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

)

)

)

)

)

)

)

CAUSE NO. 421

 

DOCKET NO. 180300150

 

TYPE: SPACING

 

ORDER NO. 421-106

 

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 amend Order No. 421-83 to include the Fort Hays, Codell, and Carlile Formations in the approximate 1,280-acre drilling and spacing unit previously established by Order No. 421-83 for Section 19 and 30, Township 11 North, Range 62 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, and approve up to six new horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the 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 19 and 30, Township 11 North, Range 62 West, 6th P.M., are subject to Rule 318.a. for the Fort Hays, Codell, and Carlile Formations.

 

5.         On February 22, 2010 (corrected January 19, 2012), the Commission entered Order No. 421-1 which, among other things, established 58 approximate 640-acre drilling and spacing units for certain lands, including Sections 19 and 30, Township 11 North, Range 62 West, 6th P.M., and approved one horizontal well within each unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, without exception being granted by the Director.

 

6.         On January 7, 2013, the Commission entered Order No. 421-32 which, among other things, vacated two approximate 640-acre drilling and spacing units established by Order No. 421-1 and 421-3 for Sections 30 and 31, Township 11 North, Range 62 West, 6th P.M., and established one approximate 1,280-acre stand-up exploratory drilling and spacing unit for Sections 30 and 31, Township 11 North, Range 62 West, 6th P.M., approving 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.

 

7.       On January 30, 2017, the Commission entered Order No. 421-83 which, among other things, vacated the approximate 1,280-acre stand-up exploratory drilling and spacing unit established by Order No. 421-32 for Sections 30 and 31, Township 11 North, Range 62 West, 6th P.M., and established six approximate 1,280-acre drilling and spacing units, including Sections 19 and 30, Township 11 North, Range 62 West, 6th P.M., providing that the existing 640-acre units for the production of the existing wells shall be maintained only until the date of first completion of the new horizontal well into the unit, and approving up to eight new horizontal wells in each approximate 1,280-acre drilling and spacing unit, providing that the productive interval of each wellbore shall be located no closer than 300 feet from the boundaries of the unit and no closer than 150 feet from the productive interval of another well producing from the same source of supply within the unit, unless an exception is granted by the Director, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.

 

8.         On September 11, 2017, the Commission entered Order No. 421-92 which, among other things, approved an additional seven horizontal wells, for a total of 15 horizontal wells, in six established approximate 1,280-acre drilling and spacing units, including Sections 19 and 30, Township 11 North, Range 62 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and required that the productive interval of each additional proposed horizontal well in each approximate 1,280-acre drilling and spacing unit shall be no closer than 300 feet from the boundaries of the unit (regardless of the lease lines within the unit) and all horizontal wells shall be no closer than 150 feet from the productive interval of another well producing from the same source of supply within the unit, unless an exception is granted by the Director, and providing that the wells will be drilled from no more than five well pads, including the existing wellpads, in each of the six drilling and spacing units to be located within such unit or adjacent thereto, unless an exception is granted by the Director, consistent with Order No. 421-83.

 

9.         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 amending Order No. 421-83 for the below-described lands (“Application Lands”) to include the Fort Hays, Codell, and Carlile Formations, and approve up to six new 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 62 West, 6th P.M.

Section 19:      All

Section 30:      All

 

10.       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.

 

11.       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.

 

12.       Geoscience testimony and exhibits submitted in support of the Application by Benjamin C. Burke, Geoscience Manager for Fifth Creek, showed the Codell Formation is present throughout the Application Lands and ranges from approximately 17 to 20 feet thick, the Carlile Formation is present throughout the Application Lands and ranges from approximately 28 to 44 feet thick, and the Fort Hays Formation is present throughout the Application Lands and ranges from approximately 18 to 28 feet thick.

 

13.       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 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 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. 

 

14.       Applicant stated that the wells will be drilled from no more than five well pads in the 1,280-acre drilling and spacing unit to be located within such unit or adjacent thereto, unless an exception is granted by the Director.

 

15.       Since Order No. 421-83 established an approximate 1,280 acre drilling and spacing unit the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and since the Fort Hays, Codell, and Carlile Formations are currently unspaced, Order No. 421-83 should be amended to include the Fort Hays, Codell, and Carlile Formations in the previously-established, approximate 1,280-acre drilling and spacing unit.

 

16.       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.

 

17.       Fifth Creek agreed to be bound by oral order of the Commission. 

 

18.       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. 421-83 to include the Fort Hays, Codell, and Carlile Formations in the approximate 1,280-acre drilling and spacing unit previously established by Order No. 421-83 for Sections 19 and 30, Township 11 North, Range 62 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, and approve up to six new horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Fort Hays, Codell, and Carlile Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Order No. 421-83 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. 421-83 for the below described lands, and a total of 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 62 West, 6th P.M.

Section 19:      All

Section 30:      All

 

2.         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 within the unit, without exception being granted by the Director.

 

3.         The proposed wells shall be located on no more than five multi-well pads within the drilling and spacing 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 13th day of April, 2018, as of March 19, 2018.

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

By_______________________________________ 

          Julie Spence Prine, Secretary