BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

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. 171200797

 

TYPE:  SPACING

 

ORDER NO. 421-103

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:  1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 421-3 for Section 15, Township 11 North, Range 64 West, 6th P.M.; and 2) establish an approximate 1,280-acre drilling and spacing unit for Sections 10 and 15, Township 11 North, Range 64 West, 6th P.M., and approve up to 14 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.         CCRP Operating Inc. (Operator No. 10665) (“CCRP” or “Applicant”), 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.  Sections 10 and 15, Township 11 North, Range 64 West, 6th P.M., are subject to Rule 318.a. for the Niobrara, 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 consisting of various lands in Township 12 North, Range 61 West, 6th P.M., Townships 10, 11, and 12 North, Ranges 62 and 63 West, 6th P.M., Townships 11 and 12, Range 64 West, 6th P.M., and allowed one horizontal well per unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.  Section 15, Township 11 North, Range 64 West, 6th P.M., is subject to Order No. 421-3 for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

6.         On October 10, 2017, CCRP, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to:  1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 421-3 for Section 15, Township 11 North, Range 64 West, 6th P.M.; and 2) establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to eight horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation and up to six horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Fort Hays, Codell, and Carlile Formations, with the productive interval of the wellbore to 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 located in the unit, without exception being granted by the Director:

 

Township 11 North, Range 64 West, 6th P.M.

Section 10:      All

Section 15:      All

 

7.         Applicant states that any horizontal wells to be drilled 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.

 

8.         On November 20, 2017, CCRP, 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 Lawrence Lillo, Vice President of Land for CCRP, showed that CCRP holds oil and gas leasehold interests and has a right to drill in the Application Lands.

 

10.       Geologic testimony and exhibits submitted in support of the Application by Steen A. Jergensen, Vice President of Geoscience for CCRP, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 275 feet thick, is generally of uniform thickness throughout the Application Lands, and is a common source of supply underling the Application Lands.  The geologic testimony showed that the Niobrara Formation consists of chalks and marls. Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 19 to 20 feet thick, is generally of uniform thickness throughout the Application Lands, and is a common source of supply underling the Application Lands.  The geologic testimony showed that the Codell Formation consists of bioturbated sandstone.  Geologic testimony further showed that the Fort Hays Formation is present throughout the Application Lands, is approximately 15 feet thick, is generally of uniform thickness throughout the Application Lands, and is a common source of supply underling the Application Lands.  The geologic testimony showed that the Fort Hays Formation consists of limestone. Geologic testimony further showed that the Carlile Formation is present throughout the Application Lands, is approximately 22 to 26 feet thick, is generally of uniform thickness throughout the Application Lands, and is a common source of supply underling the Application Lands.  The geologic testimony showed that the Carlile Formation consists of shale.

   

 11.      Engineering testimony and exhibits submitted in support of the Application by Keith Engler, Chief Executive Officer for CCRP, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 82 acres, and 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 eight horizontal wells producing oil, gas, and associated hydrocarbons from the Niobrara Formation.  The engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated at 133 acres, and an appropriate 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 Codell Formation.  Finally, the engineering testimony affirmed that the Fort Hays and Carlile Formations are not intentional target formations for the planned wells, but should be included in the drilling and spacing unit in the event a wellbore wanders outside of the target zone.

 

12.       Engineering testimony further demonstrated that the anticipated average fracture geometry for Niobrara Formation wells on the Application Lands has a propped fracture length of 179 feet, the anticipated average fracture geometry for Codell Formation wells on the Application Lands has a propped fracture length of 291 feet, and that the requested setbacks of 300 feet from the unit boundaries of the Application Lands will promote efficient drainage, protect correlative rights, and prevent waste.

 

13.       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.

 

14.       CCRP agreed to be bound by oral order of the Commission.

 

15.       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 an approximate 640-acre drilling and spacing unit established by Order No. 421-3 for Section 15, Township 11 North, Range 64 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 1,280-acre drilling and spacing unit for Sections 10 and 15, Township 11 North, Range 64 West, 6th P.M., and approve up to 14 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.         An approximate 640-acre drilling and spacing unit established by Order No. 421-3 for Section 15, Township 11 North, Range 64 West, 6th P.M., is hereby vacated, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

2.         An approximate 1,280-acre drilling and spacing unit for the below-described lands, is hereby established for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, and a total of up to eight horizontal wells within the unit are hereby approved, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation and up to six horizontal wells within the unit are hereby approved, for the production of oil, gas, and associated hydrocarbons from the Fort Hays, Codell, and Carlile Formations:

 

 

Township 11 North, Range 64 West, 6th P.M.

Section 10:      All

Section 15:      All

 

3.     The productive interval of the 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 located in the unit, unless the Director grants an exception. 

 

4.         Any horizontal wells to be drilled 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 27th day of February, 2018, as of January 29, 2018.          

 

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By_______________________________________ 

                   Julie Spence Prine, Secretary