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, FORT HAYS, CODELL, AND CARLILE FORMATIONS, HEREFORD FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 421

 

DOCKET NO. 171000669

 

TYPE: SPACING

 

ORDER NO. 421-97

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on October 30, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) vacate two 640-acre drilling and spacing unit established by Order No. 421-3 for Sections 22 and 27, Township 11 North, Range 62 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, 2) establish an approximate 1,280-acre drilling and spacing unit for Sections 22 and 27, Township 11 North, Range 62 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, and 3) approve up to 15 horizontal wells for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and approve up to six horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Fort Hays, Codell, and Carlile Formations.

 

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 Rules and Regulations of the Oil and Gas Conservation Commission requires that, on unspaced lands, wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply.  Sections 22 and 27, Township 11 North, Range 62 West, 6th P.M., are subject to Rule 318.a. for the Fort Hays, Codell, and Carlile Formations.

 

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 Sections 22 and 27, Township 11 North, Range 62 West, 6th P.M.,  for the production of oil and gas and associated hydrocarbons from the Niobrara Formation, with no more than one horizontal well to be drilled in each unit from a surface location anywhere in the unit with the horizontal leg and bottom-hole location to be not closer than 600 feet from the boundaries of each unit.

 

6.         On August 28, 2017, amended September 20, 2017, Fifth Creek filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order 1) vacating two approximate 640-acre drilling and spacing units established by Order No. 421-3 for Sections 22 and 27, Township 11 North, Range 62 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; 2) establishing an approximate 1,280-acre drilling and spacing unit for the below described lands (“Application Lands”) for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, approving up to six new horizontal wells in the unit in order to efficiently and economically develop and recover the oil, gas and associated hydrocarbons from the Codell, Fort Hays and Carlile Formations, and approving up to 15 new horizontal wells in the unit in order to efficiently and economically develop and recover the oil, gas and associated hydrocarbons from the Niobrara Formation in the proposed drilling and spacing unit, for a total of up to 21 new horizontal wells in the unit; and 3) providing that the treated interval of any horizontal well in the proposed unit shall be no closer than 300 feet from the boundaries of the unit and not less than 150 feet from the treated interval of another well within the unit, and authorizing up to five well pads in the unit, unless an exception is granted by the Director:

 

Township 11 North, Range 62 West, 6th P.M.

Section 22:      All

Section 27:      All

 

7.         On October 6, 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.

 

8.         Land testimony and exhibits submitted in support of the Application by Teale Stone, Senior Landman 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. Land testimony further showed that Applicant requests that the Commission authorize up to four new multi-well pads in the unit, unless an exception is granted by the Director.

 

9.         Geoscience testimony and exhibits submitted in support of the Application by Benjamin Burke, Geoscience Manager for Fifth Creek, showed the Niobrara Formation is present throughout the Application Lands and ranges from approximately 250 to 270 feet thick, the Codell Formation is present throughout the Application Lands and ranges from approximately 19 to 21 feet thick, the Carlile Formation is present throughout the Application Lands and ranges from approximately 33 to 35 feet thick, and the Fort Hays Formation is present throughout the Application Lands and ranges from approximately 20 to 21 feet thick.

 

10.       Engineering testimony and exhibits submitted in support of the Application by William Irwin, Engineering Advisor for Fifth Creek, showed that Fifth Creek plans to drill 15 horizontal wells in the Niobrara Formation and six wells in the Codell Formation. The engineering testimony also demonstrated that two-section lateral analog wells have an average lateral length of 9,261 feet and average estimated ultimate recovery of 431,333 barrels for the Niobrara Formation, for a drainage per well of 85 acres, and an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by fifteen horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara Formation.  The engineering testimony also showed that two-section lateral analog wells have been scaled to an average lateral length of 9,000 feet and average estimated ultimate recovery of 457,203 barrels for the Fort Hays, Codell, and Carlile Formation, for a drainage per well of 178 acres. Engineering testimony also showed that the primary drilling targets are the Niobrara and Codell Formations, but that horizontal wells drilled into the Codell Formation may deviate into the Fort Hays and Carlile Formations, but that this type of occurrence will not impact the drainage area, drainage area calculations, or the economics of wells targeting the Codell Formation. For that reason, the Application is seeking spacing for the Fort Hays and Carlile formations. Therefore, an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by six horizontal wells producing oil, gas and associated hydrocarbons from the Fort Hays, Codell, and Carlile Formations. 

 

11.       Applicant stated that the wells will be drilled from no more than four multi-well pads in the 1,280-acre drilling and spacing unit to be located within such unit or adjacent thereto, unless an exception is granted by the Director.

 

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 enter an order to: 1) vacate two 640-acre drilling and spacing unit established for Sections 22 and 27, Township 11 North, Range 62 West, 6th P.M., by Order No. 421-3, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, 2) establish an approximate 1,280-acre drilling and spacing unit for Sections 22 and 27, Township 11 North, Range 62 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, and 3) approve up to 15 horizontal wells for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and approve up to six horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Fort Hays, Codell, and Carlile Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Two approximate 640-acre drilling and spacing units established by Order No. 421-3 for Sections 22 and 27, Township 11 North, Range 62 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation are hereby vacated.

 

2.         An approximate 1,280-acre drilling and spacing unit for the below-described lands is hereby established for the production of oil, gas and associated hydrocarbons from the Niobrara, Fort Hayes, Codell, and Carlile Formations, and a total of up to 15 horizontal wells within the unit are approved for the production of oil, gas and associated hydrocarbons from the Niobrara Formation and up to six horizontal wells within the unit are approved for the production of oil, gas and associated hydrocarbons from the Fort Hays, Codell, and Carlile Formations:

 

Township 11 North, Range 62 West, 6th P.M.

Section 22:      All

Section 27:      All

 

3.         The productive interval of the wellbore will be located no closer than 300 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.

 

4.         Any horizontal wells to be drilled shall be drilled from no more than four multi-well pads on the surface of the drilling unit, or on adjacent lands with consent of the landowner, 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 20th day of November, 2017, as of October 30, 2017.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

By____________________________________       

Julie Spence Prine, Secretary