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 NIOBRARA FORMATION, HEREFORD FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 421
DOCKET NO. 170100074
TYPE: SPACING
ORDER NO. 421-83 |
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 vacate four approximate 1,280-acre exploratory drilling and spacing units established by Order Nos. 421-1, 421-12, 421-24, 421-27, 421-31 and 421-32, establish six approximate 1,280-acre drilling and spacing units for Sections 31 and 32, Township 12 North, Range 62 West, 6th P.M., and Sections 5, 6, 7, 8, 17, 18, 19, 20, 29 and 30, Township 11 North, Range 62 West, 6th P.M., and approve up to eight new horizontal wells within 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 on the Application Lands, and approved one horizontal well within each unit, for the production of oil, gas 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.
5. On October 31, 2011, the Commission entered Order No. 421-12 which, among other things, established an approximate 640-acre drilling and spacing unit for Section 7, Township 11 North, Range 62 West, 6th P.M., and authorized three additional horizontal wells, for a total of up to four horizontal wells, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the permitted wells to be located no closer than 600 feet from the boundaries of the unit, but with no interwell setback within the unit. Section 7, Township 11 North, Range 62 West, 6th P.M. of DSU #3 is subject to Order No. 421-12.
6. On January 7, 2013, the Commission entered Order No. 421-24 which, among other things, vacated two approximate 640-acre drilling and spacing units established by Order 421-1 for Sections 5 and 8, Township 11 North, Range 62 West, 6th P.M., and established one approximate 1280-acre stand-up exploratory drilling and spacing unit for Sections 5 and 8, Township 11 North, Range 62 West, 6th P.M., approving up to ten wells within the unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the bottomhole locations not less than 600 feet from the boundary of the proposed drilling 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. Section 5, Township 11 North, Range 62 West, 6th P.M. of DSU #2 and Section 8, Township 11 North, Range 62 West, 6th P.M. of DSU #4 are subject to Order No. 421-24.
7. On January 7, 2013, the Commission entered Order No. 421-27 which, among other things, vacated two approximate 640-acre drilling and spacing units established by Order 421-1 for Sections 17 and 20, Township 11 North, Range 62 West, 6th P.M., and established one approximate 1280-acre stand-up exploratory drilling and spacing unit for Sections 17 and 20, Township 11 North, Range 62 West, 6th P.M., approving up to ten wells within the unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the bottomhole locations not less than 600 feet from the boundary of the proposed drilling 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. Section 17, Township 11 North, Range 62 West, 6th P.M. of DSU #4 and Section 20, Township 11 North, Range 62 West, 6th P.M. of DSU #6 are subject to Order No. 421-27.
8. On January 7, 2013, the Commission entered Order No. 421-31 which, among other things, maintained two approximate 640-acre drilling and spacing units established by Order Nos. 421-1 and 421-3 for Sections 29 and 32, Township 11 North, Range 62 West, 6th P.M., for the Garden Creek #21-32H Well, and established one approximate 1280-acre stand-up exploratory drilling and spacing unit for Sections 29 and 32, Township 11 North, Range 62 West, 6th P.M., approving up to ten wells within the unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the bottomhole locations not less than 600 feet from the boundary of the proposed drilling 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. Section 29, Township 11 North, Range 62 West, 6th P.M. of DSU #6 is subject to Order No. 421-31.
9. On January 7, 2013, the Commission entered Order No. 421-32 which, among other things, vacated two approximate 640-acre drilling and spacing units established by Order Nos. 421-1 and 421-3 for Sections 30 and 31, Township 11 North, Range 62 West, 6th P.M., and established one approximate 1280-acre stand-up exploratory drilling and spacing unit for Sections 30 and 31, Township 11 North, Range 62 West, 6th P.M., approving up to ten wells within the unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the bottomhole locations not less than 600 feet from the boundary of the proposed drilling 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. Section 30, Township 11 North, Range 62 West, 6th P.M. in DSU #5 is subject to Order No. 421-32.
10. 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 vacate four approximate 1,280-acre exploratory drilling and spacing units established by Order Nos. 421-24, 421-27, 421-31 and 421-32, and establish six approximate 1,280-acre drilling and spacing units for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, and approve up to eight new horizontal wells within each proposed approximate 1,280-acre drilling and spacing unit, with the productive interval of the wellbore to 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 62 West, 6th P.M.
Section 31: All
Township 11 North, Range 62 West, 6th P.M.
Section 6: All
(“DSU #1”)
Township 12 North, Range 62 West, 6th P.M.
Section 32: All
Township 11 North, Range 62 West, 6th P.M.
Section 5: All
(“DSU #2”)
Township 11 North, Range 62 West, 6th P.M.
Section 7: All
Section 18: All
(“DSU #3”)
Township 11 North, Range 62 West, 6th P.M.
Section 8: All
Section 17: All
(“DSU #4”)
Township 11 North, Range 62 West, 6th P.M.
Section 19: All
Section 30: All
(“DSU #5”)
Township 11 North, Range 62 West, 6th P.M.
Section 20: All
Section 29: All
(“DSU #6”)
11. 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 Elmer #8-31H (API No. 05-123-30584) and the Garden Creek #2-06H well (API No. 05-123-31264), operated by Applicant. Applicant requests that the approximate 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 Elmer #8-31H well (API No. 05-123-30584) and the Garden Creek #2-06H well (API No. 05-123-31264) shall be allocated to the proposed DSU #1.
