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. 170100076

 

TYPE: SPACING

 

ORDER NO. 421-85

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: 1) maintain ten approximate 640-acre drilling and spacing units established by Order Nos. 421-1, 421-3, and 421-9; 2) establish six approximate 1,280-acre drilling and spacing units for Sections 7 and 18, 8 and 17, 9 and 16, 10 and 15, 11 and 14, and 12 and 13, Township 11 North, Range 63 West, 6th P.M., 3) approve up to eight new horizontal wells within each proposed 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 October 21, 2010, the Commission entered Order No. 421-3 which, among other things, established 83 approximate 640-acre drilling and spacing units for certain lands, including DSU #1 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. 

 

6.         On January 13, 2011, the Commission entered Order No. 421-4 which, among other things, established three approximate 1,280-acre drilling and spacing units for certain lands, including DSU #3, DSU #4, and DSU #5 on the Application Lands, and approved the drilling of up to two horizontal wells 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. 

 

7.         On June 27, 2011, the Commission entered Order No. 421-9 which, among other things, vacated the three approximate 1,280-acre drilling and spacing units established by Order No. 421-4 for certain lands, and reinstated five approximate 640-acre drilling and spacing units for certain lands, including DSU #3, DSU #4, and DSU #5 on the Application Lands, and approved an additional one horizontal well within each unit, for the development and operation of the Niobrara Formation, with all other provisions of Order No. 421-4 not inconsistent with this Order remain in effect.

 

8.         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 the five (5) approximate 640-acre drilling and spacing units established by Order No. 421-1 for Sections 8, 11, 12, 13, and 17, Township 11 North, Range 63 West, 6th P.M., modify the two (2) approximate 640-acre drilling and spacing units established by Order No. 421-3 for Sections 7 and 18, Township 11 North, Range 63 West, 6th P.M., modify the five (5) approximate 640-acre drilling and spacing units established by Order No. 421-9 for Sections 9, 10, 14, 15, and 16 of Township 11 North, 63 West, 6th P.M. and establish six (6) approximate 1,280-acre drilling and spacing units for Sections 7 and 18, 8 and 17, 9 and 16, 10 and 15, 11 and 14, and 12 and 13, Township 11 North, Range 63 West, 6th P.M., (2) approve up to eight (8) new horizontal wells in each proposed approximate 1,280-acre drilling and spacing unit, and (3) allow for 300-foot reduced subsurface setbacks for the boundaries of the drilling and spacing units for the efficient and economic development of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of each wellbore to be no closer than 150 feet from the productive interval of any other wellbore located within the unit, unless the Director grants an exception:

 

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

Section 7:        All       

Section 18:      All

 

(“DSU #1”)

 

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

Section 8:        All       

Section 17:      All

 

(“DSU #2”)

 

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

Section 9:        All       

Section 16:      All

 

(“DSU #3”)

 


 

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

Section 10:      All       

Section 15:      All

 

(“DSU #4”)

 

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

Section 11:      All       

Section 14:      All

 

(“DSU #5”)

 

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

Section 12:      All       

Section 13:      All

 

            (“DSU #6”)

 

                    9.         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 Critter Creek 11-07H (API No. 05-123-32081) and the Critter Creek 14-18H (API No. 05-123-32868), operated by Applicant.  Applicant respectfully requests that the 640-acre drilling and spacing units established by Order No. 421-3 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 Critter Creek 11-07H (API No. 05-123-32081) and the Critter Creek 14-18H (API No. 05-123-32868) wells shall be allocated to the proposed DSU #1.

 

                    10.       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 Critter Creek 12-08H (API No. 05-123-33088) and the Critter Creek 13-17H (API No. 05-123-31442), operated by Applicant.  Applicant respectfully 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 Critter Creek 12-08H (API No. 05-123-33088) and the Critter Creek 13-17H (API No. 05-123-31442) wells shall be allocated to the proposed DSU #2.

 

                    11.       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 Critter Creek 4-09H (API No. 05-123-31053) and the Red Poll 10-16H (API No. 05-123-30749), operated by Applicant.[1]  Applicant respectfully requests that the approximate 640-acre drilling and spacing units established by Order No. 421-9 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 Critter Creek 4-09H (API No. 05-123-31053) and the Red Poll 10-16H (API No. 05-123-30749) wells shall be allocated to the proposed DSU #3.

 

                    12.       The records of the Commission reflect that two horizontal wells, are currently producing from the Niobrara Formation in DSU #4 on the Application Lands, the Critter Creek 5-10H (API No. 05-123-31275) and the Critter Creek 9-15H (API No. 05-123-31181), operated by Applicant.  Applicant respectfully requests that the approximate 640-acre drilling and spacing units established by Order No. 421-9 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 Critter Creek 5-10H (API No. 05-123-31275) and the Critter Creek 9-15H (API No. 05-123-31181) wells shall be allocated to the proposed DSU #4.

