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 27, 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-62 ORDER NO. 535-412 |
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 ten horizontal
wells, for a total of up to 16 horizontal wells within an approximate 640-acre
drilling and spacing unit established for Section 27, 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 May 16, 2011, the Commission entered
Order No. 535-13 which, among other things, established 11 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 27, Township 8 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 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 27, Township 8 North, Range 61
West, 6th P.M. is subject to this Order for the Niobrara Formation.
6. 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 ten
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 27: 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 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.
8. 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.
9. 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.
10. 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 concluded the modeled production anticipated to be recovered
by each well indicated sound economics and would therefore serve to protect
correlative rights and avoid waste.
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 Hearing Officer
review of the Application under Rule 511, the Commission should enter an order
to approve an additional ten horizontal wells, for a total of up to 16
horizontal wells within an approximate 640-acre drilling and spacing unit
established for Section 27, 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 ten 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 27: 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