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 IN AN UNNAMED FIELD, WELD AND MORGAN COUNTIES, COLORADO

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CAUSE NO. 535

 

ORDER NO. 535-13

 

 

REPORT OF COMMISSION

 

                        This cause came on for hearing before the Commission on May 16, 2011, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to establish eleven approximate 640-acre drilling and spacing units for certain lands located in Townships 5 through 9 North, Ranges 60 and 61 West, 6th P.M., and approve up to two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.     Carrizo Oil & Gas, Inc. (“Carrizo” 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.     Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that 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.  The below-listed lands are subject to this Rule for the Niobrara Formation:

 

Township 5 North, Range 60 West, 6th P.M.

Sections 5, 6, 7, and 8:

All

 

Township 6 North, Range 60 West, 6th P.M.

Section 31:

All

 

Township 7 North, Range 60 West, 6th P.M.

Sections 20, 21, 22, and 28:

All

 

Township 9 North, Range 60 West, 6th P.M.

Section 17:

All

 

Township 8 North, Range 61 West, 6th P.M.

Section 27:

All

 

5.     On March 17, 2011, Carrizo, by its attorneys, filed with the Commission a verified application (the “Application”) for an order to establish eleven approximate 640-acre drilling and spacing units for the below-listed lands (the “Application Lands”), and approve of up to two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the wellbore to be located no closer than 600 feet from the boundary of the unit without exception being granted by the Director of the Commission:

 

Township 5 North, Range 60 West, 6th P.M.

Sections 5, 6, 7, and 8:

All

 

Township 6 North, Range 60 West, 6th P.M.

Section 31:

All

 

Township 7 North, Range 60 West, 6th P.M.

Sections 20, 21, 22, and 28:

All

 

Township 9 North, Range 60 West, 6th P.M.

Section 17:

All

 

Township 8 North, Range 61 West, 6th P.M.

Section 27:

All

 

6.     On May 3, 2011, Carrizo, by its attorney, 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.

 

7.     Land testimony and exhibits submitted in support of the Application by Renee D. Calhoun, Contract Landman for Carrizo, showed that Applicant owns a substantial leasehold interest covering the Application Lands. 

8.     Geologic testimony and exhibits submitted in support of the Application by Douglas Reid, Geological Manager for Carrizo, showed: 1) the Niobrara Formation is productive across the Application Lands; 2) the Niobrara Formation is fairly uniform in thickness and is continuous throughout the Application Lands; and 3) structural position has no significant relevance in establishing Niobrara Formation production across the Application Lands.

9.     Engineering testimony and exhibits submitted in support of the Application by Stephen Peters, Manager of Reservoir Engineering for Carrizo, showed: 1) drainage areas for horizontal wells are significantly greater than that of vertical wells; 2)  the drilling and spacing units of the specified size and configuration are not smaller than the maximum area that can be economically and efficiently drained by the proposed wells; and 3) the economics of Niobrara Formation development within the Application Lands are sound.

10.   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 gas, and will not violate correlative rights.

 

11.   Carrizo agreed to be bound by oral order of the Commission. 

 

12.  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 establishing eleven approximate 640-acre drilling and spacing units for certain lands located in Townships 5 through 9 North, Ranges 60 and 61 West, 6th P.M., and approve up to two horizontal wells within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that an eleven approximate 640-acre drilling and spacing units for the below-listed lands are established, and up to two horizontal wells within each unit are approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

 

Township 5 North, Range 60 West, 6th P.M.

Sections 5, 6, 7, and 8:

All

 

Township 6 North, Range 60 West, 6th P.M.

Section 31:

All

 

Township 7 North, Range 60 West, 6th P.M.

Sections 20, 21, 22, and 28:

All

 

Township 9 North, Range 60 West, 6th P.M.

Section 17:

All

 

Township 8 North, Range 61 West, 6th P.M.

Section 27:

All

 

                        IT IS FURTHER ORDERED, that the treated interval of the wellbore shall be located no closer than 600 feet from the boundary of the unit without exception being granted by the Director of the Commission.

 

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.

           

                        IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

 

                        IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 30 days after the date this Order is mailed by the Commission.

                       

                        IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.

 

                        ENTERED this      23rd      day of May, 2011, as of May 16, 2011.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________    

                                                                                    Robert  A. Willis, Acting Secretary

 

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

May 23, 2011