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 OPERATION FOR THE NIOBRARA, FORT HAYS, CODELL, AND CARLILE FORMATIONS, HEREFORD FIELD, WELD COUNTY, COLORADO |
) ) ) ) ) ) ) |
CAUSE NO. 421
DOCKET NO. 190300247
TYPE: SPACING
ORDER NO. 421-160 |
REPORT OF THE COMMISSION
The Commission heard this matter on July 31, 2019, at the University of Colorado, School of Public Affairs, 1380 Lawrence Street, Second Floor Terrace Room, Denver, Colorado, upon application for an order to: 1) vacate Order No. 421-19; and 2) amend Order Nos. 535-564 and 421-61 to include the Niobrara, Fort Hays, and Carlile Formations in the approximate 1,290-acre drilling and spacing unit previously established for the Application Lands for production from the Codell Formation, and approve a total of up to 14 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 boundaries of the proposed unit, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless an exception is granted by the Director:
Township 12 North, Range 63 West, 6th P.M.
Section 18: Lots 1-4 (only as to lands located in Colorado)
Section 19: All
Section 30: All
FINDINGS
The Commission finds as follows:
1. CCRP Operating, Inc. (Operator No. 10665) (“CCRP” or “Applicant”), as applicant herein, 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. Pursuant to § 34-60-106(2.5)(a), C.R.S., the Commission shall regulate oil and gas operations in a reasonable manner to protect and minimize adverse impacts to public health, safety, and welfare, the environment, and wildlife resources, and shall protect against adverse environmental impacts on any air, water, soil, or biological resource resulting from oil and gas operations.
5. On October 21, 2010, the Commission entered Order No. 421-3 which established 83 approximate 640-acre drilling and spacing units for certain lands, including Sections 19 and 30, Township 12 North, Range 63 West, 6th P.M., and approving one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
6. On January 7, 2013, the Commission entered Order No. 421-19 which, among other things, established an approximate 1,290-acre drilling and spacing unit for the Application Lands and approved up to ten horizontal wells within the unit, for the development and operation of the Niobrara Formation, with the bottomhole locations not less than 600 feet from the boundary of the 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.
7. On October 27, 2014, the Commission entered Order No. 535-564 which, among other things, established an approximate 1,290-acre drilling and spacing unit for the Application Lands and approved one horizontal well within the unit, for the development and operation of the Codell Formation, with productive interval of the wellbore to be no closer than 600 feet from the unit boundaries, without exception being granted by the Director.
8. On May 18, 2015, the Commission entered Order No. 421-61 which, among other things, allowed a total of six horizontal wells for the production of oil, gas and associated hydrocarbons from the Codell Formation underlying the Application Lands, with the productive intervals of all wells permitted under the Order to be no closer than 600 feet from the unit boundaries and no closer than 600 feet from the treated interval of a well producing from the same formation, unless an exception is granted by the Director.
9. On January 10, 2019, amended February 4, 2019, CCRP, by its attorneys, filed with the Commission a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) vacate Order No. 421-19; and 2) amend Order Nos. 535-564 and 421-61 to include the Niobrara, Fort Hays, and Carlile Formations in the approximate 1,290-acre drilling and spacing unit previously established for the Application Lands for production from the Codell Formation, and approve a total of up to 14 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 boundaries of the proposed unit, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless an exception is granted by the Director.
10. Applicant stated that all horizontal wells will be drilled from no more than four multi-well pads located within the unit, or on lands adjacent thereto with permission of the land landowner.
11. CCRP, 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.
12. The proposed drilling and spacing unit contains federal minerals. As such, CCRP 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.
13. Land testimony and exhibits submitted in support of the Application by Lawrence Lillo, Vice President-Land for CCRP, showed that CCRP owns or holds oil and gas leasehold interests and has a right to drill in the Application Lands. The land testimony also showed that all wells will be drilled from locations wholly within the State of Wyoming, and that there is no Colorado local government entity with jurisdiction over the siting of the proposed locations.
14. Geologic testimony and exhibits submitted in support of the Application by Errol Lawrence, Senior Geologist for Petrotek Engineering Corporation testifying for CCRP, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 250 to 260 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony further showed that the Fort Hays Formation is present throughout the Application Lands, is approximately 15 to 20 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 18 to 21 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony further showed that the Carlile Formation is present throughout the Application Lands, is approximately 20 to 25 feet thick, and is generally of uniform thickness throughout the Application Lands. The geologic testimony further showed that the primary drilling targets are the Niobrara and Codell Formations, but that horizontal wells drilled into the Codell Formation may deviate into the Fort Hays and Carlile Formations.
15. Engineering testimony and exhibits submitted in support of the Application by Lewis Wandke, Senior Engineer for Petrotek Engineering Corporation testifying for CCRP, showed that CCRP is planning to drill eight horizontal wells in the Niobrara Formation and six horizontal wells in the Codell Formation. The engineering testimony further showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 57 acres, and an approximate 1,290-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by eight 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 146 acres, and an appropriate 1,290-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by six horizontal wells producing oil, gas and associated hydrocarbons from the Codell Formation.
16. Finally, the engineering testimony showed that the fracture half-length for Niobrara Formation wells is estimated at 63 feet, and the fracture half-length for Codell Formation wells is estimated at 186 feet. Therefore, 300-foot setbacks from the unit boundaries are appropriate.
17. Because the engineering testimony showed that the fracture half-length for Codell Formation wells exceeds the proposed interwell setback for wells drilled in the Codell Formation, the Hearing Officer scheduled an administrative hearing to address this issue.
18. Subsequently, CCRP filed amended 511 testimony changing the requested interwell setbacks to be no closer than 150 feet from the productive interval of any other wellbore located in the Niobrara and Fort Hays Formations, and no closer than 300 feet from the productive interval of any other wellbore located in the Codell and Carlile Formations, unless the Director grants an exception.
19. Based upon CCRP’s request that the interwell setback be no closer than 300 feet from the productive interval of any other wellbore located in the Codell and Carlile Formations, the administrative hearing was vacated.
20. The above-referenced testimony and exhibits show that granting the Application will regulate oil and gas operations in a reasonable manner to protect and minimize adverse impacts to public health, safety, and welfare, the environment, and wildlife resources and will protect against adverse environmental impacts on any air, water, soil, or biological resource resulting from oil and gas operations.
21. The above-referenced testimony and exhibits further 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.
22. CCRP agreed to be bound by oral order of the Commission.
23. 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. 421-19; 2) amend Order Nos. 535-564 and 421-61 to include the Niobrara, Fort Hays, and Carlile Formations in the approximate 1,290-acre drilling and spacing unit previously established for the Application Lands for production from the Codell Formation, and approve a total of up to 14 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 boundaries of the proposed unit, no closer than 150 feet from the productive interval of any other wellbore located in the Niobrara and Fort Hays Formations, and no closer than 300 feet from the productive interval of any other wellbore located in the Codell and Carlile Formations, unless the Director grants an exception.
ORDER
IT IS HEREBY ORDERED:
1. Order No. 421-19 is hereby vacated.
2. Order Nos. 535-564 and 421-61 are amended to include the Niobrara, Fort Hays, and Carlile Formations in the approximate 1,290-acre drilling and spacing unit previously established for the Application Lands for production from the Codell Formation, and approve a total of up to 14 horizontal wells for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations.
3. Order Nos. 535-564 and 421-61 are further amended to provide that the productive interval of the wellbore of any permitted well in the unit shall be located no closer than 300 feet from the boundaries of the proposed unit, no closer than 150 feet from the productive interval of any other wellbore located in the Niobrara and Fort Hays Formations, and no closer than 300 feet from the productive interval of any other wellbore located in the Codell and Carlile Formations, unless the Director grants an exception.
4. All wells approved under this Order shall be drilled from no more than four multi-well pads within the unit, or on lands adjacent to the unit with land owner approval.
5. CCRP, 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 6th day of August, 2019, as of July 31, 2019.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By___________________________________
Mimi C. Larsen, Secretary