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 OPERATIONS FOR THE CODELL AND NIOBRARA FORMATIONS, HEREFORD FIELD, WELD COUNTY, COLORADO

 

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CAUSE NO.  421

 

DOCKET NO. 150700340

 

ORDER NO. 421-70

 

TYPE:  ADDITIONAL WELLS

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on September 14, 2015, at the Western State Colorado University, University Center, South Ballroom, 600 North Adams Street, Gunnison, Colorado, upon application for an order to: 1) approve an additional five horizontal wells, for a total of seven horizontal wells, within an approximate 1,302.07-acre drilling and spacing unit established for Sections 14, 23, and 26, Township 12 North, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) approve an additional two horizontal wells, for a total of six horizontal wells, within an approximate 1,302.08-acre drilling and spacing unit established for Sections 14, 23, and 26, Township 12 North, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell Formation.

FINDINGS

 

The Commission finds as follows:

1.            Anadarko E&P Onshore LLC (Operator No. 2800) (“Anadarko” 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.

 

5.            On December 15, 2014 (Amended May 19, 2015), Order No. 421-46 established an approximate 1,302.08-acre drilling and spacing unit for the Application Lands, for the production of oil, gas and associated hydrocarbons from the Codell Formation, and approved up to four horizontal wells within the unit.

 

6.            On December 15, 2014, Order No. 421-53 established an approximate 1,302.07-acre drilling and spacing units for the Application Lands, for production of oil, gas and associated hydrocarbons from the Niobrara Formation, and approved up to two horizontal wells within the unit. 

 

7.            On April 9, 2015, Anadarko, by its attorneys, filed with the Commission a verified application (“Application”) for an order to: 1) amend Order No. 421-46 to include Section 14 (Lots 1-4), Township 12 North, Range 64 West, 6th P.M.; 2) authorize an additional two horizontal wells, for a total of six horizontal wells, in an approximate 1,302.08-acre drilling and spacing unit for the below described lands (“Application Lands”), for the production of oil, gas, and associated hydrocarbons from the Codell Formation; 3) require the productive interval of any wellbore drilled for the Codell Formation to be located not less 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 productive interval of the wellbore no closer than 300 feet from the unit boundary, and not less than 150 feet from the treated interval of any well from the Codell Formation, without exception being granted by the Director; 4) authorize an additional five horizontal wells, for a total of seven horizontal wells, in an approximate 1,302.07-acre drilling and spacing unit for the Application lands, for the production oil, gas, and associated hydrocarbons from the Niobrara Formation, and 5) require the productive interval of the wellbore to be located not less than 600 feet from the unit boundaries, and not less than 150 feet from the treated interval of any well from the Niobrara Formation, without exception being granted by the Director:

Township 12 North, Range 64 West, 6th P.M.

Section 14:      Lots 1-4 (lying and being within the State of Colorado)

Section 23:      All

Section 26:      All

 

8.            On June 4, 2015, Anadarko agreed to withdraw its request to amend Order No. 421-46 to include Section 14 (Lots 1-4), Township 12 North, Range 64 West, 6th P.M.

9.            Applicant states that any horizontal well to be drilled under this Application will be drilled from 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 June 29, 2015, Anadarko, 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.          On July 6, 2015, Extraction Oil & Gas, LLC filed a Protest of Application.  On August 6, 2015, Extraction Oil & Gas, LLC withdrew its Protest of Application.

12.          On September 2, 2015, Anadarko, by its attorneys, and the Bureau of Land Management (BLM) agreed that the Application Lands contain federal minerals.  As such, Anadarko agreed to submit a Communitization Agreement to the BLM for any existing wells within 60 days of the entry of an order.  Anadarko also agreed to submit a Communitization Agreement to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission’s Rules) from the initial well drilled within the drilling and spacing unit for the Application Lands.

13.          Land testimony and exhibits submitted in support of the Application by Jason Rayburn, Senior Landman for Anadarko, showed that Anadarko owns substantial leasehold interests in the Application Lands.

14.          An affidavit signed by Thomas A. Berkman, Senior Project Advisor for Anadarko, requested that the Commission take administrative notice of the geologic testimony and exhibits on file with the Commission for Order Numbers 535-667 covering lands adjacent to the lands that are the subject of this Application.  Geologic testimony and exhibits submitted in support of the application for Order Number 535-667 showed that the Codell and Niobrara Formations underlie the entirety of the Application Lands.  The Codell Formation ranges from approximately 17 to 19 feet thick, and the Niobrara Formation ranges from 136 to 137 feet thick. 

15.          An affidavit signed by Emily Boeking, Reservoir Engineer for Anadarko, requested that the Commission take administrative notice of the engineering testimony and exhibits on file with the Commission for Order Numbers 535-667 covering lands adjacent to the lands that are the subject of this Application.  Engineering testimony and exhibits submitted in support of the application for Order Number 535-667 showed that the estimated drainage area for analog wells for the Codell Formation ranges from 94 acres to 286 acres, with an average estimated drainage area of 163 acres per well, and an approximate 1,302-acre drilling and spacing unit would accommodate the drilling of an additional five horizontal wells, for a total of six horizontal wells, for the Codell Formation.  The estimated drainage area for analog wells for the Niobrara Formation ranges from 29 acres to 130 acres, with an average estimated drainage area of 69 acres per well, the estimated drainage area calculated using the Joshi method is 137 acres, and an approximate 1,302-acre drilling and spacing unit would accommodate the drilling of seven horizontal wells for the Niobrara 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.          Anadarko agreed to be bound by oral order of the Commission. 

18.          Based on the facts stated in the verified Application, the protest having been resolved, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order to: 1) approve an additional five horizontal wells, for a total of seven horizontal wells, within an approximate 1,302.07-acre drilling and spacing unit established for Sections 14, 23, and 26, Township 12 North, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; and 2) approve an additional two horizontal wells, for a total of six horizontal wells, in an approximate 1,302.08-acre drilling and spacing unit established for Sections 14, 23, and 26, Township 12 North, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell Formation.

ORDER

IT IS HEREBY ORDERED:

1.            An additional five horizontal wells, for a total of seven horizontal wells, in an approximate 1302.07-acre drilling and spacing unit for the below-described lands, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

 

Township 12 North, Range 64 West, 6th P.M.

Section 14:      Lots 1-4 (lying and being within the State of Colorado)

Section 23:      All

Section 26:      All

 

2.            The productive interval of any well drilled for the Niobrara Formation shall be located not less than 600 feet from the unit boundaries, and not less than 150 feet from the treated interval of any well drilled in the Niobrara Formation, unless an exception is granted by the Director.

3.            An additional two horizontal wells, for a total of six horizontal wells, in an approximate 1,302.08-acre drilling and spacing unit for the below–described lands, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell Formation:

 

Township 12 North, Range 64 West, 6th P.M.

Section 14:      Lots 1-4 (lying and being within the State of Colorado)

Section 23:      All

Section 26:      All

 

4.            The productive interval of any wellbore drilled for the Codell Formation shall be located not less 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 productive interval of the wellbore no closer than 300 feet from the unit boundary, and not less than 150 feet from the treated interval of any well from the Codell Formation, unless an exception is granted by the Director.

5.            A maximum of eight surface locations will be allowed for development of minerals from all hydrocarbon-bearing formations within the spacing unit.

6.            Anadarko shall submit a Communitization Agreement to the BLM for any existing wells within 60 days of the entry of this Order.  Anadarko shall submit a Communitization Agreement to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission’s Rules) from the initial well drilled within the drilling and spacing units for the above described lands.

IT IS FURTHER ORDERED:

1.            The provisions contained in the above order shall become effective immediately.

2.            The Commission expressly reserves the 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 21st day of September, 2015, as of September 14, 2015.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By                                                                                          

            Julie Murphy, Secretary