BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF CARRIZO OIL AND GAS, INC., FOR AN ORDER
APPROVING UP TO FOUR HORIZONTAL WELLS WITHIN AN APPROXIMATE 640-ACRE DRILLING
AND SPACING UNIT LOCATED IN SECTION 3, TOWNSHIP 7 NORTH, RANGE 60 WEST, 6TH
P.M. FOR THE NIOBRARA FORMATION, UNNAMED FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 535
ORDER NO. 535-216
DOCKET NO. 1211-AW-25 |
REPORT OF THE COMMISSION
The Commission heard this matter on November 15, 2012, at the offices of the
Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver,
Colorado, upon application for an order to approve up to four horizontal wells
within an approximate 640-acre drilling and spacing unit established for Section
3, Township 7 North, Range 60 West, 6th P.M., for the production of
oil, gas and associated hydrocarbons from the Niobrara Formation.
FINDINGS
The Commission finds as follows:
1.
Carrizo Oil and 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 3, Township 7 North, Range 60
West, 6th P.M. is subject to this Order for the Niobrara Formation.
5.
On September 19, 2011, the Commission entered
Order No. 535-79 which, among other things, pooled all interests in an
approximate 640-acre drilling and spacing unit established for Section 3,
Township 7 North, Range 60 West, 6th P.M., for the development and
operation of the Niobrara Formation.
6.
On September 17, 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 approve up to
four horizontal wells within an approximate 640-acre drilling and spacing unit
established for the below-described lands (“Application Lands”), for the
production of oil, gas and associated hydrocarbons from the Niobrara Formation,
with the treated interval of the horizontal wellbore to be no closer than 600
feet from the unit boundaries, and no closer than 600 feet from the treated
interval of any other wellbore located in the unit, without exception being
granted by the Director:
Township 7 North, Range 60 West, 6th P.M.
Section 3: All
7.
On November 2, 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
right to drill in the Application Lands.
9.
Geologic testimony and exhibits submitted in support of the Application
by Douglas Reid, Geological Manager for Carrizo, included an isopach map of the
interval from the top of the Niobrara Formation to the top of the Codell
Formation which showed the total thickness of the Niobrara Formation underlying
the 1280-acre unit averages approximately 305 feet. A type log of the Niobrara Formation
showed resistivity and density values similar to logs from analogous wells
producing from the Niobrara Formation.
Stratigraphic cross-sections and gross thickness isopach tests show the
Niobrara to be consistent, continuous, and underlying all the Application Lands.
Additional testimony showed that the Formation generally thickens from the south
to the north by about 20 feet in the mapped area and is contiguous throughout
the area.
10.
Engineering testimony and exhibits submitted in support of the Application by
Stephen C. Peters, Manager of Reservoir Engineering for Carrizo, showed analog
wells drilled by Carrizo within its Weld County operational area indicate an
estimated ultimate recovery (“EUR”) of 200 MBO and a drainage area estimated at
70-acres. Testimony further showed
drainage estimates for the best 35 horizontal wells in the nearby Silo Field
varied from 41 to 356-acres, with an average for all 65 horizontal wells of
78-acres. Testimony concluded that
applying reasonable resource recovery and price projections to the Application
wells generates a positive rate of return sufficient for economic investment.
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 Hearings Officer review of the Application under Rule
511., the Commission should enter an order to approve up to four horizontal
wells within an approximate 640-acre drilling and spacing unit established for
Section 3, Township 7 North, Range 60 West, 6th P.M., for the
production of oil, gas and associated hydrocarbons from the Niobrara Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that up to four horizontal wells within an
approximate 640-acre drilling and spacing unit established for the
below-described lands, are hereby approved, for the production of oil, gas and
associated hydrocarbons from the Niobrara Formation, with the treated interval
of the horizontal wellbore to be no closer than 600 feet from the unit
boundaries, and no closer than 600 feet from the treated interval of any other
wellbore located in the unit, without exception being granted by the Director:
Township 7 North, Range 60 West, 6th P.M.
Section 3: All
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
November, 2012, as of November 15, 2012.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary