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,
ADAMS COUNTY, COLORADO |
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CAUSE NO. 535
ORDER NO. 535-170
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REPORT OF THE COMMISSION
The
Commission heard this matter on July 9, 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, and authorize up to two horizontal wells
within the unit for
Section 28,
Township 3 South, Range 64 West, 6th P.M.,
for
the production of oil, gas, and associated hydrocarbons of 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. Section 28, Township 3 South, Range 64 West, 6th P.M. is
subject to Rule 318.a. for the Niobrara Formation.
5.
On May 15, 2012, Carrizo, by its attorneys, filed with the Commission
pursuant to § 34-60-116 C.R.S., a verified application (“Application”) for an
order to establish an approximate 640-acre drilling and spacing unit for the
below-described lands (“Application Lands”), and authorize up to two horizontal
wells within the 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 unit boundaries and no
closer than 1,200 feet from the treated interval of any other wellbore located
in the unit, without exception being granted by the Director:
Township 3 South, Range 64 West, 6th
P.M.
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6.
On June 27, 2012,
Carrizo,
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.
7.
Land testimony and exhibits submitted in support of the Application by
Craig E. Wiest, Land Manager – Western US for Carrizo, showed that Carrizo has a
significant leasehold in the Application Lands.
8.
Geologic testimony and exhibits submitted in support of the Application
by Douglas Reid, Geological Manager for Carrizo, showed that the Niobrara
Formation underlying the Application Lands is fairly uniform in thickness and
contiguous. Additional testimony
indicated that the thickness of the Niobrara Formation underlying the
Application Lands averages around 380 feet and appears to be productive in the
area.
9.
Engineering testimony and exhibits submitted in support of the
Application by Stephen C. Peters, Manager of Reservoir Engineering for Carrizo,
showed that analogous horizontal wells drilled and completed in the Niobrara
Formation have an average drainage radius of approximately 78 acres with an
anticipated recovery of about 1,679 bbls of oil per acre drained. Additional testimony showed that the
economics for horizontal Niobrara wells drilled on the Application Lands are
sound, and that the proposed drilling and spacing unit will promote efficient
drainage, while protecting correlative rights and avoiding waste.
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 hydrocarbons, 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 to
establish an approximate
640-acre drilling and spacing unit, and authorize up to two horizontal wells
within the unit for
Section 28,
Township 3 South, Range 64 West, 6th P.M.,
for
the production of oil, gas, and associated hydrocarbons of the Niobrara
Formation.
ORDER
NOW,
THEREFORE IT IS ORDERED, that
an approximate 640-acre drilling and spacing unit is hereby established, for the
below-described lands, and up to two horizontal wells within the unit, are
hereby approved, 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 unit boundaries and no closer than 1,200 feet
from the treated interval of any other wellbore located in the unit, without
exception being granted by the Director:
Township 3 South, Range 64 West, 6th
P.M.
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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
11th
day of July, 2012, as of July 9,
2012.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary
Dated at
Suite 801
1120 Lincoln
Street
Denver,
Colorado 80203
July 11, 2012