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,
|
)
)
)
) |
CAUSE NO. 535
CORRECTED |
REPORT OF THE COMMISSION
The Commission heard this matter on August 20, 2012, at the offices of the
Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver,
Colorado, upon application for an order to: 1) re-space two approximate 640-acre
drilling and spacing units established by Order Nos. 535-41 and 535-65 for Sections 17 and 18,
Township 7 North, Range 60 West, 6th P.M.; 2) establish one
approximate 1280-acre drilling and spacing unit for
Sections 17 and 18, Township 7 North, Range 60 West, 6th P.M.;
and 3) approve up to two horizontal wells within the 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.
On
June 27, 2011, the Commission entered Order No. 535-41 which, among other
things, established nine approximate 640-acre drilling and spacing units, and
approved up to two horizontal wells within each unit, for the production of oil,
gas, and associated hydrocarbons from the Niobrara Formation. Section 18, Township 7 North, Range
60 West, 6th P.M. is subject to this Order for the Niobrara
Formation.
5.
On August 8, 2011, the Commission entered Order No. 535-65 which, among
other things, established two approximate 640-acre drilling and spacing units,
and approved two horizontal wells within each unit, for the production of oil,
gas, and associated hydrocarbons from the Niobrara Formation. Order 535-65 supersedes Order No.
535-51 which, among other things, established nine approximate 640-acre drilling
and spacing units, for certain lands, and approved one horizontal well within
each unit. Section 17, Township 7 North, Range 60 West, 6th P.M. is
subject to this Order for the Niobrara Formation.
6.
On June 21, 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: 1) re-space two approximate 640-acre drilling and spacing units
established by Order Nos. 535-41 and 535-51 for Sections 17 and 18,
Township 7
North, Range 60 West, 6th P.M.; 2) establish one approximate 1280-acre
drilling and spacing unit for the below-described lands (“Application Lands”);
and 3) approve 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 no closer than 600 feet from the unit
boundaries and with the internal wellbore setbacks at the option of the
Applicant based on geological analysis of faulting and other factors, without
exception being granted by the Director:
Township 7 North, Range 60 West, 6th P.M.
Section 17: All
Section 18: All
(1280-acre DSU)
7.
On August 7, 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.
8.
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
and that the interested parties received notice of the
Application.
9.
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 300 feet and appears to be productive in the
area.
10.
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.
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.
Carrizo
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: 1) re-space two approximate
640-acre drilling and spacing units established by Order Nos. 535-41 and 535-65 for Sections 17 and 18,
Township 7 North, Range 60 West, 6th P.M.; 2) establish one
approximate 1280-acre drilling and spacing unit for
Sections 17 and 18, Township 7 North, Range 60 West, 6th P.M.;
and 3) approve up to two horizontal wells within the unit, for the production of
oil, gas, and associated hydrocarbons from the Niobrara Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that an approximate 1280-acre drilling and spacing
unit for the below-described lands, is hereby established, 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 no closer than 600 feet from the unit
boundaries and with the internal wellbore setbacks at the option of the
Applicant based on geological analysis of faulting and other factors, without
exception being granted by the Director:
Township 7 North, Range 60 West, 6th P.M.
Section 17: All
Section 18: All
(1280-acre DSU)
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
day of August, 2012, as of August 20,
2012.
CORRECTED this ______day of
October, 2012, as of October 1, 2012
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary
Dated: August 24, 2012
CORRECTED: October ___, 2012