BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF CARRIZO OIL & GAS, INC. FOR AN ORDER TO
APPROVE UP TO SIX HORIZONTAL WELLS WITHIN AN APPROXIMATE 640-ACRE EXPLORATORY
DRILLING AND SPACING UNIT ESTABLISHED FOR SECTION 3, TOWNSHIP 7 NORTH, RANGE 62
WEST, 6TH P.M., FOR THE NIOBRARA FORMATION, WATTENBERG FIELD, WELD
COUNTY, COLORADO |
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CAUSE NO. 407 & 535
DOCKET NO. 1302-AW-08
ORDER NO. 407-759 & 535-279 |
REPORT OF THE COMMISSION
The Commission heard this matter on March 25, 2013, at the offices of the
Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver,
Colorado, upon application for an order to approve two additional wells, up to a
total of six horizontal wells within an approximate 640-acre exploratory
drilling and spacing unit established for Section 3, Township 7 North, Range 62
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 April 27, 1988, the Commission adopted Rule 318A which, among other
things, allowed certain drilling locations to be utilized to drill or twin a
well, deepen a well or recomplete a well and to commingle any or all Cretaceous
Age Formations from the base of the Dakota Formation to the surface. Rule 318A supersedes all prior
Commission drilling and spacing orders affecting well location and density
requirements of Greater Wattenberg Area wells.
On December 5, 2005, Rule 318A was amended, among other things, to allow
interior infill and boundary wells to be drilled and wellbore spacing units to
be established. On August 8, 2011,
Rule 318A was again amended, among other things, to address drilling of
horizontal wells. Section 3,
Township 7 North, Range 62 West, 6th P.M. is subject to Rule 318A for
the Niobrara Formation.
5.
On May 29, 2012, the Commission entered Order Nos. 407-642 and 535-163
which, among other things, established four approximate 640-acre drilling and
spacing units, and authorized up to four horizontal wells within each unit, for
the production of oil, gas and associated hydrocarbons from the Niobrara
Formation, with the treated interval of any horizontal well to be no closer than
460 feet from the boundaries of the unit.
Section 3, Township 7 North, Range 62 West, 6th P.M. is
subject to this Order for the Niobrara Formation.
6.
On December 13, 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 two additional wells, for a total of
six horizontal wells within the approximate 640-acre exploratory 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 wellbore to be located no closer
than 460 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 62 West, 6th
P.M.
Section 3:
All
7.
On January 29, 2013, 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.
On February 5, 2013, the Secretary of the Commission continued the matter
to the March 25, 2013 hearing.
9.
On March 8, 2013, Carrizo, by its attorneys, filed with the Commission a
second 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.
10.
Land testimony and exhibits submitted in support of the Application by Craig E.
Wiest, Land Manager for Carrizo, showed the Applicant is an owner with the right
to drill in the Application Lands.
11.
Geologic testimony and exhibits submitted in support of the Application by Paul
Fears, DJ Basin Geologist for Carrizo, included Stratigraphic cross-sections and
gross thickness isopach tests showing the Niobrara Formation is approximately
300 feet thick and to be consistent, continuous, and underlying all of the
Application Lands.
12.
Engineering testimony and exhibits submitted in support of the Application by
Stephen C. Peters, Manager of Reservoir Engineering for Carrizo, showed an
estimated ultimate recovery (“EUR”) of 200 MBO and a drainage area estimated at
70-acres, for analogous type wells drilled by Carrizo within its Weld County
operational area. 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 of 78-acres. Testimony concluded the economics of
the project were sound.
13. 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.
14.
Carrizo agreed to be bound by oral order of the Commission.
15.
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 approve two additional wells, up
to a total of six horizontal wells within an approximate 640-acre exploratory
drilling and spacing unit established for Section 3, Township 7 North, Range 62
West, 6th P.M., for the production of oil, gas and associated
hydrocarbons from the Niobrara Formation.
ORDER
NOW, THEREFORE IT IS ORDERED, that a total of up to six horizontal wells, are
hereby approved, within the approximate 640-acre exploratory 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 wellbore to be located no closer
than 460 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 62 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 5th day
of April, 2013, as of March 25, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary