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. 170100075

 

TYPE: SPACING

 

ORDER NO. 421-84

AMENDED

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on January 30, 2017 and March 20, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, and The Larimer County Conference Center at The Ranch, First National Bank Building, 5280 Arena Circle, Loveland, Colorado, upon application for an order to maintain 12 approximate 640-acre drilling and spacing units established by Order No. 421-1, establish six approximate 1,280-acre drilling and spacing units for Sections 23 and 26, and 24 and 25, Township 12 North, Range 63 West, 6th P.M., and Sections 19 and 30, 20 and 29, 21 and 28, and 22 and 27, Township 12 North, Range 62 West, 6th P.M., 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 into Order No. 421-1 which, among other things, established 58 approximate 640-acre drilling and spacing units for certain lands, including DSU #1, DSU #2, DSU, #3, DSU #4, DSU #5, and DSU #6 on 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 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: 1) modify 12 approximate 640-acre drilling and spacing units established by Order No. 421-1 for Sections 19, 20, 21, 22, 27, 28, 29, 30, Township 12 North, Range 62 West, 6th P.M. and Sections 23, 24, 25, and 26, Township 12 North, Range 63 West, 6th P.M.; 2) establish six approximate 1,280-acre drilling and spacing units for Sections 23 and 26, and 24 and 25, Township 12 North, Range 63 West, 6th P.M., and Sections 19 and 30, 20 and 29, 21 and 28, and 22 and 27, Township 12 North, Range 62 West, 6th P.M.; 3) 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, 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 62 West, 6th P.M.

Section 19:      All  (All portions of this section within the State of Colorado)

Section 30:      All

 

(“DSU #1”)

 

Township 12 North, Range 62 West, 6th P.M.

Section 20:      All  (All portions of this section within the State of Colorado)

Section 29:      All

 

(“DSU #2”)

 

Township 12 North, Range 62 West, 6th P.M.

Section 21:      All  (All portions of this section within the State of Colorado)

Section 28:      All

 

(“DSU #3”)

 

Township 12 North, Range 62 West, 6th P.M.

Section 22:      All  (All portions of this section within the State of Colorado)

Section 27:      All

 

(“DSU #4”)

 

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

Section 23:      All  (All portions of this section within the State of Colorado)

Section 26:      All

 

(“DSU #5”)

 

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

Section 24:      All  (All portions of this section within the State of Colorado)

Section 25:      All

 

(“DSU #6”)

 

                     6.         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 Randall Creek 6-19H well (API No. 05-123-31925) and the Randall Creek 03-30H well (API No. 05-123-31339) operated by Applicant.  Applicant requests that the approximate 640-acre drilling and spacing units established by Order No. 421-1 be 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 6-19H well (API No. 05-123-31925) and the Randall Creek 03-30H well (API No. 05-123-31339) shall be allocated to the proposed DSU #1.

 

                     7.         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 02-29H well (API No. 05-123-31333), operated by Applicant.  Applicant requests that the approximate 640-acre drilling and spacing unit established by Order No. 421-1 be 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 02-29H well (API No. 05-123-31333) shall be allocated to the proposed DSU #2.

 

                     8.         The records of the Commission reflect that two horizontal wells are currently producing from the Niobrara Formation in DSU #3 on the Application Lands, the Randall Creek 6-21H well (API No. 05-123-33686), and the Randall Creek 1-28H well (API No. 05-123-31357), operated by Applicant.  Applicant requests that the approximate 640-acre drilling and spacing units established by Order No. 421-1 be 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 6-21H well (API No. 05-123-33686), and the Randall Creek 1-28H well (API No. 05-123-31357) shall be allocated to the proposed DSU #3.

 

                     9.         The records of the Commission reflect that one horizontal well is currently producing from the Niobrara Formation in DSU #4 on the Application Lands, the Randall Creek 13-27H (API No. 05-123-33962), operated by Applicant.  Applicant requests that the approximate 640-acre drilling and spacing unit established by Order No. 421-1 be 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 13-27H (API No. 05-123-33962) well shall be allocated to the proposed DSU #4.

