BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF BILL BARRETT CORPORATION FOR AN ORDER TO
ESTABLISH TWO APPROXIMATE 640-ACRE DRILLING AND SPACING UNITS AND APPROVE UP TO 16 HORIZONTAL WELLS FOR THE NIOBRARA
FORMATION, AND FOUR HORIZONTAL WELLS FOR THE CODELL FORMATION, LOCATED IN
SECTION 36, TOWNSHIP 1 SOUTH, RANGE 66 WEST, 6TH P.M., FOR THE CODELL
AND NIOBRARA FORMATIONS, WATTENBERG FIELD, ADAMS COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 1306-SP-95
ORDER NO. 407-800 |
REPORT OF THE COMMISSION
The Commission heard this matter on June 17, 2013, at the Two Rivers
Convention Center, 159 Main Street, Grand Junction, Colorado, upon application
for an order to: 1) vacate the approximate 80-acre drilling and spacing units
established by Order No. 407-87 for Section 36, Township 1 South, Range 66 West,
6th P.M.; 2) establish an approximate 640-acre drilling and spacing
unit for Section 36, Township 1 South, Range 66 West, 6th P.M., and
approve up to 16 horizontal wells within the unit, for the production of oil,
gas and associated hydrocarbons from the Niobrara Formation; and 3) establish an
approximate 640-acre drilling and spacing unit for Section 36, Township 1 South,
Range 66 West, 6th P.M., and approve up to four horizontal wells
within the unit, for the production of oil, gas and associated hydrocarbons from
the Codell Formation.
FINDINGS
The Commission finds as follows:
1.
Bill Barrett Corporation (“BBC” 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 36,
Township 1 South, Range 66 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 36, Township 1 South, Range
66 West, 6th P.M. is subject to this Order for the Codell and
Niobrara Formations.
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 36, Township 1 South, Range 66 West, 6th P.M. is subject to
Rule 318A for the Codell Formation.
7.
On March 28, 2013, Bill Barrett Corporation (“BBC” or “Applicant”), 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 the approximate
80-acre drilling and spacing units established by Order No. 407-87 for Section
36, Township 1 South, Range 66 West, 6th P.M.; 2) establish an
approximate 640-acre drilling and spacing unit for the below-described lands
(“Application Lands”), and approve up to 16 horizontal wells within the unit,
for the production of oil, gas and associated hydrocarbons from the Niobrara
Formation; 3) establish an approximate 640-acre drilling and spacing unit for
the Application Lands, and approve up to four horizontal wells within the unit,
for the production of oil, gas and associated hydrocarbons from the Codell
Formation; and 4) for both units, provide
the treated interval of the wellbore to
be located 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 1 South, Range 66 West, 6th P.M.
Section 36:
All
Applicant stated the proposed wells shall be located on no more than
two multi-well pads within the drilling and spacing unit.
8.
On June 4, 2013, BBC, 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
Brian Wert, Senior Landman for BBC, showed BBC owns substantial leasehold
interests in the Application Lands.
10.
Geologic testimony and exhibits submitted in support of the Application by Jason
F. Brand, Petroleum Geologist for BBC, showed the Niobrara Formation underlies
the entirety of the Application Lands and ranges from approximately 300 to 330
feet thick in the Niobrara Formation, and 14 feet for the Codell Formation,
which also underlies the entirety of the Application Lands. Further testimony showed the Niobrara
Formation is a sequence of chalks, marls and limestones and is a common source
of supply.
11.
Engineering testimony and exhibits submitted in support of the Application by
Mark Stouffer, Reservoir Engineering Advisor for BBC, showed the drainage area
for nearby horizontal type wells averaged 35-acres for the Niobrara and
101-acres for the Codell Formations.
Testimony concluded the 640-acre unit would accommodate up to sixteen horizontal
Niobrara wells and up to four horizontal Codell wells, while protecting
correlative rights of adjacent mineral owners.
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. BBC
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 80-acre
drilling and spacing units established by Order No. 407-87 for Section 36,
Township 1 South, Range 66 West, 6th P.M.; 2) establish an
approximate 640-acre drilling and spacing unit for Section 36, Township 1 South,
Range 66 West, 6th P.M., and approve up to 16 horizontal wells within
the unit, for the production of oil, gas and associated hydrocarbons from the
Niobrara Formation; and 3) establish an approximate 640-acre drilling and
spacing unit for Section 36, Township 1 South, Range 66 West, 6th
P.M., and approve up to four horizontal wells within the unit, for the
production of oil, gas and associated hydrocarbons from the Codell Formation.
ORDER
IT IS HEREBY ORDERED:
1.
The approximate 80-acre drilling and spacing units established by Order
No. 407-87 for Section 36, Township 1 South, Range 66 West, 6th P.M.,
are hereby vacated.
2.
An
approximate 640-acre drilling and spacing unit for the below-described lands, is
hereby established, and up to 16 horizontal wells within the unit, are hereby
approved, for the production of oil, gas and associated hydrocarbons from the
Niobrara Formation:
Township 1 South, Range 66 West, 6th P.M.
Section 36:
All
3.
An approximate 640-acre drilling and spacing unit for the below described
lands, is hereby established, and up to four horizontal wells within the unit,
are hereby approved, for the production of oil, gas and associated hydrocarbons
from the Codell Formation:
Township 1 South, Range 66 West, 6th P.M.
Section 36:
All
4.
For both units,
the treated interval of the wellbore shall be located
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:
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 30
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
8th
day of July, 2013, as of June 17, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary