BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

IN THE MATTER OF 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. 161000427

 

TYPE: EXCEPTION LOCATION

 

ORDER NO. 421-77

 

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on December 13, 2016, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to modify Order Nos. 421-57 and 421-64, and allow the productive interval of any permitted well to be located no closer than 300 feet from the unit boundaries of three approximate 1280-acre drilling and spacing units established for Sections 22 and 27, Township 12 North, Range 63 West, 6th P.M., Sections 23 and 26, Township 12 North, Range 63 West, 6th P.M., and Sections 24 and 25, Township 12 North, Range 63 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Fifth Creek Energy Operating Company, LLC (Operator No. 10629) (“Fifth Creek” 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 Commission Rules provides a well to be drilled 2,500 feet or greater shall be located not less than 600 feet from any lease line, and shall be located not less than 1,200 feet from any other producible oil or gas well when drilling to the same common source of supply, unless authorized by the Commission upon hearing.

 

5.         On January 26, 2015, the Commission entered into Order No. 421-57, which was amended and corrected on April 13, 2015. Order No. 421-57, among other things, established eleven (11) approximate 1,280-acre drilling and spacing units for certain lands, and approved one (1) horizontal well within each unit, for the development and operation of the Codell Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore producing from the same source of supply within the unit, without exception being granted by the Director.  Sections 22, 23, 24, 25, 26, and 27, Township 12 North, Range 63 West, 6th P.M., are subject to this Order for the Codell Formation.

 

6.         On July 20, 2015, the Commission entered Order No. 421-64 which, among other things, modified portions of Order No. 421-57 to allow for up to six (6) horizontal wells within each drilling and spacing unit, for the development and operation of the Codell Formation, with the productive interval of the wellbore to be located no closer than 460 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore producing from the same source of supply within the unit, without exception being granted by the Director.  Sections 22, 23, 24, 25, 26, and 27, Township 12 North, Range 63 West, 6th P.M., are subject to this Order for the Codell Formation.

 

7.         On August 25, 2016, amended September 21, 2016, Fifth Creek, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order modifying Order Nos. 421-57 and 421-64 to allow the productive interval of any permitted well to be located no closer than 300 feet from the unit boundaries of three approximate 1280-acre drilling and spacing units established for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Codell Formation, without an exception being granted by the Director:

 

Drilling and Spacing Unit No. 1

 

Township 12 North, Range 63 West, 6th P.M.

Section 22:      All portions lying within the State of Colorado

Section 27:      All

 

Drilling and Spacing Unit No. 2

 

Township 12 North, Range 63 West, 6th P.M.

Section 23:      All portions lying within the State of Colorado

Section 26:      All

 

Drilling and Spacing Unit No. 3

 

Township 12 North, Range 63 West, 6th P.M.

Section 24:      All portions lying within the State of Colorado

Section 25:      All

 

8.         On September 30, 2016, Fifth Creek, 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.

 

9.         Land testimony and exhibits submitted in support of the Application by P. M. Di Grappa, Land Manager for Fifth Creek, showed that Fifth Creek holds oil and gas leasehold interests and has a right to drill in the Application Lands.

 

10.       Geologic testimony and exhibits submitted in support of the Application by Benjamin C. Burke, Geologist for Fifth Creek, showed the Codell Formation is present throughout the Application Lands, is approximately 20 to 25 feet thick, and is generally of uniform thickness throughout the Application Lands.

 

11.       Engineering testimony and exhibits submitted in support of the Application by Salina J. Derichsweiler, Senior Reservoir Engineer for Fifth Creek, demonstrated that the estimated drainage area of analogue horizontal wells in the Codell Formation is 175 acres, and that the requested setbacks of 300 feet from the unit boundaries of the Application Lands will promote efficient drainage, protect correlative rights, and prevent waste.

 

12.       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.

 

13.       Fifth Creek agreed to be bound by oral order of the Commission. 

 

14.       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 modify Order Nos. 421-57 and 421-64 and allow the productive interval of any permitted well to be located no closer than 300 feet from the unit boundaries of three approximate 1280-acre drilling and spacing units established for the unit boundaries of three approximate 1280-acre drilling and spacing units established for Sections 22 and 27, Township 12 North, Range 63 West, 6th P.M., Sections 23 and 26, Township 12 North, Range 63 West, 6th P.M., and Sections 24 and 25, Township 12 North, Range 63 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Order Nos. 421-57 and 421-64 are hereby modified to allow the productive interval of any permitted well to be located no closer than 300 feet from the unit boundaries of three approximate 1280-acre drilling and spacing units established for the below-described lands, unless the Director grants an exception, for the production of the oil, gas, and associated hydrocarbons from the Codell Formation:

 

Drilling and Spacing Unit No. 1

 

Township 12 North, Range 63 West, 6th P.M.

Section 22:      All portions lying within the State of Colorado

Section 27:      All

 

Drilling and Spacing Unit No. 2

 

Township 12 North, Range 63 West, 6th P.M.

Section 23:      All portions lying within the State of Colorado

Section 26:      All

 

Drilling and Spacing Unit No. 3

 

Township 12 North, Range 63 West, 6th P.M.

Section 24:      All portions lying within the State of Colorado

Section 25:      All

 

2.         The wells shall be located no closer than 150 feet from the treated interval of another well producing from the same formation, 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 20th day of December, 2016, as of December 12, 2016.

           

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By: ____________________________________     

Julie Murphy, Secretary