BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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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. 181000852
TYPE: SPACING
ORDER NO. 421-150 |
REPORT OF THE COMMISSION
The Commission heard this matter on January 28, 2019, 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 Section 18, Township 10 North, Range 63 West, 6th P.M., and Section 13, 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. Section 18, Township 10 North, Range 63 West, 6th P.M., and Section 13, 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 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, 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 63 West, 6th P.M.
Section 18: All
Township 10 North, Range 64 West, 6th P.M.
Section 13: 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.
6. On October 5, 2018, amended 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. On October 12, 2018, HighPoint Operating Corporation (“HighPoint”) filed a protest. On December 5, 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, Geoscientist 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, and contains three potentially productive zones. 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 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 underling 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 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. The testimony further showed that Highlands plans to drill nine horizontal wells in the Niobrara Formation, and seven horizontal wells in the Codell Formation.
10. Engineering testimony and exhibits submitted in support of the Application by Thomas D. Taylor, Geoscientist for Upland, 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. 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 engineering testimony further showed that the drainage half-width for a horizontal Niobrara-Formation well is calculated to be 232 feet. The engineering testimony also showed that the drainage half-width for a horizontal Codell-Formation well is calculated to be 297 feet. Therefore, a setback of 300 feet from the unit boundaries is appropriate.
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. Upland agreed to be bound by oral order of the Commission.
14. 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 1,280-acre drilling and spacing unit for Section 18, Township 10 North, Range 63 West, 6th P.M., and Section 13, Township 10 North, Range 64 West, 6th P.M., and to 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, and a total of up to 16 new horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations:
Township 10 North, Range 63 West, 6th P.M.
Section 18: All
Township 10 North, Range 64 West, 6th P.M.
Section 13: All
2. The productive interval of the wellbore shall 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.
3. 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 25th day of February, 2019, as of January 28, 2019.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Mimi C. Larsen, Secretary