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 SIXTEEN HORIZONTAL WELLS WITHIN AN APPROXIMATE 640-ACRE
DRILLING AND SPACING UNIT FOR SECTION 2, TOWNSHIP 8 NORTH, RANGE 61 WEST, 6TH
P.M., FOR THE NIOBRARA FORMATION, UNNAMED FIELD, WELD COUNTY, COLORADO |
) ) ) ) ) ) ) ) |
CAUSE NO. 535 DOCKET NO. 1309-AW-61 ORDER NO. 535-411 |
REPORT OF THE COMMISSION
The
Commission heard this matter on September 16, 2013, at the offices of the
Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver,
Colorado, upon application for an order to approve an additional three
horizontal wells, for a total of up to 16 horizontal wells within an approximate
640-acre drilling and spacing unit established for Section 2, Township 8 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 February 22, 2011, the Commission
entered Order No. 535-3 which, among other things, established 160 approximate
640-acre drilling and spacing units, and approved one horizontal well within
each unit, for the production of oil, gas and associated hydrocarbons from the
Niobrara Formation. Section 2, Township 8 North, Range 61 West, 6th
P.M. is subject to this Order for the Niobrara Formation.
5. On November 15, 2012, the Commission
entered Order No. 535-215 which, among other things, approved up to two
horizontal wells within each of two 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 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. Section 2, Township 8 North, Range 61
West, 6th P.M. is subject to this Order for the Niobrara Formation.
6. On March 25, 2013, the Commission
entered Order No. 535-295 which, among other things, approved up to a total of
six horizontal wells within each of two approximate 640-acre
drilling and spacing units, for the production of oil, gas and associated
hydrocarbons from the Niobrara Formation.
Section 2, Township 8 North, Range 61 West, 6th P.M. is
subject to this Order for the Niobrara Formation.
7. On July 29, 2013, the Commission
entered Order No. 535-373, which approved up to 13 horizontal wells within an
approximate 640-acre drilling and spacing unit, for the production of oil, gas,
and associated hydrocarbons from the Niobrara Formation. Section 2, Township 8 North, Range 61 West, 6th
P.M. is subject to this Order for the Niobrara Formation.
8. On July 18, 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 an additional three
horizontal wells, for a total of up to 16 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 wellbore to be located no closer than 300 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 8 North, Range 61 West, 6th P.M.
Section 2: All
The proposed wells shall be located on no
more than one wellpad per quarter quarter section within the drilling and
spacing unit.
9. On September 3, 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 that the Applicant is an owner with the
right to drill wells in the Application Lands.
11. Geologic testimony and exhibits submitted
in support of the Application by Paul Fears, Geologist for Carrizo, showed that
the Niobrara Formation underlies the Application Lands. An isopach map of the interval from the top
of the Niobrara Formation to the top of the Codell Formation showed the total
thickness of the Niobrara averages approximately 350 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.
12. Engineering testimony and exhibits
submitted in support of the Application by Stephen C. Peters, Reservoir Engineering
Manager for Carrizo, showed that using reservoir properties, determined from
performance of actual wells drilled by Carrizo as a basis for modeling, analog
development scenarios resulted in efficient drainage of an area of
approximately 32 acres per wellbore.
This 32 acres is the approximate area per wellbore that would result
from 16 wellbores within the unit with 300 feet offset from unit and interwell
boundaries. Testimony also showed that
the modeled production anticipated to be recovered by each well indicated sound
economics and would therefore serve to protect correlative rights and avoid
waste.
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 an additional three horizontal wells, for a total of up to 16
horizontal wells within an approximate 640-acre drilling and spacing unit
established for Section 2, Township 8 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:
1. An additional three horizontal wells,
for a total of up to 16 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 wellbore to be located no
closer than 300 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 8 North, Range
61 West, 6th P.M.
Section 2: All
2. The proposed wells shall be located on
no more than one wellpad per quarter quarter section within the drilling and
spacing unit.
3. Owners of adjacent and cornering tracts
may request similar setbacks on the lands affected by this Order.
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 11th
day of October, 2013, as of
September 16, 2013.
OIL
AND GAS CONSERVATION COMMISSION
OF
THE STATE OF COLORADO
By____________________________________
Robert
J. Frick, Secretary