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 TO APPROVE UP TO THIRTEEN HORIZONTAL WELLS IN AN
APPROXIMATE 640-ACRE DRILLING AND SPACING UNIT ESTABLISHED FOR SECTION 36,
TOWNSHIP 9 NORTH, RANGE 61 WEST, 6TH P.M., UNNAMED FIELD, WELD
COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 1306-AW-32
ORDER NO. 535-341 |
REPORT OF THE COMMISSION
The Commission heard this matter on June 17, 2013, at the Two Rivers
Convention Center, 159 Main Street, Grand Junction, Colorado, upon application
for an order to approve up to thirteen horizontal wells within an approximate
640-acre drilling and spacing unit established for Section 36, Township 9 North,
Range 61 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 August 12, 2010, the Commission entered Order No. 535-1 which, among
other things, established four 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 36, Township 9 North, Range
61 West, 6th P.M. is subject to this Order for the Niobrara
Formation.
5.
On January 7, 2013, the Commission entered Order No. 535-238, which,
among other things, approved up to six horizontal wells within each of ten
approximate 640-acre drilling and spacing units, 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 600 feet from the treated interval of any other wellbore located in
the unit.
Section 36, Township 9 North, Range 61 West, 6th P.M. is
subject to this Order for the Niobrara Formation.
6.
On April 13, 2013, 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 thirteen 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 internal wellbores offset by 300 feet and unit
boundary setbacks of 600 feet. Applicant
requested 100 foot “heel-and-toe” completed interval setbacks from the unit
boundaries perpendicular to the well laterals apply so long as Applicant obtains
exception location approvals pursuant to Rule 318.c. This exception location
requirement for reduced unit boundary setbacks shall not apply if superseded by
a subsequent Commission Rule or Order:
Township 9 North, Range 61 West, 6th
P.M.
Section 36:
All
The
proposed wells shall be located on no more than one wellpad per quarter quarter
section within the drilling and spacing unit.
7.
On June 4, 2013 (Revised June 11, 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 June 11, 2013, the Bureau of Land Management (“BLM”) filed a protest
to the Application.
9.
On June 11, 2013, Carrizo, by its attorneys, withdrew the request for the
100 foot “heel and toe” setbacks.
10. On
June 13, 2013, BLM withdrew its protest to the Application.
11.
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.
12.
Geologic testimony and exhibits submitted in support of the Application by Paul
Fears, the DJ Basin Geologist for Carrizo, included stratigraphic cross-sections
and gross thickness isopach tests showing the Niobrara Formation is
approximately 345 feet thick and to be consistent, continuous, and underlying
all of the Application Lands.
13.
Engineering testimony and exhibits submitted in support of the Application by
Stephen C. Peters, Manager of Reservoir Engineering for Carrizo, showed that
analog wells, drilled by Carrizo on 300 feet internal wellbore setbacks with
frac half-lengths of 75 feet, and the assumed lateral length of 5080 feet should
exhibit an Estimated Ultimate Recovery (“EUR”) between 128.3 and 136.3 thousand
oilfield barrels of oil (“MBO”) plus associated gas and processed natural gas
liquids (NGLs). This configuration
will accommodate up to 13 wellbores in a 640-acre drilling and spacing unit with
600 feet unit boundary setbacks. Testimony concluded the economics of the
project were sound.
14. 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.
15.
Carrizo agreed to be bound by oral order of the Commission.
16.
Based on the facts stated in the verified Application, having resolved all
protests, and based on the Hearing Officer review of the Application under Rule
511, the Commission should enter an order to approve up to thirteen horizontal
wells within an approximate 640-acre drilling and spacing unit established for
Section 36, Township 9 North, Range 61 West, 6th P.M., for the
production of oil, gas and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED that:
1.
Up to thirteen 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 300 feet from the
treated interval of any other wellbore located in the unit, without exception
being granted by the Director:
Township 9 North, Range 61 West, 6th P.M.
Section 36:
All
2.
The proposed wells shall be located on no more than one wellpad per quarter
quarter section within the drilling and spacing unit.
IT IS FURTHER ORDERED:
1.
The provisions contained in the above order shall become effective
immediately.
2.
The Commission expressly reserves its right, after notice and hearing, to
alter, amend or repeal any and/or all of the above orders.
3.
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.
4.
An application for reconsideration by the Commission of this Order is not
required prior to the filing for judicial review.
ENTERED THIS
8th
day of July, 2013, as of June 17, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary