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. 180300149
TYPE: SPACING
ORDER NO. 421-105 |
REPORT OF THE COMMISSION
The Commission heard this matter on March 19, 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 1,262-acre stand-up exploratory drilling and spacing unit established by Order No. 421-18 for Sections 21 and 28, Township 12 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; 2) vacate an approximate 1,280-acre drilling and spacing unit established by Order No. 421-57 for Sections 21 and 28, Township 12 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell Formation; 3) vacate Order No. 421-58; 4) establish an approximate 1,280-acre drilling and spacing unit for Sections 21 and 28, Township 12 North, Range 63 West, 6th P.M., and approve up to 21 horizontal wells within the unit, for the production of 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. Sections 21 and 28, Township 12 North, Range 63 West, 6th P.M., are subject to Rule 318.a. for the Niobrara, Fort Hays, Codell, and Carlile Formations.
5. On February 22, 2010, the Commission entered Order No. 421-1 which, among other things, established 58 approximate 640-acre drilling and spacing units, and approved one horizontal well for each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
5. On January 7, 2013, the Commission entered Order No. 421-18 which, among other things, vacated two approximate 640-acre drilling and spacing units established by Order No. 421-1 for Sections 21 and 28, Township 12 North, Range 63 West, 6th P.M., established an approximate 1,262-acre stand-up exploratory drilling and spacing unit for Sections 21 and 28, Township 12 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 proposed 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.
6. On January 26, 2015, the Commission entered Order No. 421-57 which, among other things, established an approximate 1,280-acre drilling and spacing unit for Sections 21 and 28, Township 12 North, Range 63 West, 6th P.M., and approved one horizontal well for the unit, for the production of oil, gas, and associated hydrocarbons from the Codell Formation.
7. On May 18, 2015, the Commission entered Order No. 421-58 which, among other things, approved a total of up to six horizontal wells in the approximate 1,280-acre drilling and spacing unit established by Order No. 421-57 for Sections 21 and 28, Township 12 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell Formation, provided that the productive intervals of all wells shall be not less than 600 feet from the unit boundaries with an inter-well setback of not less than 600 feet from the productive interval of a well producing from the same formation, without exception being granted by the Director, and that a maximum of four surface locations will be allowed for the development of minerals from the Codell Formation within the spacing unit.
8. On January 17, 2018, Fifth Creek, by its attorneys, filed a verified Application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) vacate an approximate 1,262-acre stand-up exploratory drilling and spacing unit established by Order No. 421-18 for the Niobrara Formation, 2) vacate an approximate 1,280-acre drilling and spacing unit established by Order No. 421-57 for the Codell Formation, 3) vacate Order No. 421-58 for the Codell Formation, 4) establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) for the Codell, Fort Hays, Carlile and Niobrara Formations and approve up to six new horizontal wells, for the production of oil, gas and associated hydrocarbons from the Codell, Fort Hays and Carlile Formations, and approve up to 15 new horizontal wells, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of any horizontal well to be no closer than 300 feet from the unit boundaries, and not less than 150 feet from the productive interval of another well within the unit, for the production oil, gas and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, without exception being granted by the Director:
Township 12 North, Range 63 West, 6th P.M.
Section 21: All portions lying within the State of Colorado
Section 28: All
9. On February 5, 2018, 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.
10. 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.
11. Geologic 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 250 to 290 feet thick, the Ft. Hays Formation is present throughout the Application Lands and ranges from approximately 16 to 19 feet thick, the Codell Formation is present throughout the Application Lands and ranges from approximately 19 to 23 feet thick, and the Carlile Formation is present throughout the Application Lands and ranges from approximately 34 to 37 feet thick.
12. Engineering testimony and exhibits submitted in support of the Application by William Irwin, Engineering Advisor for Fifth Creek, demonstrated that the average estimated drainage per well in the Niobrara Formation is 85 acres, the average estimated drainage per well in the Codell, Fort Hays, and Carlile Formations is 178 acres, the Fort Hays and Carlile Formations do not impact the drainage calculations as they are not hydrocarbon bearing formations, and that the drilling, completion, and production of up to six Codell, Fort Hays, and Carlile Formation horizontal wells and 15 Niobrara Formation horizontal wells within the proposed 1280-acre drilling and spacing unit will not drain more than the requested approximate 1,280-acre drilling and spacing unit in the Codell, Fort Hays, Carlile and Niobrara Formations.
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. 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: 1) vacate an approximate 1,262-acre stand-up exploratory drilling and spacing unit established by Order No. 421-18 for Sections 21 and 28, Township 12 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; 2) vacate an approximate 1,280-acre drilling and spacing unit established by Order No. 421-57 for Sections 21 and 28, Township 12 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell Formation; 3) vacate Order No. 421-58; 4) establish an approximate 1,280-acre drilling and spacing unit for Sections 21 and 28, Township 12 North, Range 63 West, 6th P.M., for the Niobrara, Fort Hays, Codell, and Carlile Formations, and approve up to six new horizontal wells for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, and approve up to 15 new horizontal wells for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 1,262-acre stand-up exploratory drilling and spacing unit established by Order No. 421-18 for Sections 21 and 28, Township 12 North, Range 63 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, is hereby vacated.
2. An approximate 1,280-acre drilling and spacing unit established by Order No. 421-57 for Sections 21 and 28, Township 12 North, Range 63 West, 6th P.M., for the production oil, gas, and associated hydrocarbons from the Codell Formation, is hereby vacated.
3. Order No. 421-58 which approved an additional five additional wells, for the drilling and spacing unit established for Sections 21 and 28, Township 12 North, Range 63 West, 6th P.M., for the production oil, gas, and associated hydrocarbons from the Codell Formation, is hereby vacated.
4. 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 six new 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, and a total of up to 15 new horizontal wells are within the unit are hereby approved, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation:
Township 12 North, Range 63 West, 6th P.M.
Section 21: All portions lying within the State of Colorado
Section 28: All
5. The productive interval of any 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 within the unit, unless the Director grants an exception.
6. The proposed wells shall be located on 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 12th day of April, 2018, as of March 19, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By_______________________________________
Julie Spence Prine, Secretary