 

                    13.       The records of the Commission reflect that two horizontal wells are currently producing from the Niobrara Formation in DSU #5 on the Application Lands, the Bessie 09-11H (API No. 05-123-32585) and the Critter Creek 08-14H (API No. 05-123-31222), operated by Applicant.  Applicant respectfully requests that the approximate 640-acre drilling and spacing unit established by Order Nos. 421-1 and 421-9 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 Bessie 09-11H (API No. 05-123-32585) and the Critter Creek 08-14H (API No. 05-123-31222) wells shall be allocated to the proposed DSU #5.

 

                    14.       The records of the Commission reflect that two horizontal wells are currently producing from the Niobrara Formation in DSU #6 on the Application Lands, Critter Creek 6-12H (API No. 05-123-31493) and the Critter Creek 7-13H (API No. 05-123-31325), operated by Applicant.  Applicant respectfully 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 Critter Creek 6-12H (API No. 05-123-31493), and the Critter Creek 7-13H (API No. 05-123-31325) wells shall be allocated to the proposed DSU #6.

 

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 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.

 

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 220 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 bbl oil per horizontal well with a drainage area of 121 acres for 300’ setbacks, and that 300’ 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.

 

19.       Applicant stated that the wells will be drilled from no more than five well pads in each of the proposed in each of the six 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: 1) maintain 10 approximate 640-acre drilling and spacing units established by Order Nos. 421-1, 421-3, and 421-9; 2) establish six approximate 1,280-acre drilling and spacing units for Sections 7 and 18, 8 and 17, 9 and 16, 10 and 15, 11 and 14, and 12 and 13, Township 11 North, Range 63 West, 6th P.M., 3) approve up to eight new horizontal wells within each proposed 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 Sections 7 and 18, Township 11 North, Range 63 West, 6th P.M (“Application Lands in DSU #1) 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 63 West, 6th P.M.

Section 7:        All       

Section 18:      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 Sections 7 and 18, 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 Critter Creek 11-07H Well (API No. 05-123-32081) and the Critter Creek 14-18H Well (API No. 05-123-32868) shall be allocated to the proposed DSU #1.

 

4.            An approximate 1,280-acre drilling and spacing unit for Sections 8 and 17, Township 11 North, Range 63 West, 6th P.M (“Application Lands in DSU #2) 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 63 West, 6th P.M.

Section 8:        All       

Section 17:      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.            Two approximate 640-acre drilling and spacing units established by Order No. 421-3 for Sections 8 and 17, 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 Critter Creek 12-08H Well (API No. 05-123-33088) and the Critter Creek 13-17H Well (API No. 05-123-31442) shall be allocated to the proposed DSU #2.

 

7.            An approximate 1,280-acre drilling and spacing unit for Sections 9 and 16, Township 11 North, Range 63 West, 6th P.M (“Application Lands in DSU #3) 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 63 West, 6th P.M.

Section 9:        All       

Section 16:      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.            Two approximate 640-acre drilling and spacing units established by Order No. 421-9 for Sections 9 and 16, 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 Critter Creek 4-09H Well (API No. 05-123-31053) and the Red Poll 10-16H Well (API No. 05-123-30749) shall be allocated to the proposed DSU #3.

 

10.          An approximate 1,280-acre drilling and spacing unit for Sections 10 and 15, Township 11 North, Range 63 West, 6th P.M (“Application Lands in DSU #4) 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 63 West, 6th P.M.

Section 10:      All       

Section 15:      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.          Two approximate 640-acre drilling and spacing units established by Order No. 421-9 for Sections 10 and 15, 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 Critter Creek 5-10H Well (API No. 05-123-31275) and the Critter Creek 9-15H Well (API No. 05-123-31181) shall be allocated to the proposed DSU #4.

 

13.          An approximate 1,280-acre drilling and spacing unit for Sections 11 and 14, Township 11 North, Range 63 West, 6th P.M (“Application Lands in DSU #5) 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 63 West, 6th P.M.

Section 11:      All       

Section 14:      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.          Two approximate 640-acre drilling and spacing units established by Order No. 421-1 for Section 11, Township 11 North, Range 63 West, 6th P.M. and Order No. 421-9 for Section 14, 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 Bessie 09-11H Well (API No. 05-123-32585) and the Critter Creek 08-14H Well (API No. 05-123-31222) shall be allocated to the proposed DSU #5.

 

16.          An approximate 1,280-acre drilling and spacing unit for Sections 12 and 13, Township 11 North, Range 63 West, 6th P.M (“Application Lands in DSU #6) 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 63 West, 6th P.M.

Section 12:      All       

Section 13:      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.          Two approximate 640-acre drilling and spacing units established by Order No. 421-1 for Sections 12 and 13, 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 Critter Creek 6-12H Well (API No. 05-123-31493), and the Critter Creek 7-13H Well (API No. 05-123-31325) shall be allocated to the proposed DSU #6;

 

19.          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



[1] The Critter Creek 34-16H (API No. 15-123-33103) well is located partially in Section 15, Township 11 North, Range 63 West and is located partially in Section 16, Township 11 North, Range 63 West, 6th P.M., Weld County, Colorado.  Applicant requests that due to the unique nature of the Critter Creek 34-16H (API No. 15-123-33103) well that it be excluded from the proposed DSU #3 and DSU #4 and continue to allocate production on the 640-acre basis allowed in Order No. 421-9 as to the wellbore only in this “rolling” drilling and spacing unit.