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. 181000907
TYPE: SPACING
ORDER NO. 421-155 |
REPORT OF THE COMMISSION
The Commission heard this matter on March 11, 2018, at the Ralph L. Carr Colorado Judicial Center, 1300 Broadway, First Floor, Denver, Colorado, upon application for an order to amend Order No. 421-74 to include the Fort Hays and Carlile Formations in the approximate 1,280-acre drilling and spacing unit previously established by Order No. 421-74 for Section 36, Township 11 North, Range 62 West, 6th P.M., and Section 1, Township 12 North, Range 62 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations, and approve up to eight 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. 8 North, LLC (Operator No. 10575) (“8 North” 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 36, Township 11 North, Range 62 West, 6th P.M., and Section 1, Township 12 North, Range 62 West, 6th P.M., are subject to Rule 318.a., for the Fort Hays and Carlile Formations.
5. On October 21, 2010, the Commission issued Order No. 421-3 which, among other things, established two approximate 640-acre drilling and spacing units for Section 36, Township 11 North, Range 62 West, 6th P.M., and Section 1, Township 12 North, Range 62 West, 6th P.M., and approved the drilling of one horizontal well within each unit, for production of oil, gas and associated hydrocarbons from the Niobrara Formation.
6. On June 17, 2013, the Commission issued Order No. 421-44 which, among other things, established an approximate 1,280-acre drilling and spacing unit for Section 36, Township 11 North, Range 62 West, 6th P.M., and Section 1, Township 12 North, Range 62 West, 6th P.M., and authorized the drilling of four horizontal wells within said unit, for the production of oil, gas and associated hydrocarbons from the Codell Formation.
7. On September 14, 2015, the Commission issued Order No. 421-74 which, among other things, (1) vacated the two 640-acre drilling and spacing units established for Section 36, Township 11 North, Range 62 West, 6th P.M., and Section 1, Township 12 North, Range 62 West, 6th P.M., for production of oil, gas and associated hydrocarbons from the Niobrara Formation, and (2) modified Order No. 421-44 to establish an approximate 1,280-acre drilling and spacing unit for Section 36, Township 11 North, Range 62 West, 6th P.M., and Section 1, Township 12 North, Range 62 West, 6th P.M., for production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, and approved the drilling of eight horizontal wells within said unit, with the productive interval of any permitted wellbore to be no closer than 600 feet from the productive interval of another other wellbore producing from the Niobrara or Codell Formations, and no closer than 600 feet from east and west unit boundaries and 300 feet from north and south unit boundaries, unless authorized by the Director.
8. On September 24, 2018, 8 North filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order amending Order No. 421-74 for below described lands (“Application Lands”) to include the Fort Hays and Carlile Formations and to approve the drilling of up to eight horizontal wells in the unit for the production of oil, gas and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, with the treated interval of any horizontal well in the unit to be located not less than 600 feet from east and west unit boundaries, 300 feet from north and south unit boundaries, and not less than 600 feet from the treated interval of any other well producing or drilling from the Niobrara, Fort Hays, Codell, and/or Carlile Formations, without exception being granted by the Director:
Township 11 North, Range 62 West, 6th P.M.
Section 36: All
Township 12 North, Range 62 West, 6th P.M.
Section 1: All
Applicant stated that any horizontal wells will be drilled from no more than four multi-well pads within the drilling and spacing unit, or on adjacent lands with surface owner consent, without exception being granted by the Director.
9. On December 14, 2018, supplemented February 22, 2019, 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.
10. Land testimony and exhibits submitted in support of the Application by Sean Flanagan, Landman for 8 North, showed that Extraction owns a leasehold interest and has a right to drill in the Application Lands.
11. Geologic testimony and exhibits submitted in support of the Application by Alicia Branch, Geologist for Extraction, showed that the Fort Hays Formation is present throughout the Application Lands, is approximately 17 to 20 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 21 to 25 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.
10. Engineering testimony and exhibits submitted in support of the Application by Boyd McMaster, Petroleum Engineer for Extraction, showed that Extraction plans to drill four wells in the Niobrara Formation and four horizontal wells in the Codell Formation. The engineering testimony further showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 16 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 four 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 134 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 four horizontal wells producing oil, gas and associated hydrocarbons from the Codell Formation. 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. The engineering testimony also showed that the horizontal wells will be drilled in a north-south orientation.
11. The engineering testimony further showed that the estimated drainage radius is 96 feet for a horizontal Niobrara-Formation well and 272 feet for a horizontal Codell Formation well. Therefore, the proposed setbacks from the unit boundaries are appropriate.
14. 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.
15. 8 North agreed to be bound by oral order of the Commission.
16. 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 amend Order No. 421-74 to include the Fort Hays and Carlile Formations in the approximate 1,280-acre drilling and spacing unit previously established for Section 36, Township 11 North, Range 62 West, 6th P.M., and Section 1, Township 12 North, Range 62 West, 6th P.M., for the Niobrara and Codell Formations, and approve up to eight 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. Order No. 421-74 is hereby amended to include the Fort Hays and Carlile Formations, in addition to the Niobrara and Codell Formations, in an approximate 1,280-acre drilling and spacing unit established by Order No. 421-74 for the below described lands, and a total of up to eight 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 62 West, 6th P.M.
Section 36: All
Township 12 North, Range 62 West, 6th P.M.
Section 1: All
2. The productive interval of any horizontal wellbore will be located no closer than 600 feet from east and west unit boundaries, 300 feet from north and south unit boundaries, and no closer than 600 feet from the treated interval of any other well 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.
4. All horizontal wells shall be drilled in a north-south direction.
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 March, 2019, as of March 11, 2019.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Mimi C. Larsen, Secretary