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. 181200892
TYPE: ADDITIONAL WELLS
ORDER NO. 421-153 |
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: 1) vacate Order No. 421-92 as it relates to Sections 20 and 29, Township 11 North, Range 62 West, 6th P.M., for the Niobrara Formation; and 2) amend Order Nos. 421-83 and 421-101, which established an approximate 1,280-acre drilling and spacing unit for Sections 20 and 29, Township 11 North, Range 62 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, to approve up to two additional horizontal wells within the unit, for a total of up to 16 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. On February 22, 2010 (corrected January 19, 2012), the Commission entered into Order No. 421-1 which, among other things, established 58 approximate 640-acre drilling and spacing units for certain lands, including Sections 20 and 29, Township 11 North, Range 62 West, 6th P.M., and approved one horizontal well within each unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, without exception being granted by the Director.
5. On January 7, 2013, the Commission entered Order No. 421-27 which, among other things, vacated two approximate 640-acre drilling and spacing units established by Order 421-1 for Sections 17 and 20, Township 11 North, Range 62 West, 6th P.M., and established one approximate 1,280-acre stand-up exploratory drilling and spacing unit for Sections 17 and 20, Township 11 North, Range 62 West, 6th P.M., and approved up to ten wells within the unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the bottom hole locations not less than 600 feet from the boundary of the proposed drilling unit and not less than 460 feet from any other well or treated interval of a well producing from the Niobrara Formation, without exception being granted by the Director.
6. On January 30, 2017, the Commission entered Order No. 421-83 which, among other things, 1) vacated the approximate 1,280-acre drilling and spacing unit established by 421-27 for Sections 17 and 20, Township 11 North, Range 62 West, 6th P.M., 2) established six approximate 1,280-acre drilling and spacing units, including Sections 20 and 29, Township 11 North, Range 62 West, 6th P.M., providing that the existing 640-acre units for the production of the existing wells shall be maintained only until the date of first completion of the new horizontal well into the unit, and approved up to eight new horizontal wells in each approximate 1,280-acre drilling and spacing unit, providing that the productive interval of each wellbore shall be located no closer than 300 feet from the boundaries of the unit and no closer than 150 feet from the productive interval of another well producing from the same source of supply within the unit, unless an exception is granted by the Director, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
7. On September 11, 2017, the Commission entered Order No. 421-92 which, among other things, approved an additional seven horizontal wells, for a total of 15 horizontal wells, in six established 1,280-acre units, including Sections 20 and 29, Township 11 North, Range 62 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and required that the productive interval of each additional proposed horizontal well in each approximate 1,280-acre drilling and spacing unit shall be no closer than 300 feet from the boundaries of the unit (regardless of the lease lines within the unit) and all horizontal wells shall be no closer than 150 feet from the productive interval of another well producing from the same source of supply within the unit, unless an exception is granted by the Director, and providing that the wells will be drilled from no more than five well pads, including the existing wellpads, in each of the six drilling and spacing units to be located within such unit or adjacent thereto, unless an exception is granted by the Director, consistent with Order No. 421-83.
8. On January 30, 2018, the Commission entered Order No. 421-101 which, among other things, amended Order No. 421-83 to include the Fort Hays, Codell, and Carlile Formations in the approximate 1,280-acre drilling and spacing unit previously established by Order No. 421-83 for Sections 20 and 29, Township 11 North, Range 62 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, and approved a total of up to six horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Fort Hays, Codell, and Carlile Formations.
9. On September 12, 2018, (amended on November 7, 2018), HighPoint, by its attorneys, filed with the Commission a verified application (“Application”) for an order to: 1) vacate Order No. 421-92 as it relates to Sections 20 and 29, Township 11 North, Range 62 West, 6th P.M., for the Niobrara Formation; and 2) amend Order Nos. 421-83 and 421-101, which established an approximate 1,280-acre drilling and spacing unit for the following described lands (“Application Lands”) for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, to approve up to two additional horizontal wells within the unit, for a total of up to 16 horizontal wells, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations. with the productive interval of the wellbores in the Niobrara and Fort Hays Formations to be located no closer than 150 feet from unit boundaries, the productive interval of the wellbores in the Codell and Carlile Formations to be located no closer than 300 feet from the unit boundaries, and the productive interval of the wellbores in the Niobrara, Fort Hays, Codell, and Carlile Formations to be located no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless the Director grants an exception:
Township 11 North, Range 62 West, 6th P.M.
Section 20: All
Section 29: All
Applicant stated that any horizontal wells to be drilled under this Application 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.
10. On November 21, 2018, amended December 7, 2018, HighPoint, 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.
11. Land testimony and exhibits submitted in support of the Application by Teale Stone, Landman for HighPoint, showed that the surface and mineral ownership of the Application Lands is owned in fee and that HighPoint has a partial leasehold interest with the right to drill in the Application Lands.
12. Geologic testimony and exhibits submitted in support of the Application by Emily K. Brehm, Geologist for HighPoint, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 300 to 310 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 and marls. Geologic testimony further showed that the Fort Hays Formation is present throughout the Application Lands and is approximately 21 to 27 feet thick. 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 and is approximately 29 to 31 feet thick. The geologic testimony showed that the Carlile Formation consists of silty shale with then interbeds of limestone and sandstones.
13. Engineering testimony and exhibits submitted in support of the Application by Billy Sprague, 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 Codell and Niobrara 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.
14. Engineering testimony also predicted that horizontal Niobrara Formation wells will have a drainage distance of 115 feet and that horizontal Codell Formation wells will have a drainage distance of 149 feet. Thus, the requested setbacks of 150 feet from the unit boundaries for Niobrara Formation wells and 300 feet from the unit boundaries for Codell Formation wells are appropriate.
15. 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.
16. HighPoint agreed to be bound by oral order of the Commission.
17. 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 Order No. 421-92 as it relates to Sections 20 and 29, Township 11 North, Range 62 West, 6th P.M., for the Niobrara Formation; and 2) amend Order Nos. 421-83 and 421-101, which established an approximate 1,280-acre drilling and spacing unit for Sections 20 and 29, Township 11 North, Range 62 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, to approve up to two additional horizontal wells within the unit, for a total of up to 16 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. Order No. 421-92 is hereby vacated as it relates to Sections 20 and 29, Township 11 North, Range 62 West, 6th P.M.
2. A total of up to 16 horizontal wells within the approximate 1,280-acre drilling and spacing unit established by Order Nos. 421-83 and 421-101 for the following described lands (“Application Lands”), are hereby approved for production from the Niobrara, Fort Hays, Codell, and Carlile Formations:
Township 11 North, Range 62 West, 6th P.M.
Section 20: All
Section 29: All
3. The productive interval of the wellbores in the Niobrara and Fort Hays Formations will be located no closer than 150 feet from unit boundaries, the productive interval of the wellbores in the Codell and Carlile Formations will be located no closer than 300 feet from the unit boundaries, and the productive interval of the wellbores in the Niobrara, Fort Hays, Codell, and Carlile Formations will be located no closer than 150 feet from the productive interval of any other wellbore located in 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.
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