BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

 

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. 1404-SP-2039

 

ORDER NO. 535-478

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on April 28, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to modify the approximate 1,286.95-acre drilling and spacing unit established by Order No. 535-335 for Sections 5 and 6, Township 9 North, Range 58 West, 6th P.M., to establish the Codell and Niobrara Formations as the spaced formations and approve up to 14 horizontal wells within the unit, and reduce setbacks from 600 to 300 feet along the northern, eastern and western exterior boundary lines.

 

FINDINGS

 

The Commission finds as follows:

 

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 5 and 6, Township 9 North, Range 58 West, 6th P.M. is subject to Rule 318.a. for the Codell Formation.

 

5.         On May 6, 2013, the Commission entered Order No. 535-335 which vacated Order No. 535-3 as it applied to Sections 5 and 6, Township 9 North, Range 58 West, 6th P.M., and established an approximate 1,280 acre drilling and spacing unit for the Niobrara Formation, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries.

 

6.         On February 27, 2014, Noble, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S. for an order to modify the approximate 1,286.95-acre drilling and spacing unit established by Order No. 535-335 to: 1) establish the Codell and Niobrara Formations as the spaced formations; 2) determine the appropriate number of wells to efficiently and economically recover the oil, gas and associated hydrocarbons from Codell and Niobrara Formations; and 3) require the productive interval of the wellbore to be located no closer than 300 feet from the northern, eastern and western unit boundaries, no closer than 600 feet from the southern unit boundary, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:

 

                        Township 9 North, Range 58 West, 6th P.M.

                        Section 5:                    ALL

                        Section 6:                    ALL

 

7.         On April 15, 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.

 

8.         Land testimony and exhibits submitted in support of the Application by Julie Jenkins, Land Manager for Noble, showed the minerals within the Application Lands consist solely of Fee minerals, the surface ownership is owned in Fee, and that Noble is an owner with the right to drill within the proposed unit.  Applicant requested the Commission approve up to 14 wells to be drilled from no more than eight new multi-well pads within the proposed unit.  Testimony further stated that Noble will negotiate to obtain surface use agreements with the surface owners covering any new wells proposed within the drilling and spacing unit.

 

9.         Applicant stated the Timbro LD06-64HN Well is currently permitted to the Niobrara Formation and will remain permitted to the Niobrara Formation unless or until a sundry is filed to reflect the Codell and Niobrara Formations.

 

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 11 feet, that the average thickness of the Niobrara formation within the Application Lands is 265 feet, that the Codell Formation immediately underlies the Niobrara Formation, that microseismic results show that during hydraulic fracturing seismic events occurring throughout the Niobrara and Codell Formation indicate that both formations are connected through the hydraulic fracture and may be producing as a single 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 0.188% 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 unit.  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.       Noble’s Application requested that the Codell-Niobrara Formation be used to describe the target formation.  The position of COGCC technical staff, however, is the Codell-Niobrara Formation is not a geologically recognized formation within the Application Lands and, therefore, the terminology “Codell and Niobrara Formations” shall be used.

 

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.       Noble 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 modify the approximate 1,286.95-acre drilling and spacing unit established by Order No. 535-335 for Sections 5 and 6, Township 9 North, Range 58 West, 6th P.M., to establish the Codell and Niobrara Formations as the spaced formations and approve up to 14 horizontal wells within the unit, and reduce setbacks from 600 feet to 300 feet along the northern, eastern and western exterior boundary lines.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         The approximate 1,286.95-acre drilling and spacing unit established by Order No. 535-335 for the below-described lands, is hereby modified, to establish the Codell and Niobrara Formations as the spaced formations:

 

                        Township 9 North, Range 58 West, 6th P.M.

                        Section 5:                    ALL

                        Section 6:                    ALL

 

2.         Up to 14 horizontal wells within the unit are hereby approved.

 

3.         The productive interval of the wellbore shall be located no closer than 300 feet from the northern, eastern and western unit boundaries, no closer than 600 feet from the southern unit boundary, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director.

 

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