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, |
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CAUSE NO. 535 ORDER NO. 535-146 |
REPORT OF THE COMMISSION
The Commission heard this matter on April 16, 2012, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, upon application for an order to establish an approximate 640-acre drilling and spacing unit for Section 18, Township 11 North, Range 60 West, 6th P.M., and approve one or more horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
FINDINGS
The Commission finds as follows:
1. Noble Energy, Inc. (“Noble” 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. Section 18, Township 11 North, Range 60 West, 6th P.M. is subject to Rule 318.a.
5. On January 5, 2012, Noble, by its attorneys, filed with the Commission a verified application (“Application”) for an order to: 1) establish an approximate 640-acre drilling and spacing unit for the below-listed lands (“Application Lands”), and approve one or more horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the treated interval of any permitted well to be no closer than 600 feet from the boundaries of said unit and the distance between the treated intervals of any permitted well to be no closer than 150 feet; and 2) authorize the surface location for any permitted well under the Application to be located anywhere within said unit or on surrounding lands:
Township 11 North, Range 60 West, 6th P.M.
Section 18: All
In addition to the proposed horizontal wells, Applicant stated it may, in the future, seek to drill and complete one or more vertical or directional wells to the Codell and Niobrara Formations within the Application Lands in order to efficiently and economically develop the resources. Applicant affirmatively stated that its request for authorization to drill and complete only horizontal wells at this time should not be construed to limit or preclude Applicant’s right to drill and complete vertical or directional wells within the Application Lands in the future. Applicant requests that future vertical or directional wells approved within the Application Lands, if any, be spaced independently from the proposed 640-acre drilling and spacing unit, based upon relevant geologic and engineering testimony, and in conformance with then applicable Commission spacing and well location Rules.
6. On February 16, 2012, Noble requested, and Commission Staff granted, a continuance to the April 16, 2012 Commission hearing.
7. On April 2, 2012, Noble, 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 Chuck A. Snure, Land Manager for Noble, noted that paragraph 6 of the Application requested authorization to locate surface facilities for horizontal wells anywhere within the designated drilling or spacing unit or surrounding lands. After conferring with COGCC Staff, Applicant modified the relief sought, stating that wells to be drilled under this Application, whether horizontal, vertical or directional, shall be drilled from no more than four well pads per quarter section with wells on each pad to be drilled within 50 feet of an adjacent well, absent a showing of good cause which shall include surface-owner consent. All other setbacks remained the same, as requested in the Application.
9. Geologic testimony and exhibits submitted in support of the Application by Ron Pritchett, Senior Geologist for Noble, stated an analysis of cross-sections from nearby Codell and Niobrara Formation type wells, demonstrating the Codell and Niobrara Formations underlie, and are generally of uniform thickness throughout the Application Lands.
10. Engineering testimony and exhibits submitted in support of the Application by Ryan Sullivan, Engineering Team Lead for Noble, indicated that the use of horizontal and vertical wells in Application Lands is necessary to increase the recovery of hydrocarbons from the reservoir. Testimony further indicated that the first and each subsequent horizontal well would increase the recovery factor by 1.4%, with an Estimated Ultimate Recovery of 245 MBOE.
11. 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.
12. Noble agreed to be bound by oral order of the Commission.
13. 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 establish an approximate 640-acre drilling and spacing unit for Section 18, Township 11 North, Range 60 West, 6th P.M., and approve one or more horizontal wells within said unit, as necessary to economically and efficiently recover the oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
ORDER
NOW, THEREFORE IT IS ORDERED, that an approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established; and one or more horizontal wells within said unit, are hereby approved, as necessary to economically and efficiently recover the oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.
Township 11 North, Range 60 West, 6th P.M.
Section 18: All
IT IS FURTHER ORDERED, that the treated interval of any permitted well shall be no closer than 600 feet from the outer boundaries of the exploratory drilling unit and the distance between another well or treated intervals of any permitted well shall be no closer than 150 feet.
IT IS FURTHER ORDERED, that future vertical or directional wells completed to the Codell and Niobrara Formations within the Application Lands are not precluded, and that such wells, if any, may be spaced independently from the approved 640-acre drilling and spacing unit, based upon relevant geologic and engineering testimony, and in conformance with then applicable Commission spacing and well location Rules.
IT IS FURTHER ORDERED, that wells drilled under this Application, whether horizontal, vertical or directional, shall be drilled from no more than four well pads per quarter section with wells on each pad to be drilled within 50 feet of an adjacent well, absent a showing of good cause which shall include surface-owner consent.
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 18th day of April, 2012, as of April 16, 2012.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Peter J. Gowen, Acting Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
April 18, 2012