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 FOR THE NIOBRARA, FORT HAYS, CODELL, AND CARLILE FORMATIONS, HEREFORD FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 421
DOCKET NO. 171000707
TYPE: SPACING
ORDER NO. 421-102 |
REPORT OF THE COMMISSION
The Commission heard this matter on January 29, 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to amend Order No. 421-42 to include the Fort Hays, Codell, and Carlile Formations in the approximate 1,280-acre drilling and spacing unit previously established by Order No. 421-42 for Section 32, Township 11 North, Range 63 West, 6th P.M. and Section 5, Township 10 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and approve a total of up to 21 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations.
FINDINGS
The Commission finds as follows:
1. Fifth Creek Energy Operating Company, LLC (Operator No. 10629) (“Fifth Creek” 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. Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that, on unspaced lands, wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. Section 32, Township 11 North, Range 63 West, 6th P.M. and Section 5, Township 10 North, Range 63 West, 6th P.M. are subject to Rule 318.a. for the Fort Hays, Codell, and Carlile Formations.
5. On October 21, 2010, the Commission entered Order No. 421-3 which, among other things, established 83 approximate 640-acre drilling and spacing units for certain lands, including Section 32, Township 11 North, Range 63 West, 6th P.M. and Section 5, Township 10 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with no more than one horizontal well to be drilled in each unit from a surface location anywhere in the unit with the horizontal leg and bottom-hole location to be not closer than 600 feet from the boundaries of each unit.
6. On February 11, 2013, the Commission entered Order No. 421-42 which, among other things, vacated two approximate 640-acre drilling and spacing units established by Order No. 421-3 for Section 32, Township 11 North, Range 63 West, 6th P.M. and Section 5, Township 10 North, Range 63 West, 6th P.M., and established one approximate 1,280-acre stand-up exploratory drilling and spacing unit for Section 32, Township 11 North, Range 63 West, 6th P.M. and Section 5, Township 10 North, Range 63 West, 6th P.M. and approved up to ten wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the bottomhole locations not less than 600 feet from the boundary of the drilling unit and not less than 460 feet from any other well or treated interval of a well producing from the Niobrara Formation, without exception being granted by the Director. Section 32, Township 11 North, Range 63 West, 6th P.M. and Section 5, Township 10 North, Range 63 West, 6th P.M. are subject to Order No. 421-42 for the Niobrara Formation.
7. On August 28, 2017, amended first on September 20, 2017, and again on November 27, 2017, Fifth Creek filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order amending Order No. 421-42 to include the Fort Hays, Codell and Carlile Formations in the approximate 1,280-acre drilling and spacing unit previously established by Order No. 421-42 for the below described lands (“Application Lands”) and to approve up to a total of 15 horizontal wells within the unit for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation and up to six horizontal wells in the unit for the production of oil, gas, and associated hydrocarbons from the Fort Hays, Codell, and Carlile Formations, with the treated interval of any horizontal well in the unit to be located no closer than 300 feet from the boundaries of the unit and not less than 150 feet from the treated interval of another well within the unit, and approving up to five well pads in the unit, unless an exception is granted by the Director:
Township 11 North, Range 63 West, 6th P.M.
Section 32: All
Township 10 North, Range 63 West, 6th P.M.
Section 5: All
8. On October 6, 2017, supplemented November 21, 2017, Fifth Creek, 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 Teale Stone, Senior Landman for Fifth Creek, showed that both the mineral and surface interests in the Application Lands are owned in fee, and that Fifth Creek owns a partial undivided leasehold ownership interest in the Application Lands. Land testimony further showed that Applicant is changing its request that the Commission authorize up to five well pads in the unit to a request for authorization of a total of four well pads within the unit for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, unless an exception is granted by the Director.