 

                     10.       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 Fox Creek 03-26H well (API No. 05-123-31417), operated by Applicant. Applicant requests that the approximate 640-acre drilling and spacing unit established by Order No. 421-1 be 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 03-26H well (API No. 05-123-31417) shall be allocated to the proposed DSU #5.

 

                     11.       The records of the Commission reflect that one horizontal well is currently producing from the Niobrara Formation in DSU #6 on the Application Lands, the Fox Creek 2-25H well (API No. 05-123-31400), operated by Applicant.  Applicant requests that the approximate 640-acre drilling and spacing unit established by Order No. 421-1 be 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 2-25H well (API No. 05-123-31400) shall be allocated to the proposed DSU #6.

 

 

 

 

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.       On January 17, 2017, Ivy Energy (“Ivy” or “Protestant”), by its attorney, filed a protest to the Application, alleging that the Application would violate the correlative rights of Protestant in Section 30, Township 12 North, Range 62 West, 6th P.M. in DSU #1.

 

14.       On January 18, 2017, Fifth Creek, by its attorneys, requested to bifurcate DSU #1 from the remainder of the Application and maintain the remaining proposed units on the consent agenda.  Staff granted the request to bifurcate the matter. Fifth Creek’s request to create DSU #1 was continued to the March 20, 2017 hearing.

 

15.       On March 15, 2017, Ivy withdrew its protest to the Application.

 

16.       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 in DSU #2 through DSU #6.

 

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 in DSU #2 through DSU #6 and ranges from approximately 230 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 five 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 a total of five well pads within each of the five remaining 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 maintain 10 approximate 640-acre drilling and spacing units established by Order No. 421-1, establish five six approximate 1,280-acre drilling and spacing units for Sections 23 and 26, and 24 and 25, Township 12 North, Range 63 West, 6th P.M., and Sections 19 and 30, 20 and 29, 21 and 28, and 22 and 27, Township 12 North, Range 62 West, 6th P.M., 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 1280-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 19:     All (All portions of this section within the State of Colorado)

Section 30:     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.            The approximate 640-acre drilling and spacing units established by Order No. 421-1 for Sections 19 and 30, 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 6-19H well (API No. 05-123-31925) and the Randall Creek 03-30H well (API No. 05-123-31339) shall be allocated to the proposed DSU #1

 

4.            An approximate 1280-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 20:      All        (All portions of this section within the State of Colorado)

Section 29:      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 approximate 640-acre drilling and spacing unit established by Order No. 421-1 for Section 29, 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 02-29H Well (API No. 05-123-31333) shall be allocated to the proposed DSU #2

 

7.            An approximate 1280-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 21:      All        (All portions of this section within the State of Colorado)

Section 28:      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 approximate 640-acre drilling and spacing units established by Order No. 421-1 for Sections 21 and 28, Township 12 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 Randall Creek 6-21H Well (API No. 05-123-33686), and the Randall Creek 1-28H Well (API No. 05-123-31357) shall be allocated to the proposed DSU #3. 

 

10.          An approximate 1280-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 22:      All        (All portions of this section within the State of Colorado)

Section 27:      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 27, 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 13-27H Well (API No. 05-123-33962) shall be allocated to the proposed DSU #4. 

 

13.          An approximate 1280-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 23:      All        (All portions of this section within the State of Colorado)

Section 26:      All

 

(“DSU #5”)

 

14.          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.

 

15.          The approximate 640-acre drilling and spacing unit established by Order No. 421-1 for Section 26, 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 Fox Creek 03-26H Well (API No. 05-123-31417) shall be allocated to the proposed DSU #5

 

16.          An approximate 1280-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 24:      All        (All portions of this section within the State of Colorado)

Section 25:      All

 

(“DSU #6”)

 

17.          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.

 

18.          The approximate 640-acre drilling and spacing unit established by Order No. 421-1 for Section 25, Township 12 North, Range 63 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 Fox Creek 2-25H Well (API No. 05-123-31400) shall be allocated to the proposed DSU #6

 

19.          All new permitted wells shall be located on no more than a total of five wellpads, including existing wellpads, within each of the five 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.

AMENDED this 27th day of March, 2017, as of March 20, 2017.

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

By: ____________________________________     

     Peter Gowen, Acting Secretary