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. 181000851

 

TYPE: SPACING

 

ORDER NO. 421-144

                    

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on October 29 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to establish an approximate 1,280-acre drilling and spacing unit for Sections 14 and 23, Township 10 North, Range 64 West, 6th P.M., and approve up to 16 new horizontal wells within the unit, 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.         Upland Exploration, LLC (Operator No. 10701) (“Upland” 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.  Sections 14 and 23, Township 10 North, Range 64 West, 6th P.M., are subject to Rule 318.a. for the Niobrara, Fort Hays, Codell, and Carlile Formations. 

 

5.         On August 30, 2018, Upland, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve 16 new horizontal wells within the unit for the 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 10 North, Range 64 West, 6th P.M.

Section 14:      All

Section 23:      All

 

6.         On October 5, 2018, supplemented October 12, 2018, Upland, 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.

 

7.         Land testimony and exhibits submitted in support of the Application by Larry Jenkins, Vice-President of Land for Upland, showed that Upland holds oil and gas leasehold interests and has a right to drill in the Application Lands.

 

8.         The drilling and spacing unit contains federal minerals under Section 14, Township 10 North, Range 64 West, 6th P.M.  As such, Upland Exploration, LLC agreed that it, or its successor operator, will submit a Communitization Agreement (“CA”) to the Bureau of Land Management (“BLM”) at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the initial well drilled within the drilling and spacing unit.

 

9.         Geologic testimony and exhibits submitted in support of the Application by Thomas D. Taylor, Geoscientist testifying for Upland, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 270 to 290 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 Niobrara Formation consists of chalks and marls. Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 17 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 Codell Formation consists of bioturbated sandstone.  Geologic testimony further showed that the Fort Hays Formation is present throughout the Application Lands, is approximately 24 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 Fort Hays Formation consists of limestone. Geologic testimony further showed that the Carlile Formation is present throughout the Application Lands, is approximately 25 to 30 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 Carlile Formation consists of shale.  Finally, the geologic testimony affirmed that the Fort Hays 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 zone, and unintentional deviation into the Fort Hays and/or Carlile formations will not materially impact the drainage calculations or economics for the well.

 

10.       Engineering testimony and exhibits submitted in support of the Application by Thomas D. Taylor, Geoscientist testifying for Upland, showed that Upland plans to drill up to nine wells in the Niobrara Formation and three wells in the Codell Formation.  The testimony also showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 105 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 nine 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 135 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 seven horizontal wells producing oil, gas and associated hydrocarbons from the Codell Formation.  Engineering testimony also showed that the calculated drainage half width for a Niobrara Formation well is 232 feet, the calculated drainage half width for a Codell Formation well is 297 feet, and therefore a 300-foot setback from the unit boundaries is appropriate.  Engineering testimony also showed that Applicant intends to use two multi-well pads to drill the proposed wells.

 

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.       Upland 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 establish an approximate 1,280-acre drilling and spacing unit for portions of Sections 14 and 23, Township 10 North, Range 64 West, 6th P.M., and approve up to 16 new horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         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 16 new horizontal wells within the unit are approved for the production of oil, gas and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations:

 

Township 10 North, Range 64 West, 6th P.M.

Section 14:      All

Section 23:      All

 

2.         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 producing from the same source of supply within the unit, without exception being granted by the Director.

 

3.         Any horizontal wells to be drilled shall be drilled from no more than two 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.

 

4.         Upland Exploration, LLC, or its successor operator, shall submit a Communitization Agreement (“CA”) to the Bureau of Land Management (“BLM”) at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the initial well drilled within the drilling and spacing unit.

 

 

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 15th day of November, 2018, as of October 29, 2018.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________       

Julie Spence Prine, Secretary