10. Geoscience testimony and exhibits submitted in support of the Application by Benjamin Burke, Geoscience Manager for Fifth Creek, showed the Niobrara Formation is present throughout the Application Lands and ranges from approximately 270 to 290 feet thick, the Codell Formation is present throughout the Application Lands and ranges from approximately 15 to 19 feet thick, the Fort Hays Formation is present throughout the Application Lands and ranges from approximately 18 to 20 feet thick, and the Carlile Formation is present throughout the Application Lands and ranges from approximately 35 to 38 feet thick.
11. Engineering testimony and exhibits submitted in support of the Application by William Irwin, Engineering Advisor for Fifth Creek, showed that Fifth Creek plans to drill up to 15 wells in the Niobrara Formation and six wells in the Codell Formation. The engineering testimony showed that two-section lateral analog wells have been scaled to an average lateral length of 9,000 feet and average estimated ultimate recovery of 431,333 bbl for the Niobrara Formation, for a drainage per well of 85 acres. Therefore, an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically, and effectively drained by 15 horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation. The engineering testimony further showed that two-section lateral analog wells have been scaled to an average lateral length of 9,000 feet and average estimated ultimate recovery of 457,203 barrels for the Fort Hays, Codell, and Carlile Formation, for a drainage per well of 178 acres. Engineering testimony also showed that the primary drilling target is the Codell Formation, but that horizontal wells drilled into the Codell Formation may deviate into the Fort Hays and Carlile Formations. However, this type of occurrence will not impact the drainage area, drainage area calculations, or the economics of wells targeting the Codell Formation. Therefore, an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically, and effectively drained by six horizontal wells producing oil, gas, and associated hydrocarbons from the Fort Hays, Codell, and Carlile Formations.
12. Applicant agrees that approval of its request for reduced setbacks for the Fort Hays, Codell, and Carlile Formations for 300 feet is conditioned on the adjacent lands having been approved for reciprocal 300-foot setbacks at the time the first well is drilled in the Application Lands.
13. The drilling and spacing unit contains federal minerals. As such, Fifth Creek or successor operator agrees to submit a Communitization Agreement (CA) to the Bureau of Land Management (“BLM”) at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the initial well drilled within the drilling and spacing unit.
14. 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.
15. Fifth Creek agreed to be bound by oral order of the Commission.
16. 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 amend Order No. 421-42 to include the Fort Hays, Codell, and Carlile Formations in the approximate 1,280-acre drilling and spacing unit previously established by Order No. 421-42 for Section 32, Township 11 North, Range 63 West, 6th P.M. and Section 5, Township 10 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and approve a total of up to 21 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations.
ORDER
IT IS HEREBY ORDERED:
1. Order No. 421-42 is hereby amended to include the Fort Hays, Codell, and Carlile Formations, in addition to the Niobrara Formation, in an approximate 1,280-acre drilling and spacing unit established by Order No. 421-42 for the below described lands, and a total of up to 15 horizontal wells within the unit are approved for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation and up to six horizontal wells within the unit are approved for the production of oil, gas, and associated hydrocarbons from the Fort Hays, Codell, and Carlile Formations:
Township 11 North, Range 63 West, 6th P.M.
Section 32: All
Township 10 North, Range 63 West, 6th P.M.
Section 5: All
2. The productive interval of any horizontal wellbore will be located no closer than 300 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore producing from the same source of supply within the unit, without exception being granted by the Director.
3. The setbacks for the Fort Hays, Codell, and Carlile Formations are 300 feet; provided, however, that approval of 300-foot reduced setbacks is conditioned on the adjacent lands having been approved for reciprocal 300-foot setbacks at the time the first well is drilled in the Application Lands.
4. Any horizontal wells to be drilled, including horizontal wells drilled to the Niobrara, Fort Hays, Codell, and Carlile Formations, shall be drilled from no more than four multi-well pads on the surface of the drilling unit, or on adjacent lands with consent of the landowner, unless an exception is granted by the Director
IT IS FURTHER ORDERED:
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 35 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 28th day of February, 2018, as of January 29, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ______________________________________
Julie Spence Prine, Secretary