results in a fracture-only play then
estimated drainage areas could be more than what is presented here, which
necessitates 640-acre drilling and spacing units for the Application Lands.
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 establish 74 approximate 640-acre
drilling and spacing units for certain lands in Townships 4, 5 and 6 North,
Ranges 61 and 62, 6th P.M., and allow one horizontal well in each
unit, for the production of oil, gas and associated hydrocarbons from the
Niobrara Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that 74 approximate 640-acre drilling and spacing units are hereby established for the below-listed lands, and one horizontal well is approved for each of the units, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation with the treated interval of the permitted wellbore to be located no closer than 460 feet from the boundaries of the proposed unit:
Township
4 North, Range 61 West, 6th P.M.
Sections: 1 through
5, 7, 8, 10 through 12, 14, 15, and 17 through 23
Township
4 North, Range 62 West, 6th P.M.
Sections: 1
through 4 and 9 through 15
Township
5 North, Range 61 West, 6th P.M.
Sections: 19
through 21, 25 through 30, and 33 through 36
Township
5 North, Range 62 West, 6th P.M.
Sections: 22,
23, 25 through 27, and 34 through 36
Township
6 North, Range 61 West, 6th P.M.
Sections: 7, 17
through 21, and 28 through 30
Township
6 North, Range 62 West, 6th P.M.
Sections:
3, 10, 11, 13 through 15, 22 through 27, 34, and 35
IT IS FURTHER ORDERED, that the surface location for any permitted horizontal
well shall be located anywhere in the designated drilling and spacing unit with
the initial perforation and the ultimate bottomhole location being no closer
than 460 feet from the boundaries of
the drilling and spacing unit without exception being granted by the Director of
the Commission.
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 an application for reconsideration by the Commission
of this Order is not required prior to the filing for judicial review.
ENTERED this 8th
day of March, 2011, as of February 22,
2011.
CORRECTED this 4th
day of April, 2013, as of February
22, 2011.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert A. Willis, Acting Secretary
Robert J. Frick, Secretary