12. The records of the Commission reflect that one horizontal well is currently producing from the Niobrara Formation in DSU #2 on the Application Lands, the Randall Creek #04-32H well (API No. 05-123-31233), operated by Applicant. Applicant requests 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 Randall Creek #04-32H well (API No. 05-123-31233) shall be allocated to the proposed DSU #2.
13. 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 Garden Creek 28-07H well (API No. 05-123-34655), Garden Creek 4-07H well (API No. 05-123-32501), and the Garden Creek 11-18H well (API No. 05-123-31331), operated by Applicant. Applicant requests that the 640-acre drilling and spacing units established by Orders No. 421-1 and 421-12 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 Garden Creek 28-07H well (API No. 05-123-34655), the Garden Creek 4-07H well (API No. 05-123-32501), and the Garden Creek 11-18H well (API No. 05-123-31331) shall be allocated to the proposed DSU #3.
14. The records of the Commission reflect that one horizontal well is currently producing from the Niobrara Formation in DSU #5 on the Application Lands, the Garden Creek 12-19H well (API No. 05-123-32856), operated by Applicant. Applicant requests 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 Garden Creek 12-19H well (API No. 05-123-32856) shall be allocated to the proposed DSU #5.
15. 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.
16. Land testimony and exhibits submitted in support of the Application by Tricia 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.
17. Geoscience testimony and exhibits submitted in support of the Application by Benjamin Burke, Geologist for Fifth Creek, showed the Niobrara Formation is present throughout the Application Lands and ranges from approximately 240 to 260 feet thick.
18. 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 for 300 foot setbacks, and that 300 foot setbacks in the approximate 1,280-acre drilling and spacing units, with the requested number of wells, will promote efficient drainage, protect correlative rights, and prevent waste.
19. Applicant stated that the wells will be drilled from no more than five well pads in each of the six proposed drilling and spacing units to be located within such unit or adjacent thereto, unless an exception is granted by the Director.
20. 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.
21. Fifth Creek agreed to be bound by oral order of the Commission.
22. 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 vacate four approximate 1,280-acre exploratory drilling and spacing units established by Order Nos. 421-24, 421-27, 421-31 and 421-32, establish six approximate 1,280-acre drilling and spacing units for Sections 31 and 32, Township 12 North, Range 62 West, 6th P.M., and Sections 5, 6, 7, 8, 17, 18, 19, 20, 29 and 30, Township 11 North, Range 62 West, 6th P.M., and approve up to eight new horizontal wells within 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 62 West, 6th P.M.
Section 31: All
Township 11 North, Range 62 West, 6th P.M.
Section 6: 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 31, Township 12 North, Range 62 West, 6th P.M. and Section 6, Township 11 North, Range 62 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 Elmer #8-31H Well (API No. 05-123-30584) and the Garden Creek #2-06H Well (API No. 05-123-31264) shall be allocated to the proposed DSU #1.
4. The approximate 1280-acre exploratory drilling and spacing unit established for Sections 5 and 8, Township 11 North, Range 62 West, 6th P.M. by Order No. 421-24 is hereby vacated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
5. 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 62 West, 6th P.M.
Section 32: All
Township 11 North, Range 62 West, 6th P.M.
Section 5: All
(“DSU #2”)
6. 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.
7. One approximate 640-acre drilling and spacing unit established by Order No. 421-1 for Section 32, Township 12 North, Range 62 West, 6th P.M. is 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 Randall Creek #04-32H Well (API No. 05-123-31233) shall be allocated to the proposed DSU #2.
8. 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 is hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:
Township 11 North, Range 62 West, 6th P.M.
Section 7: All
Section 18: All
(“DSU #3”)
9. 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.
10. Two approximate 640-acre drilling and spacing units established by Order No. 421-1 for Sections 7 and 18, Township 11 North, Range 62 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 Garden Creek 28-07H Well (API No. 05-123-34655), the Garden Creek 4-07H Well (API No. 05-123-32501), and the Garden Creek 11-18H Well (API No. 05-123-31331) shall be allocated to the proposed DSU #3.
11. The approximate 1280-acre exploratory drilling and spacing unit established for Sections 17 and 20, Township 11 North, Range 62 West, 6th P.M. by Order No. 421-27 is hereby vacated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
12. 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 11 North, Range 62 West, 6th P.M.
Section 8: All
Section 17: All
(“DSU #4”)
13. 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.
14. The approximate 1280-acre exploratory drilling and spacing unit established for Sections 30 and 31, Township 11 North, Range 62 West, 6th P.M. by Order No. 421-32 is hereby vacated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
15. 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 11 North, Range 62 West, 6th P.M.
Section 19: All
Section 30: All
(“DSU #5”)
16. 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.
17. The approximate 640-acre drilling and spacing unit established by Order No. 421-1 for Section 19, Township 11 North, Range 62 West, 6th P.M. is 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 Garden Creek 12-19H well (API No. 05-123-32856) shall be allocated to the proposed DSU #5.
18. The approximate 1280-acre exploratory drilling and spacing unit established by Order No. 421-31 is hereby vacated, for Sections 29 and 32, Township 11 North, Range 62 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
19. 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 11 North, Range 62 West, 6th P.M.
Section 20: All
Section 29: All
(“DSU #6”)
20. 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.
21. All new permitted wells shall be located on no more than five total wellpads, including existing wellpads, within each of the six proposed drilling and spacing units, unless an exception is granted by the Director.
22. Sections 31 and 32, Township 11 North, Range 62 West, 6th P.M. shall be deemed unspaced lands, and shall revert to Rule 318.a.
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