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. 1406-SP-2075
ORDER NO. 535-495 |
REPORT OF THE COMMISSION
The Colorado Oil and Gas Conservation Commission (“Commission”) heard this matter on June 17, 2014, at the Rifle Branch Library, Garfield County Public Library District, 207 East Avenue, Rifle, Colorado,, upon application for an order to modify Order No. 535-3, allowing 300 foot setbacks on the western section line of Section 7, Township 9 North, Range 58 West, 6th P.M. for 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. Section 7, Township 9 North, Range 58 West, 6th P.M. is subject to Rule 318.a. for the Codell Formation.
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. Section 7, Township 9 North, Range 58 West, 6th P.M. are subject to this Order for the Niobrara Formation.
6. On April 28, 2014, the Commission entered Order No. 535-479 which, among other things, modified the approximate 640-acre drilling and spacing unit established by Order No. 535-3 for Section 12, Township 9 North, Range 59 West, 6th P.M. to establish the Codell and Niobrara Formations as the spaced formations. The drilling and spacing unit was approved with the resolution of the Bureau of Land Management’s (“BLM”) protest to include the language, in relevant part: “With further exception allowing for corresponding reciprocal setbacks of 300 feet along the eastern section line of Section 12, Township 9 North, Range 59 West, 6th P.M. upon application and approval of 300 foot exterior boundary setbacks being approved by the Commission for the western section line of Section 7, Township 9 North, Range 58 West, 6th P.M. for the Codell Formation and Niobrara Formation, without exception being granted by Director.”
7. There is currently only one well producing from the Application Lands, the Timbro Federal LD #07-78HN (API No. 05-123-37002), a horizontal well spud on June 24, 2013, operated by Noble and producing from the Niobrara Formation. The records of the Commission reflect that this well’s treated intervals are more than 600 feet from the boundaries of the unit composed of the Application Lands.
8. On April 29, 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 for the western section boundary line by the Commission for a portion of Section 7, Township 9 North, Range 58 West, 6th P.M. for the Codell and Niobrara Formations:
Township 9 North, Range 58 West, 6th P.M.
Section 7: All (specific to the western unit boundary line only)
9. On April 29, 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.
10. Land testimony and exhibits submitted in support of the Application by Julie Jenkins, Land Manager, for Noble, showed that Noble Energy, Inc. and Noble Energy WyCo, LLC own a majority leasehold interest in the Application Lands.
11. 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 9 to 11 feet, that the average thickness of the Niobrara Formation within the Application Lands is 250 to 260 feet, and that the Codell and Niobrara Formations underlies the Application Lands.
12. 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. 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.
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 Order No. 535-3, allowing 300 foot setbacks on the western boundary section line of Section 7, Township 9 North, Range 58 West, 6th P.M. for the Codell and Niobrara Formations as to the Application Lands below, effective as of the date of the Application.
ORDER
NOW, THEREFORE IT IS ORDERED, that:
1. Order No. 535-3 is hereby modified to allow 300-foot setbacks as to the western boundary section lines of the below-described lands for the Codell and Niobrara Formations:
Township 9 North, Range 58 West, 6th P.M.
Section 7: All (specific to the western unit boundary 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 8th day of July, 2014, as of June 17, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ____________________________________
Robert J. Frick, Secretary