BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF GREAT WESTERN OPERATING COMPANY, LLC FOR AN
ORDER TO ESTABLISH AN APPROXIMATE
320-ACRE HORIZONTAL DRILLING AND SPACING UNIT FOR SECTION 11, TOWNSHIP 6 NORTH,
RANGE 67 WEST, 6TH P.M., AND APPROVE UP TO SIX HORIZONTAL WELLS
WITHIN THE UNIT, FOR THE CODELL-NIOBRARA FORMATION, WATTENBERG FIELD, WELD
COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 1307-SP-1135
ORDER NO. 407-830 |
REPORT OF THE COMMISSION
The Commission heard this matter on July 29, 2013, at offices of the
Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver,
Colorado, upon application for an order to establish an approximate 320-acre
horizontal drilling and spacing unit for Section 11, Township 6 North, Range 67
West, 6th P.M., and approve up to six 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 Operating 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 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 11, Township 6 North, Range
67 West, 6th P.M. is subject to this Order for the Codell-Niobrara
Formation.
5.
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 11,
Township 6 North, Range 67 West, 6th P.M. is subject to Rule 318A for
the Codell-Niobrara Formation.
6.
On May 30, 2013, 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 establish an approximate 320-acre horizontal drilling and
spacing unit for the below-described lands (“Application Lands”), and approve up
to six 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 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 6 North, Range 67 West, 6th P.M.
Section 11:
W½
Applicant executed a Surface Use
Agreement and obtained surface owner consent to locate the wellpads outside of
the designated GWA drilling windows.
If, however, there is a change in the location of the wellpads, Applicant stated
the proposed horizontal wells shall remain subject to Rule 318A.
Applicant requested a finding by
the Commission that Applicant may use its existing surface blanket bond to
locate the wellpads for the proposed horizontal wells at a surface location
outside the applicable GWA drilling window, within the unit. Applicant will identify the GWA
window to be forfeited in its Rule 511 testimony.
Applicant stated that existing
vertical/directional wells within the unit shall be excluded from the proposed
horizontal drilling and spacing unit, and that the allocation of proceeds from
existing vertical/directional wells shall continue to pay on their current
spacing or leasehold status.
7.
On July 16, 2013, 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.
8.
Land testimony and exhibits submitted in support of the Application by
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, and that Great Western owns a partial leasehold ownership
interest in the Application Lands.
9.
Geologic testimony and exhibits submitted in support of the Application
by Glen A. Luebking, Contract Geologist for Great Western, showed the Codell
Formation is present throughout the Application Lands, is approximately 19 to 20
feet thick, and the Niobrara Formation is present throughout the Application
Lands, is approximately 77 to 95 feet thick, and both formations are generally
of uniform thickness throughout the Application Lands.
10.
Engineering testimony and exhibits submitted in support of the Application by
Jay Smith, Vice President of Engineering for Great Western, estimated drilling
six horizontal wells would result in an estimated ultimate recovery (“EUR”) of
1,500,000 BOE of oil and 9,000,000 MCFE of gas, a recovery factor of
approximately 18.12% within the 320-acre unit, showing the economics of the
project are sound.
11.
The Commission finds Applicant may use its existing surface blanket bond to
locate the wellpads for the proposed horizontal wells at a surface location
outside the applicable GWA drilling window, within the unit. Applicant identified the GWA window
to be forfeited in its Rule 511 testimony.
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 Hearing Officer review of the Application under Rule
511, the Commission should enter an order to establish an approximate 320-acre
horizontal drilling and spacing unit for Section 11, Township 6 North, Range 67
West, 6th P.M., and approve up to six horizontal wells within the
unit, for the production of oil, gas, and associated hydrocarbons from the
Codell-Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1.
An approximate 320-acre horizontal drilling and spacing unit for the
below-described lands, is hereby established, and up to six 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 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 6 North, Range 67 West, 6th P.M.
Section 11:
W½
2.
Applicant may use its existing surface blanket bond to locate the
wellpads for the proposed horizontal wells at a surface location outside the
applicable GWA drilling window, within the unit.
Applicant identified the GWA window to be forfeited in its Rule 511
testimony.
3.
Existing vertical/directional wells within the unit shall be excluded
from the proposed horizontal drilling and spacing unit, and the allocation of
proceeds from existing vertical/directional wells shall continue to pay on their
current spacing or leasehold status.
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 27 day
of August, 2013, as of July 29, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary