BEFORE THE OIL AND GAS CONSERVATION COMMISSION                        

OF THE STATE OF COLORADO

 

IN THE MATTER OF PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE CODELL, FORT HAYS, CARLILE, AND NIOBRARA FORMATIONS, HEREFORD FIELD, WELD COUNTY, COLORADO

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CAUSE NO.  421

 

DOCKET NO.  180400302

 

TYPE: SPACING

 

ORDER NO. 421-111

 

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on June 11, 2018, at the Lindou Auditorium in the Michener Library on the University of Northern Colorado campus, 501 20th Street, Greeley, Colorado, upon an application for an order to: 1) vacate an approximate 1,280-acre drilling and spacing unit established by Order No. 421-38 for Sections 1 and 12, Township 11 North, Range 64 West, 6th P.M., for production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) amend an approximate 1,280-acre drilling and spacing unit established by Order No. 421-49 for Section 36, Township 12 North, Range 64 West, 6th P.M., and Section 1, Township 11 North, Range 64 West, 6th P.M., for production of oil, gas and associated hydrocarbons from the Codell Formation, and 3) establish an approximate 1,280-acre drilling and spacing unit for Section 36, Township 12 North, Range 64 West, 6th P.M., and Section 1, Township 11 North, Range 64 West, 6th P.M., and approve up to 14 horizontal wells within the unit, for 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”), 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 herein, 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 36, Township 12 North, Range 64 West, 6th P.M., and Section 1, Township 11 North, Range 64 West, 6th P.M., are subject to this Rule for production of oil and gas from the Fort Hays and Carlile Formations.  Section 36, Township 12 North, Range 64 West, 6th P.M., is subject to this Rule for production of oil and gas from the Niobrara Formation.

 

5.            On January 7, 2013, the Commission entered Order No. 421-38 which, among other things, established an approximate 1,280-acre drilling and spacing unit for Sections 1 and 12, Township 11 North, Range 64 West, 6th P.M., and authorized the drilling of ten horizontal wells within said unit, for production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the bottomhole location of any permitted well located not less than 600 feet from the unit boundaries and an interwell setback of not less than 460 feet from the treated wellbore of any wellbore producing or drilling for the Niobrara Formation.

 

6.            On December 15, 2014, the Commission entered Order No. 421-49 which, among other things, established an approximate 1,280-acre drilling and spacing unit for Section 36, Township 12 North, Range 64 West, 6th P.M., and Section 1, Township 11 North, Range 64 West, 6th P.M., and authorized the drilling of one horizontal well within said unit, for production of oil, gas and associated hydrocarbons from the Codell Formation, with the productive interval of any permitted well located not less than 600 feet from the unit boundaries and an interwell setback of not less than 150 feet from the treated wellbore of any wellbore producing or drilling for the Codell Formation.

 

7.            On February 23, 2018, Amended March 21, 2018, 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 1,280-acre drilling and spacing unit established by Order No. 421-38 for Sections 1 and 12, Township 11 North, Range 64 West, 6th P.M., for production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) amend an approximate 1,280-acre drilling and spacing unit established by Order No. 421-49 for Section 36, Township 12 North, Range 64 West, 6th P.M., and Section 1, Township 11 North, Range 64 West, 6th P.M., for production of oil, gas and associated hydrocarbons from the Codell Formation, and 3) establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve, and approve up to 14 horizontal wells within the unit, for production of oil, gas and associated hydrocarbons from the Niobrara, 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 12 North, Range 64 West, 6th P.M.

Section 36:      All

 

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

Section 1:        All

 

Applicant stated that any horizontal wells to be drilled will 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 May 7, April 9, 2018, 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 Larry Lillo, Vice President of Land CCRP, showed CCRP owns substantial leasehold interests underlying the Application Lands.

 

10.          Geologic testimony and exhibits submitted in support of the Application by Steen Jergensen, Vice President of Geoscience for CCRP, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 265 feet thick, is generally of uniform thickness throughout the Application Lands, and is a common source of supply underlying 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 sandstone.  Geologic testimony further showed that the Fort Hays Formation is present throughout the Application Lands, is approximately 16 feet thick, is generally of uniform thickness throughout the Application Lands, and is a common source of supply underlying the Application Lands.  The geologic testimony showed that the Fort Hayes Formation consists of limestone. Geologic testimony further showed that the Carlile Formation is present throughout the Application Lands, is approximately 22 to 24 feet thick, is generally of uniform thickness throughout the Application Lands, and is a common source of supply underlying the Application Lands.  The geologic testimony showed that the Carlile Formation consists of shale.  Finally, the geologic testimony affirmed that the Fort Hayes 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 deviates outside of the target formation.

 

11.          Engineering testimony and exhibits submitted in support of the Application by by Keith Engler, Chief Operating Officer for CCRP, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 65 acres, and an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well 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 97 acres, and an appropriate 1,280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Codell Formation.

 

12.          The engineering testimony further showed that the estimated drainage radius for a Niobrara-Formation well is 149 feet and the estimated drainage radius for a Codell-Formation well is 221 feet.  Therefore, a setback of 300 feet from the unit boundaries is appropriate.

 

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 agrees to be bound by the 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 1,280-acre drilling and spacing unit established by Order No. 421-38 for Sections 1 and 12, Township 11 North, Range 64 West, 6th P.M., for production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) amend an approximate 1,280-acre drilling and spacing unit established by Order No. 421-49 for Section 36, Township 12 North, Range 64 West, 6th P.M., and Section 1, Township 11 North, Range 64 West, 6th P.M., for production of oil, gas and associated hydrocarbons from the Codell Formation, and 3) establish an approximate 1,280-acre drilling and spacing unit for Section 36, Township 12 North, Range 64 West, 6th P.M., and Section 1, Township 11 North, Range 64 West, 6th P.M., and approve up to 14 horizontal wells within the unit, for production of oil, gas and associated hydrocarbons from the Niobrara, Fort Hays, Codell and Carlile Formations..

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate1,280-acre drilling and spacing unit established by Order No. 421-38 for Sections 1 and 12, Township 11 North, Range 64 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons for the Codell Formation is hereby vacated.

2.         Order No. 421-49 is hereby amended to provide that an approximate 1,280-acre drilling and spacing unit is established for Section 36, Township 12 North, Range 64 West, 6th P.M., and Section 1, Township 11 North, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara, Fort Hayes, Codell, and Carlile Formations, and a total of up to 14 horizontal wells within the unit are approved, for the production of oil, gas and associated hydrocarbons from the Niobrara, Fort Hayes, Codell, and Carlile Formations:

Township 12 North, Range 64 West, 6th P.M.

Section 36:      All

 

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

Section 1:        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 within 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 the Director grants an exception.

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 3rd day of July, 2018, as of June 11, 2018.

 

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

By____________________________________

                 Julie Spence Prine, Secretary