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. 181000846
TYPE: SPACING
ORDER NO. 421-146 |
REPORT OF THE COMMISSION
The Commission heard this matter on December 17, 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 320-acre drilling and spacing unit for Section 21, Township 11 North, Range 64 West, 6th P.M., and approve up to seven 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 300 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 21, Township 11 North, Range 64 West, 6th P.M., is 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 320-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve seven 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 11 North, Range 64 West, 6th P.M.
Section 21: N½
Applicant stated that any horizontal wells to be drilled will be drilled from no more than one multi-well pad on the surface of the drilling unit, or on adjacent lands with consent of the landowner, unless an exception is granted by the Director.
6. On October 9, 2017, supplemented on October 11, 2018 and on November 28, 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. On October 12, 2018, HighPoint Operating Corporation (“HighPoint”) filed a protest. On November 28, 2018, HighPoint withdrew its protest.
8. 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.
9. Geologic testimony and exhibits submitted in support of the Application by Thomas D. Taylor, Consulting Geoscientist for Upland, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 275 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 Fort Hays Formation is present throughout the Application Lands, is approximately 15 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 Hays Formation consists of limestone. Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 19 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 Carlile Formation is present throughout the Application Lands, is approximately 26 feet thick, is generally of uniform thickness throughout the Application Lands, and is a common source of supply underyling the Application Lands. The geologic testimony showed that the Carlile Formation consists of shale. The geologic testimony showed that are the target formations for hydrocarbon production.
10. Engineering testimony and exhibits submitted in support of the Application by Thomas D. Taylor, Consulting Geoscientist for Upland, showed that Upland plans to drill four horizontal wells in the Niobrara Formation and three horizontal wells in the Codell Formation. Engineering testimony further showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 60 acres, and an approximate 320-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by four horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara Formation. Engineering testimony also showed that horizontal wells in the Niobrara Formation are expected to drain approximately 280 feet from the wellbore. The engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated at 61 acres, and an approximate 320-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by three horizontal wells producing oil, gas and associated hydrocarbons from the Codell Formation. Engineering testimony also showed that horizontal wells in the Codell Formation are expected to drain approximately 280 feet from the wellbore. Finally, the engineering 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.
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, the protest having been withdrawn, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to establish an approximate 320-acre drilling and spacing unit for Section 21, Township 11 North, Range 64 West, 6th P.M., and to approve up to seven 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 320-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 seven 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 11 North, Range 64 West, 6th P.M.
Section 21: N½
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 one multi-well pad 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 7th day of January, 2019, as of December 17, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Mimi C. Larsen, Secretary