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. 180700573
TYPE: SPACING
ORDER NO. 421-131
|
REPORT OF THE COMMISSION
The Commission heard this matter on September 17, 2018, at the Garfield County Sheriff's Annex – Rifle, 106 County Road 333-A, Rifle, Colorado, upon application for an order to: 1) vacate the approximate 640-acre drilling and spacing unit established by Order No. 421-3 for Section 16, 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 9 and 16, Township 11 North, Range 64 West, 6th P.M., and approve up to 16 new horizontal wells 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. HighPoint Operating Corporation (Operator No. 10071) (“HighPoint” 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. Section 9, Township 11 North, Range 64 West, 6th P.M. is subject to this Rule for the Niobrara, Fort Hays, Codell, and Carlile Formations, and Section 16, Township 11 North, Range 64 West, 6th P.M. is subject to this Rule for the 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 for certain lands, including Section 16, Township 11 North, Range 64 West, 6th P.M., and approved one horizontal well within each unit, for the production of oil and gas and associated hydrocarbons from the Niobrara Formation.
6. On May 31, 2018, HighPoint, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to: 1) vacate the approximate 640-acre drilling and spacing unit established by Order No. 421-3 for Section 16, 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 below-described lands (“Application Lands”), and approve up to 16 new horizontal wells in the approximate 1,280-acre unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, with the productive interval of any horizontal well in the unit shall be no closer than 150 feet from the boundaries of the unit for production from the Niobrara and Fort Hays Formations, 300 feet from the boundaries of the unit for production from the Codell and Carlile Formations, and the treated interval of all horizontal wells shall be no closer than 150 feet from the treated interval of any other well within the unit, unless an exception is granted by the Director:
Township 11 North, Range 64 West, 6th P.M.
Section 9: All
Section 16: All
Applicant requests any permitted wells drilled under this Application should be located on no more than four multi-well pads within the drilling and spacing unit, or on adjacent lands with surface owner consent, unless the Director grants an exception.
7. On July 3, 2018, supplemented on July 13, 2018, HighPoint, by its attorneys, filed with the Commission a written request to approve the Amended 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 Bryce Doty, Landman for HighPoint, showed that the surface and mineral ownership of the Application Lands is owned in fee and state, and that HighPoint has a leasehold interest with the right to drill in the Application Lands.
9. Geologic testimony and exhibits submitted in support of the Application by Daniel Moore, Senior Geologist for HighPoint, showed that the Niobrara Formation is present throughout the Application Lands and is approximately 290 to 305 feet thick, and is a common source of supply underlying the Application Lands. The geologic testimony showed that the Niobrara Formation consists of a sequence of chalks, marls, and limestones. Geologic testimony further showed that the Fort Hays Formation is present throughout the Application Lands, is approximately 18 to 20 feet thick, and is a common source of supply underlying the Application Lands. The geologic testimony showed that the Fort Hays Formation is limestone. Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 18 to 20 feet thick, and is a common source of supply underlying the Application Lands. The geologic testimony showed that the Codell Formation is a sequence of siltstones and sandstones. Geologic testimony further showed that the Carlile Formation is present throughout the Application Lands, is approximately 31 to 33 feet thick, and is a common source of supply underlying the Application Lands. The geologic testimony showed that the Carlile Formation consists of shale.
10. Engineering testimony and exhibits submitted in support of the Application Sean Stewart, Senior Reservoir Engineer at HighPoint, showed that HighPoint plans to drill four to six horizontal Codell Formation wells and 10 to 12 horizontal Niobrara Formation wells. In addition, the engineering testimony showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 54 acres per well, 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 10 to 12 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 78 acres per well, 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 four to six horizontal wells producing oil, gas and associated hydrocarbons from the Codell Formation. Engineering testimony also showed that the primary drilling targets are the Niobrara and Codell Formations, but that horizontal wells targeting the Codell Formation might deviate into the Fort Hays and Carlile Formations. However, this type of occurrence will not impact the drainage area calculations.
11. The Lion Creek #4-16H (API No. 05-123-32036) is hereby excluded from the proposed 1280-acre drilling and spacing unit for the purposes of payment of proceeds.
12. 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.
13. HighPoint agreed to be bound by oral order of the Commission.
14. Based on the facts stated in the verified Amended 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 the approximate 640-acre drilling and spacing unit established by Order No. 421-3 for Section 16, 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 9 and 16, Township 11 North, Range 64 West, 6th P.M., and approve up to 16 new horizontal wells for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations.
ORDER
IT IS HEREBY ORDERED:
1. The approximate 640-acre drilling and spacing unit established by Order No. 421-3 for Section 16, Township 11 North, Range 64 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 is hereby established for the below-described lands, and up to 16 new horizontal wells are hereby approved, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations:
Township 11 North, Range 64 West, 6th P.M.
Section 9: All
Section 16: All
3. The productive interval of any horizontal well in the unit shall be no closer than 150 feet from the boundaries of the unit for production from the Niobrara and Fort Hays Formations, 300 feet from the boundaries of the unit for production from the Codell and Carlile Formations, and not less than 150 feet from the productive interval of any other wellbore within the unit, unless the Director grants an exception.
4. All wells permitted under this Order will be drilled from no more than four multi-well pads within the Application Lands, or on adjacent lands with surface owner consent, unless the Director grants an exception.
5. The Lion Creek #4-16H (API No. 05-123-32036) is hereby excluded from the proposed 1280-acre drilling and spacing unit for the purposes of payment of proceeds.
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 2nd day of October, 2018, as of September 17, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Julie Spence Prine, Secretary