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
VACATE ONE APPROXIMATE 960-ACRE DRILLING AND SPACING UNIT ESTABLISHED BY ORDER
NO. 535-179, AND ESTABLISH AN APPROXIMATE 640-ACRE DRILLING AND SPACING UNIT AND
APPROVE ONE HORIZONTAL WELL WITHIN THE UNIT LOCATED IN SECTION 5, TOWNSHIP 10
NORTH, RANGE 57 WEST, 6TH P.M., FOR THE NIOBRARA FORMATION, UNNAMED
FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 1302-SP-34
ORDER NO. 535-284 |
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: 1) vacate an approximate 960-acre
drilling and spacing unit established by Order No. 535-179 for Sections 5 and 8,
Township 10 North, Range 57 West, 6th P.M.; and 2) establish an
approximate 640-acre drilling and spacing unit for Section 5, Township 10 North,
Range 57 West, 6th P.M., and approve one horizontal well 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 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 July 9, 2012, the Commission entered Order No. 535-179 which, among
other things, established six approximate 960-acre drilling and spacing units,
and approved up to four horizontal wells within each unit, for the production of
oil, gas and associated hydrocarbons from the Niobrara Formation. Section 5, Township 10 North, Range
57 West, 6th P.M. is subject to this Order for the Niobrara
Formation.
5.
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: 1) vacate one approximate
960-acre drilling and spacing unit established by Order No. 535-179 for Sections
5 and 8, Township 10 North, Range 57 West, 6th P.M.; and 2) establish
an approximate 640-acre drilling and spacing unit for the below-described lands
(“Application Lands”), and approve one horizontal well 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, without exception being granted by the Director:
Township 10 North, Range 57 West, 6th P.M.
Section 5:
All
6.
On January 28, 2013, Whiting Oil and Gas Corporation (“Whiting” or
“Protestant”), by its attorneys, filed a protest to the Application.
7.
On January 31, 2013, Carrizo, by its attorneys, requested, and the
Secretary of the Commission granted, a continuance to the March hearing,
8.
On March 8, 2013, Whiting, by its attorneys, withdrew the protest to the
Application.
9.
On March 12, 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.
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.
Paul Fears, DJ Basin Geologist for Carrizo, included Stratigraphic
cross-sections and gross thickness isopach tests showing the Niobrara Formation
is approximately 320 feet thick and to be consistent, continuous, and underlying
all of the Application Lands. Additional testimony showed the Niobrara Formation
exists under the entirety of the Application Lands and is a common source of
supply.
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: 1) vacate an approximate 960-acre
drilling and spacing unit established by Order No. 535-179 for Sections 5 and 8,
Township 10 North, Range 57 West, 6th P.M.; and 2) establish an
approximate 640-acre drilling and spacing unit for Section 5, Township 10 North,
Range 57 West, 6th P.M., and approve one horizontal well 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 960-acre drilling and spacing
unit established by Order No. 535-179 for Sections 5 and 8, Township 10 North,
Range 57 West, 6th P.M., is hereby vacated.
IT IS FURTHER ORDERED, that an approximate 640-acre drilling and spacing
unit for the below-described lands, is hereby established, and one horizontal
well within the unit, is 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,
without exception being granted by the Director:
Township 10 North, Range 57 West, 6th P.M.
Section 5:
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 Procedures 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