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 NIOBRARA FORMATION, HEREFORD FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 421

 

DOCKET NO. 170100073

 

TYPE: SPACING

 

ORDER NO. 421-82

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on January 30, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to establish four approximate 1,280-acre drilling and spacing units for certain lands in Townships 12 and 11 North, Range 63 West, 6th P.M., maintain the existing 640-acre units for the production of the existing wells only until the date of first completion of the new horizontal well into the unit, and approve up to eight new horizontal wells in each proposed approximate 1,280-acre drilling and spacing unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Fifth Creek Energy Operating Company, LLC (“Fifth Creek” 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.         On February 22, 2010 (corrected January 19, 2012), the Commission entered Order No. 421-1 which, among other things, established 58 approximate 640-acre drilling and spacing units for certain lands in the Application Lands, and approved one horizontal well within each unit, for the development and operation of the Niobrara Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, without exception being granted by the Director. 

 

5.         On May 18, 2010, the Commission entered Order No. 421-2 which, among other things, approved up to two horizontal wells to be drilled from a common pad for the established 640-acre drilling and spacing unit for Section 36, Township 12 North, Range 63 West, 6th P.M. for the production of the oil and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, without exception being granted by the Director.

 

6.         On April 15, 2011, the Commission entered Order No. 421-8 which, among other things, approved up to three horizontal wells to be drilled from a common pad for the established 640-acre drilling and spacing unit for Section 36, Township 12 North, Range 63 West, 6th P.M. for the production of the oil and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, with no inter-well setback required, without exception being granted by the Director.

 

7.         On December 1, 2016, Fifth Creek, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to establish four approximate 1,280-acre drilling and spacing units for the below-described lands (“Application Lands”) and approve up to eight new horizontal wells in each proposed approximate 1,280-acre drilling and spacing unit, with the productive interval of the wellbore be located no closer than 300 feet from the boundaries of the unit and no closer than 150 feet from the productive interval of another well producing from the same source of supply within the unit, unless an exception is granted by the Director:

 

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

Section 33:      All

 

Township 11 North, Range 63 West, 6th P.M.

Section 4:        All

 

(“DSU #1”)

 

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

Section 34:      All

 

Township 11 North, Range 63 West, 6th P.M.

Section 3:        All

 

(“DSU #2”)

 

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

Section 35:      All

 

Township 11 North, Range 63 West, 6th P.M.

Section 2:        All

 

(“DSU #3”)

 

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

Section 36:      All

 

Township 11 North, Range 63 West, 6th P.M.

Section 1:        All

 

(“DSU #4”)

 

                                    8.         The records of the Commission reflect that two horizontal wells are currently producing from the Niobrara Formation in DSU #1 on the Application Lands, the Fox Creek 6-33H (API No. 05-123-31558), and the Critter Creek 3-04H (API No. 05-123-31973), operated by Applicant. Applicant requested that the 640-acre drilling and spacing units established by Order No. 421-1 be maintained for the production of oil, gas and associated hydrocarbons from the Niobrara Formation only until the date of first completion of the new horizontal well into the unit, at which time production from the Fox Creek 6-33H (API No. 05-123-31558) and the Critter Creek 3-04H (API No. 05-123-31973) shall be allocated to the proposed DSU #1.

 

                                    9.         The records of the Commission reflect that two horizontal wells are currently producing from the Niobrara Formation in DSU #2 on the Application Lands, the Elsie 7-34H (API No. 05-123-30631), and the Critter Creek 2-03H (API No. 05-123-31047) operated by Applicant.  Applicant requested that the 640-acre drilling and spacing units established by Order No. 421-1 be maintained for the production of oil, gas and associated hydrocarbons from the Niobrara Formation only until the date of first completion of the new horizontal well into the unit, at which time production from the Elsie 7-34H (API No. 05-123-30631) and the Critter Creek 2-03H (API No. 05-123-31047) shall be allocated to the proposed DSU #2.

 

                                    10.       The records of the Commission reflect that three horizontal wells are currently producing from the Niobrara Formation in DSU #3 on the Application Lands, the Fox Creek 1-35H (API No. 05-123-31385), Critter Creek 1-02 Well (API No. 05-123-31211) and the Critter Creek 29-02H (API No. 05-123-33687) operated by Applicant.  Applicant requested that the 640-acre drilling and spacing units established by Order No. 421-1 be maintained for the production of oil, gas and associated hydrocarbons from the Niobrara Formation only until the date of first completion of the new horizontal well into the unit, at which time production from the Fox Creek 1-35H (API No. 05-123-31385), Critter Creek 1-02 Well (API No. 05-123-31211) and the Critter Creek 29-02H (API No. 05-123-33687) shall be allocated to the proposed DSU #3.

 

                                    11.       The records of the Commission reflect that three horizontal wells are currently producing from the Niobrara Formation in DSU #4 on the Application Lands, the Longhorn B3-36H (API No. 05-123-30586), Longhorn B5-36H (API No. 05-123-31532), and the Jake 2-01H (API No. 05-123-30574), operated by Applicant.  Applicant requested that the 640-acre drilling and spacing unit established by Order No. 421-1 be maintained for the production of oil, gas and associated hydrocarbons from the Niobrara Formation only until the date of first completion of the new horizontal well into the unit, at which time production from the Longhorn B3-36H (API No. 05-123-30586), Longhorn B5-36H (API No. 05-123-31532) and the Jake 2-01H (API No. 05-123-30574) shall be allocated to the proposed DSU #4.

 

12.       On January 9, 2017, 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.

 

13.       Land testimony and exhibits submitted in support of the Application by P.M. Di Grappa, Land Manager for Fifth Creek, showed that both the mineral and surface interests in the Application Lands are owned in fee, and that Fifth Creek owns a partial undivided leasehold ownership interest in the Application Lands.

 

14.       Geoscience testimony and exhibits submitted in support of the Application by Benjamin Burke, Geologist for Fifth Creek, showed the Niobrara Formation is present and continuous throughout the Application Lands and ranges from approximately 220 to 260 feet thick.

 

15.       Engineering testimony and exhibits submitted in support of the Application by Salina Derichsweiler, Senior Reservoir Engineer for Fifth Creek, demonstrated that the estimated recovery factor for the Niobrara Formation is predicted at 434,000 barrels of oil per horizontal well with a drainage area of 121 acres, and that 300 foot setbacks in the 1,280-acre drilling and spacing units, with the requested number of wells, will promote efficient drainage, protect correlative rights, and prevent waste.

 

16.       Applicant stated that the wells will be drilled from no more than five well pads in each of the four proposed drilling and spacing units to be located within such unit or adjacent thereto, unless an exception is granted by the Director.

 

17.       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.

 

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

 

19.       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 establish four approximate 1,280-acre drilling and spacing units for certain lands in Townships 12 and 11 North, Range 63 West, 6th P.M., maintain the existing 640-acre units for the production of the existing wells only until the date of first completion of the new horizontal well into the unit, and approve up to eight new horizontal wells in each proposed approximate 1,280-acre drilling and spacing unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 1,280-acre drilling and spacing unit for the below-described lands is hereby established, and up to eight new horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

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

Section 33:      All

 

Township 11 North, Range 63 West, 6th P.M.

Section 4:        All

 

(“DSU #1”)

 

2.         The productive interval of the wellbore will be located no closer than 300 feet from the boundaries of the unit and no closer than 150 feet from the productive interval of another well producing from the same source of supply within the unit, unless an exception is granted by the Director.

