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

)

)

)

)

)

)

)

CAUSE NO. 421

 

DOCKET NO. 171000670

 

TYPE: SPACING

 

ORDER NO. 421-98

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on December 11, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) vacate Order No. 421-29; 2) establish an approximate 1,280-acre drilling and spacing unit for Sections 23 and 26, 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 new horizontal wells for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and approve up to six new 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 23 and 26, Township 11 North, Range 62 West, 6th P.M., are subject to Rule 318.a. for the Fort Hayes, 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 23 and 26, 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 January 7, 2013, the Commission entered Order No. 421-29 which, among other things, vacated two approximate 640-acre drilling and spacing units established by Order No. 421-3  for Sections 26 and 35, Township 11 North, Range 62 West, 6th P.M., and established an approximate 1280-acre stand-up exploratory drilling and spacing unit for Sections 26 and 35, Township 11 North, Range 62 West, 6th P.M., and approved up to ten wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

7.         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 Order No. 421-29; 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 for the production of oil, gas and associated hydrocarbons from the Codell, Fort Hays and Carlile Formations, and approving up to 15 new horizontal wells in the unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, for a total of up to 21 new horizontal wells in the unit; 3) providing that Order No. 421-3 be maintained for the existing production from the Garden Creek #16-2314H Well (API No. 05-123-32661); 4) 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 5) 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 23:      All

Section 26:      All

 

8.         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.

 

9.         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 five well pads in the unit, unless an exception is granted by the Director. There is one existing pad location within the Application lands, which is located within Applicant’s right of way corridor. Applicant is requesting up to four new well pads in the Application Lands, for a total of five well pads, to accommodate 1,280-acre development of the Niobrara, Fort Hays, Codell, and Carlile Formations.

 

10.       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 20 to 22 feet thick, the Carlile Formation is present throughout the Application Lands and ranges from approximately 34 to 36 feet thick, and the Fort Hays Formation is present throughout the Application Lands and ranges from approximately 20 to 22 feet thick.

 

11.       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; however, 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 Hayes, Codell, and Carlile Formations. 

 

12.       Applicant stated that the wells will be drilled from no more than five 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.

 

13.       The Commission takes administrative notice of Commission records showing that two approximate 640-acre drilling and spacing units established by Order No. 421-3 for Sections 14 and 23, Township 11 North, Range 62 West, 6th P.M., currently contain the Garden Creek #16-2314H Well (API No. 05-123-32661), which is an approximate two-mile horizontal well.  Applicant requested that the Garden Creek #16-2314H Well be excluded from the approximate 1,280 acre drilling and spacing unit proposed for the Application Lands for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hays, Codell, and Carlile Formations, and that the Garden Creek #16-2314H Well be allowed to continue paying to the two approximate 640-acre drilling and spacing units as is currently being done.  The Commission has determined that this is not appropriate, and that the two-approximate 640-acre drilling and spacing units should be vacated and replaced with an approximate 1,280-acre drilling and spacing unit for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the Garden Creek #16-2314H Well to be the only approved well in that approximate 1,280-acre drilling and spacing unit.  On November 27, 2017, Applicant filed an application in Docket No. 180100038 to establish such a drilling and spacing unit.

 

14.       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.

 

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

 

16.       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 Order No. 421-29, 2) establish an approximate 1,280-acre drilling and spacing unit for Sections 23 and 26, 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 new horizontal wells for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and approve up to six new 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.         Order No. 421-29 is 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 Hays, Codell, and Carlile Formations, and a total of up to 15 new 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 23:      All

Section 26:      All

 

3.         The productive interval of any horizontal 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 five 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 22nd day of December, 2017, as of December 11, 2017.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

By____________________________________       

Julie Spence Prine, Secretary