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. 180300154

 

TYPE: SPACING

 

ORDER NO. 421-110 &

                      535-993

 

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 two approximate 640-acre drilling and spacing units established by Order No. 535-28 for Sections 11 and 14, Township 10 North, Range 62 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 11 and 14, Township 10 North, Range 62 West, 6th P.M. 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.

 

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 11 and 14, Township 10 North, Range 62 West, 6th P.M., are subject to Rule 318.a. for the Niobrara, Fort Hays, Codell, and Carlile Formations.

 

5.         On June 27, 2011, the Commission entered Order No. 535-28 which, among other things, established 52 approximate 640-acre drilling and spacing units for certain lands, including Sections 11 and 14, Township 10 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, provided that the surface location for any permitted horizontal well shall be located anywhere in the designated drilling and spacing unit, and the treated interval of the wellbore shall be no closer than 600 feet from the boundaries of the drilling and spacing unit without exception being granted by the Director.

 

6.         On January 17, 2018, Fifth Creek, by its attorneys, filed a verified application pursuant to §34-60-116, C.R.S., for an order to: 1) vacate two approximate 640-acre drilling and spacing units established by Order No. 535-28 for Sections 11 and 14, Township 10 North, Range 62 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 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 Codell, Carlile, Fort Hays, and Niobrara Formations, unless an exception is granted by the Director:

 

Township 10 North, Range 62 West, 6th P.M.

Section 11:      All

Section 14:      All

 

7.         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.

 

8.         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.

 

9.         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 300 feet thick, the Ft. Hays Formation is present throughout the Application Lands and ranges from approximately 18 to 31 feet thick, the Codell Formation is present throughout the Application Lands and ranges from approximately 16 to 23 feet thick, and the Carlile Formation is present throughout the Application Lands and ranges from approximately 33 to 36 feet thick.

 

10.       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.

 

11.       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.

 

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

 

13.       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 two approximate 640-acre drilling and spacing units established by Order No. 535-28 for Sections 11 and 14, Township 10 North, Range 62 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 11 and 14, Township 10 North, Range 62 West, 6th P.M. 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.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Two approximate 640-acre drilling and spacing units established by Order No. 535-28 for Sections 11 and 14, Township 10 North, Range 62 West, 6th P.M, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, are hereby vacated.

 

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 Codell, Fort Hays, Carlile, and Niobrara 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 Codell, Fort Hays, 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 10 North, Range 62 West, 6th P.M.

Section 11:      All

Section 14:      All

 

3.         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, unless an exception is granted by the Director.

 

4.         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 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