 

3.         Two approximate 640-acre drilling and spacing units established by Order No. 421-1 for Section 33, Township 12 North, Range 63 West, 6th P.M. and Section 4, Township 11 North, Range 63 West, 6th P.M., are hereby maintained, for the existing production of oil, gas and associated hydrocarbons from the Niobrara Formation only until the date of first completion of the new horizontal well into the unit at which time production from the existing Fox Creek 6-33H Well (API No. 05-123-31558) and the Critter Creek 3-04H Well (API No. 05-123-31973) shall be allocated to the proposed DSU #1.

 

4.         An approximate 1280-acre drilling and spacing unit is hereby established for the below-described lands and up to eight new horizontal wells are approved within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

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

Section 34:      All

 

Township 11 North, Range 63 West, 6th P.M.

Section 3:        All

 

(“DSU #2”)

 

5.         The productive interval of the wellbore will be located no closer than 300 feet from the boundaries of the unit and no closer than 150 feet from the productive interval of another well producing from the same source of supply within the unit, unless an exception is granted by the Director.

 

6.         The two approximate 640-acre drilling and spacing units established by Order No. 421-1 for Section 34, Township 12 North, Range 63 West, 6th P.M. and for Section 3, Township 11 North, Range 63 West, 6th P.M., are hereby maintained, for the existing production of oil, gas and associated hydrocarbons from the Niobrara Formation only until the date of first completion of the new horizontal well into the unit at which time production from the Elsie 7-34H Well (API No. 05-123-30631) and the Critter Creek 2-03H Well (API No. 05-123-31047) shall be allocated to the proposed DSU #2.

 

7.         An approximate 1280-acre drilling and spacing unit is hereby established for the below-described lands and up to eight new horizontal wells are approved within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

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

Section 35:      All

 

Township 11 North, Range 63 West, 6th P.M.

Section 2:        All

 

(“DSU #3”)

 

8.         The productive interval of the wellbore will be located no closer than 300 feet from the boundaries of the unit and no closer than 150 feet from the productive interval of another well producing from the same source of supply within the unit, unless an exception is granted by the Director.

 

9.         The two approximate 640-acre drilling and spacing units established by Order No. 421-1 for Section 35, Township 12 North, Range 63 West, 6th P.M. and Section 2, Township 11 North, Range 63 West, 6th P.M., are hereby maintained, for the existing production of oil, gas and associated hydrocarbons from the Niobrara Formation only until the date of first completion of the new horizontal well into the unit at which time production from the Fox Creek 1-35H Well (API No. 05-123-31385), Critter Creek 1-02 Well (API No. 05-123-31211) and the Critter Creek 29-02H Well (API No. 05-123-33687) shall be allocated to the proposed DSU #3.

 

10.       An approximate 1280-acre drilling and spacing unit is hereby established for the below-described lands and up to eight new horizontal wells are hereby approved within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

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

Section 36:      All

 

Township 11 North, Range 63 West, 6th P.M.

Section 1:        All

 

(“DSU #4”)

 

11.       The productive interval of the wellbore will be located no closer than 300 feet from the boundaries of the unit and no closer than 150 feet from the productive interval of another well producing from the same source of supply within the unit, unless an exception is granted by the Director.

 

12.       The approximate 640-acre drilling and spacing unit established by Order No. 421-1 for Section 36, Township 12 North, Range 63 West, 6th P.M. and an approximate 640-acre drilling and spacing unit established by Order No. 421-8 for Section 1, Township 11 North, Range 63 West, 6th P.M., are hereby maintained, for the existing production of oil, gas and associated hydrocarbons from the Niobrara Formation only until the date of first completion of the new horizontal well into the unit at which time production from the Longhorn B3-36H Well (API No. 05-123-30586), Longhorn B5-36H Well (API No. 05-123-31532) and the Jake 2-01H Well (API No. 05-123-30574) shall be allocated to the proposed DSU #4.

 

13.       All new permitted wells shall be located on no more than five total wellpads, including existing wellpads, within each of the four proposed drilling and spacing units, unless an exception is 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 14th day of February, 2017, as of January 30, 2017.

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

By ____________________________________      

Julie Murphy, Secretary