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 26, TOWNSHIP 8 NORTH, RANGE 60 WEST, 6TH P.M., FOR THE NIOBRARA FORMATION, UNNAMED FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 535

 

DOCKET NO. 1309-AW-60

 

ORDER NO. 535-438

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on December 16, 2013, at the Ralph L. Carr Colorado Judicial Center, 1300 Broadway, 1st Floor, Room 1E, Denver, Colorado, upon application for an order to approve an additional nine horizontal wells, for a total of up to 15 horizontal wells within an approximate 640-acre drilling and spacing unit established for Section 26, Township 8 North, Range 60 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 October 31, 2011, the Commission entered Order No. 535-91 which, among other things, established two 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 26, Township 8 North, Range 60 West, 6th P.M. is subject to this Order for the Niobrara Formation.

 

5.         On July 9, 2012, the Commission entered Order No. 535-189 which, among other things, pooled all interests in an approximate 640-acre drilling and spacing unit established for Section 26, Township 8 North, Range 60 West, 6th P.M., for the development and operation of the Niobrara Formation.

 

6.         On November 15, 2012, the Commission entered Order No. 535-219 which, among other things, approved up to four horizontal wells within each of three 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 26, Township 8 North, Range 60 West, 6th P.M. is subject to this Order for the Niobrara Formation.

 

7.         On July 18, 2013, Carrizo Oil and Gas, Inc. (“Carrizo” or “Applicant”), 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 10 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 productive interval of the wellbore to be located no closer than 300 feet from the unit boundaries, and no closer than 300 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:

 

                        Township 8 North, Range 60 West, 6th P.M.

                        Section 26:      All

 

8.         Applicant states that the proposed wells shall be located on no more than one wellpad per quarter section within the drilling and spacing unit.

 

9.         On September 4, 2013 (Amended December 13, 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.       On September 10, 2013, the Bureau of Land Management (“BLM”) filed a Protest to the Application.

 

11.       On September 20, 2013, Carrizo requested, and Commission staff requested, a continuance to the October hearing.

 

12.       On October 8, 2013, Carrizo requested, and Commission staff requested, a continuance to the December  hearing.

 

13.       On December 11, 2013, Carrizo, by its attorneys, withdrew the request for the 300 foot setbacks on the north, west and south section lines which are adjacent to a section containing federal minerals and requested 600 foot setbacks from the unit boundary.  Carrizo maintained the request for the 300 foot setbacks for the east section line. Carrizo request a total of up to 15 horizontal wells within the unit.

 

14.       On December 12, 2013, the BLM withdrew its Protest to the Application.

 

15.       Land testimony and exhibits submitted in support of the Application by Ross D. Wardlaw, Senior Landman for Carrizo, showed that the Applicant is an owner with the right to drill wells in the Application Lands.

 

16.       Geologic testimony and exhibits submitted in support of the Application by Paul Fears, DJ Basin 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.

 

17.       Engineering testimony and exhibits submitted in support of the Application by Stephen C. Peters, Reservoir Engineering Manager for Applicant, showed that reservoir properties, determined from performance of actual wells drilled by Carrizo as a basis for modeling, analog development scenarios resulted in efficient drainage.  Testimony further showed that a well with a completed lateral length of 4680 feet incorporating 15 frac stages with 75 foot half-lengths placed in a similar reservoir and limited to 300 feet interwell spacing should exhibit an estimated ultimate recovery (“EUR”) of between117.9 and 125.4 MBOs plus associated gas and processed natural gas liquids.  Testimony concluded that the modeled production anticipated to be recovered by each well showed the project was economic.

 

18.       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.

 

19.       Carrizo agreed to be bound by oral order of the Commission. 

 

20.       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 an additional nine horizontal wells, for a total of up to 15 horizontal wells within an approximate 640-acre drilling and spacing unit established for Section 26, Township 8 North, Range 60 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Nine additional horizontal wells, for a total of up to 15 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 productive interval of the wellbore to be located no closer than 600 feet from the north, west and south section lines which are adjacent to a section containing federal minerals and no closer than 300 feet from the east section line, and no closer than 300 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:

                   

                        Township 8 North, Range 60 West, 6th P.M.

                        Section 26:      All

 

2.         The proposed wells shall be located on no more than one wellpad per 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 35 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 ______ day of January, 2014, as of December 16, 2013.

           

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary