BEFORE THE OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE CODELL AND NIOBRARA FORMATIONS, UNNAMED FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 1403-SP-2021
ORDER NO. 535-474 |
REPORT OF THE COMMISSION
The Commission heard this matter on April 28, 2014, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, 80203, upon application for an order to modify Order No. 535-3, allowing 300-foot setbacks as to the northern section lines of Sections 13 and 14, Township 9 North, Range 58 West, 6th P.M. and to modify Order No. 535-3 to amend the formation in Order No. 535-3 from the Niobrara Formation to the Codell and Niobrara Formations.
FINDINGS
1. Noble Energy, Inc. (“Noble” 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. Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that wells drilled, on unspaced lands, in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. Sections 13 and 14, Township 9 North, Range 58 West, 6th P.M. are subject to Rule 318.a. for the Codell and Niobrara Formations.
5. 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, with the surface location for any permitted horizontal well to be located anywhere in the drilling and spacing unit with the initial perforation and the ultimate bottomhole location being no closer than 600 feet from the boundaries of the drilling and spacing unit, without exception being granted by the Director of the Commission. Sections 13 and 14, Township 9 North, Range 58 West, 6th P.M. are subject to this Order for the Codell and Niobrara Formations.
6. On December 16, 2013, the Commission entered Order No. 535-451 which established an approximate 3200-acre unconventional resource unit for five sections directly north of Sections 13 and 14, Township 9 North, Range 58 West, 6th P.M. The URU was approved with the resolution of the Bureau of Land Management’s (“BLM”) protest to include the language “with the intrawell distance to be no closer than 150 feet from the productive interval of any other wellbore producing from the Codell-Niobrara Formation, and no closer than 300 feet from the exterior boundaries of the unit, except along the southern section lines of Sections 11 and 12, Township 9 North, Range 58 West, 6th P.M. which shall be no closer than 600 feet from the exterior unit boundary, with a further exception allowing for corresponding reciprocal setbacks of 300 feet along the southern section lines of Sections 11 and 12, upon application and approval of 300 foot boundary setbacks by the Commission for the northern section lines of Sections 13 and 14, Township 9 North, Range 58 West, 6th P.M. without exception being granted by the Director.” Sections 13 and 14, Township 9 North, Range 58 West, 6th P.M. are subject to this Order No. 535-451 for the Codell and Niobrara Formations.
7. On January 16, 2014, Noble, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to modify Order No. 535-3, allowing 300 foot setbacks as to the northern section lines of Sections 13 and 14, Township 9 North, Range 58 West, 6th P.M. and to modify Order No. 535-3 to amend the formation in Order No. 535-3 from the Niobrara Formation to the Codell-Niobrara Formation, but only as to the Application Lands described below, effective as of the date of the Application:
Township 9 North, Range 58 West, 6th P.M.
Section 13: All (with setbacks specific to the northern section line only)
Section 14: All (with setbacks specific to the northern section line only)
Applicant requested that Order No. 535-3 be modified only as to the northern unit boundary lines of the Application Lands.
8. On March 4, 2014, Noble, 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.
9. Land testimony and exhibits submitted in support of the Application by Julie Jenkins, Land Manager, for Noble, showed that the Application Lands consist of 1,280 acres of Fee and Federal surface. Noble owns a majority leasehold interest in the Application Lands.
10. Geologic testimony and exhibits submitted in support of the Application by Mark Nicholson, Geologist, for Noble stated that the Codell and Niobrara Formations exist under the Application Lands, that the average thickness of the Codell Formation within the Application Lands is 10 to 11.5 feet, that the average thickness of the Niobrara Formation within the Application Lands is 260 to 265 feet thick, and that the Codell Formation immediately underlies the Niobrara Formation.
11. Engineering testimony and exhibits submitted in support of the Application by Jenette Hilton, Senior Production Engineer for Noble, indicated that volumetric calculations of the Codell-Niobrara Formation indicate that the estimated recovery factor of hydrocarbons under the Application Lands using a horizontal lateral would be approximately 0.075% per well and that multiple horizontal laterals can capture additional reserves without the need for drilling individual vertical wells, and reduces surface disturbance in the URU by approximately 67%. Such testimony also illustrated that the economic calculations indicate that the NPV10 and rate of return values for vertical well development would be negative while and the horizontal lateral development is economic.
12. On March 13, 2014, the Bureau of Land Management (“BLM”) filed a protest to the Application alleging that Noble had not provided sufficient and specific evidence and justification that the Codell-Niobrara Formation reservoir characteristics, completion techniques and production at 300 foot setbacks would not impact the correlative rights of the adjacent mineral estate. The BLM requested that the Commission deny the Application and not allow for well setback distances less than 600 feet from the unit boundary.
13. On March 13, 2014, Noble requested, and the Commission staff granted, a continuance to the April 28, 2014 hearing.
14. On April 23, 2014, Commission staff determined that there was insufficient technical data to justify that the Codell-Niobrara Formation should be treated as one formation.
15. On April 24, 2014, Noble changed its request to modify Order No. 535-3 to amend the formation in Order No. 535-3 from the Niobrara Formation to the Codell and Niobrara Formations.
16. On April 24, 2014, the BLM withdrew its protest to the Application.
17. 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.
18. Noble agreed to be bound by oral order of the Commission.
19. 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 modify Order No. 535-3, allowing 300 foot setbacks as to the northern section lines of Sections 13 and 14, Township 9 North, Range 58 West, 6th P.M. and to modify Order No. 535-3 to amend the formation in Order No. 535-3 from the Niobrara Formation to the Codell and Niobrara Formations.
ORDER
NOW, THEREFORE IT IS ORDERED, that:
1. Order No. 535-3 is hereby modified to allow 300-foot setbacks as to the northern section lines of Sections 13 and 14, Township 9 North, Range 58 West, 6th P.M. and
2. Order No. 535-3 is also modified to amend the Niobrara Formation to the Codell and Niobrara Formations, as to the below-described lands:
Township 9 North, Range 58 West, 6th P.M.
Section 13: All (with setbacks specific to the northern section line only)
Section 14: All (with setbacks specific to the northern section line only)
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 23rd day of May, 2014, as of April 28, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ____________________________________
Robert J. Frick, Secretary