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 CODELL FORMATION, HEREFORD FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 421
DOCKET NO. 1412-SP-2200
ORDER NO. 421-59 |
REPORT OF THE COMMISSION
The Commission heard this matter on April 13, 2015, at the offices of the Colorado Oil and Gas Conservation, 1120 Lincoln St., Suite 801, Denver, CO 80203, upon application for an order to establish an approximate 1280-acre drilling and spacing unit, for Section 5, Township 11 North, Range 63 West, 6th P.M., and Section 32, Township 12 North, Range 63 West, 6th P.M., and approve up to four horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Codell Formation.
FINDINGS
The Commission finds as follows:
1. Extraction Oil & Gas, LLC (“Extraction” 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. 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 5, Township 11 North, Range 63 West, 6th P.M., and Section 32, Township 12 North, Range 63 West, 6th P.M are subject to this Rule for the Codell Formation.
5. On October 16, 2014 (Amended November 14, 2014), Extraction, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to four horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the productive interval of any other wellbore located in the unit and no closer than 300 feet from the unit boundaries, unless such boundary abuts or corners lands for which the Commission has not at the time of the drilling permit application granted the right to locate the treated interval of the wellbore no closer than 300 feet from a unit boundary, without exception being granted by the Director. If the Commission has not at the time of the drilling permit application granted to owners of adjacent or cornering lands the right to locate the treated interval of the wellbore no closer than 300 feet from a unit boundary, then the treated interval of the wellbore shall be located no closer than the distance permitted in the adjacent or cornering lands:
Township 11 North, Range 63 West, 6th P.M.
Section 5: All
Township 12 North, Range 63 West, 6th P.M.
Section 32: All
6. On October 16, 2014, EOG Resources, Inc. (“EOG”) filed an application in Docket No. 1412-SP-2201 for an order establishing an approximate 1280-acre drilling and spacing unit for the Application Lands, for the production of oil, gas, and associated hydrocarbons from the Codell Formation.
7. On December 1, 2014, Extraction filed a protest to EOG’s application in Docket No. 1412-SP-2201 alleging that EOG’s spacing request for the Applications Lands would cause waste, adversely affect correlative rights and prevent the greatest ultimate recovery of oil, gas and associated hydrocarbons from the reservoirs and would prevent Extraction from fully developing its leasehold interest and injure Extraction’s correlative rights.
8. On December 1, 2014, EOG filed a protest to the Application alleging that Extraction’s spacing request would interfere with EOG’s development plans to promote the prevention of waste and inhibit EOG’s ability to realize economies of scale garnered from utilizing existing infrastructure used in EOG’s field-wide development plans.
9. On December 1, 2014, the Commission continued the Application to the January 26, 2015 hearing. The Application was again continued on January 15, 2015, and February 9, 2015, to the March and April hearings, respectively.
10. On or about March 23, 2015, Extraction and EOG reached an agreement resolving the parties’ respective protests.
11. On March 31, 2015, EOG and Extraction filed a joint motion withdrawing EOG’s protest in this Docket No. 1412-SP-2200 and Extraction’s protest in Docket No. 1412-SP-2201.
12. On November 24, 2014 (Updated January 5, 2015), Extraction, 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.
13. Land testimony and exhibits submitted in support of the Application by Allyson Vistica, Land Manager for Extraction, showed Extraction as the owner of a leasehold interest in the Application Lands.
14. Geologic testimony and exhibits submitted in support of the Application by Matt Volkmar, Petroleum Engineer for Extraction, included an analysis of the Codell Formation structure; an isopach map showing the gross thickness of the Codell Formation across the Application Lands; and a type cross section of several wells in the vicinity of the Application Lands. The testimony showed that the Codell Formation is present throughout the Application Lands, is approximately 18 to 24 feet feet thick, and is generally of uniform thickness throughout the Application Lands.
15. Engineering testimony and exhibits submitted in support of the Application by John Tonello, Engineering Manager for Extraction, showed that the drainage area for analog horizontal Codell Formation wells are estimated at approximately 319 acres, and an appropriate 1280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Codell Formation.
16. 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.
17. Extraction agreed to be bound by oral order of the Commission.
18. Based on the facts stated in the verified Application, EOG’s protest having been resolved, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to establish an approximate 1280-acre drilling and spacing unit, for Section 5, Township 11 North, Range 63 West, 6th P.M., and Section 32, Township 12 North, Range 63 West, 6th P.M., and approve up to four horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Codell Formation.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 1280-acre drilling and spacing unit for the below described lands, is hereby established, and a total of up to four horizontal wells, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell Formation:
Township 11 North, Range 63 West, 6th P.M.
Section 5: All
Township 12 North, Range 63 West, 6th P.M.
Section 32: All
2. The treated interval of the wellbore shall be no closer than 600 feet from the treated interval of any other wellbore producing from the Codell Formation, and no closer than 300 feet from a unit boundary unless such boundary abuts or corners lands for which the Commission has not at the time of the drilling permit application granted the right to locate the treated interval of the wellbore no closer than 300 feet from a unit boundary, without exception being granted by the Director. If the Commission has not at the time of the drilling permit application granted to owners of adjacent or cornering lands the right to locate the treated interval of the wellbore no closer than 300 feet from a unit boundary, then the treated interval of the wellbore shall be located no closer than the distance permitted in the adjacent or cornering lands, without exception being granted by the Director.
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 30th day of April, 2015, as of April 13, 2015
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Julie Murphy, Secretary