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 NIOBRARA FORMATION, UNNAMED FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 1407-SP-2080
ORDER NO. 535-525 |
REPORT OF THE COMMISSION
The Commission heard this matter on July 28, 2014, at the Weld County Administration Building - Events Center, 1150 “O” Street, Greeley, CO upon application for an order to: 1) vacate two approximate 640-acre drilling and spacing units established by Order No. 535-3, for Sections 2 and 3, Township 8 North, Range 61 West, 6th P.M.; 2) vacate Order No. 535-295 as it applies to Section 2, Township 8 North, Range 61 West, 6th P.M.; 3) vacate Order Nos. 535-215, 535-373, 535-411 and 535-463 in their entirety; and 4) establish an approximate 960- acre drilling and spacing unit for Sections 2 and 3, Township 8 North, Range 61 West, 6th P.M., and approve up to a total of 16 horizontal wells within the unit, the production of oil, gas, and associated hydrocarbons of 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. Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that, on unspaced lands, wells drilled 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. Upon approval of this Application, the E˝ of Section 2, Township 8 North, Range 61 West, 6th P.M. will be revert to Rule 318.a. for the Niobrara Formation.
5. On February 22, 2011, the Commission entered Order No. 535-3 which established 160 approximate 640-acre drilling and spacing units, and approved one horizontal well in each unit for the Niobrara Formation. Sections 2 and 3, Township 8 North, Range 61 West. 6th P.M. are subject to this Order for the Niobrara Formation.
5. On November 15, 2012, the Commission entered Order No. 535-215, which established two approximate 640-acre drilling and spacing units and approved two horizontal wells in each unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation. Section 2, Township 8 North, Range 61 West, 6th P.M. is subject to this Order for the Niobrara Formation.
6. On March 25, 2013, the Commission entered Order No. 535-295 which approved up to a total of six horizontal wells, within each of two approximate 640-acre drilling and spacing units, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation. Section 2, Township 8 North, Range 61 West, 6th P.M. is subject to this Order for the Niobrara Formation.
7. On July 29, 2013, the Commission entered Order No. 535-373 which approved up to a total of 13 horizontal wells within an approximate 640-acre drilling unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation. Section 2, Township 8 North, Range 61 West, 6th P.M. is subject to this Order for the Niobrara Formation.
8. On September 16, 2013, the Commission entered Order No. 535-411 which established an approximate 640-acre drilling and spacing unit, and approved up to a total of 16 horizontal wells, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Section 2, Township 8 North, Range 61 West, 6th P.M. is subject to this Order for the Niobrara Formation.
9. On January 27, 2014, the Commission entered Order No. 535-463 which pooled all interests in an approximate 640-acre drilling and spacing unit established for Section 2, Township 8 North, Range 61 West, 6th P.M., to accommodate the Ross 1-2-8-61 Well (API No. 05-123-38575), and subjected all non-consenting interests to the cost recovery provisions in §34-60-116(7), C.R.S., for the development and operation of the Niobrara Formation.
10. On May 29, 2014 (amended July 3, 2014), Carrizo, by its attorneys, filed a verified application (“Amended Application”) pursuant to §34-60-116, C.R.S. for an order to: 1) vacate two approximate 640-acre drilling and spacing units established by Order No. 535-3 for Sections 2 and 3, Township 8 North, Range 61 West, 6th P.M.; 2) vacate Order No. 535-295 as it applies to Section 2, Township 8 North, Range 61 West, 6th P.M.; 3) vacate Order Nos. 535-215, 535-373, 535-411 and 535-463 in their entirety; and 4) establish an approximate 960-acre drilling and spacing unit, and approve up to a total of 16 horizontal wells for the below-described lands (“Application Lands”), with the productive interval of each 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 61 West, 6th P.M.
Section 2: W˝
Section 3: All
Applicant requests that the proposed wells be located on no more than one well pad per quarter section within the unit, without exception granted by the Director.
Applicant states that upon vacating the approximate 640-acre drilling and spacing unit for Section 2, Township 8 North, Range 61 West, 6th P.M., the E˝ of Section 2, Township 8 North, Range 61 West, 6th P.M. will no longer be subject to a spacing order and will revert to Rule 318.a.
11. On July 15, 2014, 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.
12. Land Testimony and exhibits submitted in support of the Application by Craig E. Wiest, Western U.S. Land Manager for Carrizo, showed that Carrizo owns leasehold interests with the right to drill wells in the Application Lands.
13. Geologic Testimony and exhibits submitted in support of the Application by Paul Fears, DJ Basin Geologist for Carrizo, showed that the thickness of the Niobrara Formation underlying the Application Lands 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.
14. Engineering Testimony and exhibits submitted in support of the Application by Andrew R. Agosto, Vice President of Business Development for Carrizo, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated to be 32 acres, and 960-acre drilling and spacing units are therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Niobrara Formation.
15. 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.
16. Carrizo agreed to be bound by oral order of the Commission.
17. 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: 1) vacate two approximate 640-acre drilling and spacing units established by Order No. 535-3, for Sections 2 and 3, Township 8 North, Range 61 West, 6th P.M.; 2) vacate Order No. 535-295 as it applies to Section 2, Township 8 North, Range 61 West, 6th P.M.; 3) vacate Order Nos. 535-215, 535-373, 535-411 and 535-463 in their entirety; and 4) establish an approximate 960- acre drilling and spacing unit for Sections 2 and 3, Township 8 North, Range 61 West, 6th P.M., and approve up to a total of 16 horizontal wells within the unit, the production of oil, gas, and associated hydrocarbons of the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. Two approximate 640-acre drilling and spacing units established by Order No. 535-3 for Sections 2 and 3, Township 8 North, Range 61 West, 6th P.M., are hereby vacated.
2. Order No. 535-295, as it applies to Section 2, Township 8 North, Range 61 West, 6th P.M., is hereby vacated.
3. Order Nos. 535-215, 535-373, 535-411 and 535-463, are hereby vacated, in their entirety.
4. An approximate 960-acre drilling and spacing unit for the below-described lands, is hereby established, and up to a total of 16 horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore will 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 61 West, 6th P.M.
Section 2: W˝
Section 3: All
5. All proposed wells shall be located on no more than one well pad per quarter section within the unit, without exception being granted by the Director.
6. The E˝ of Section 2, Township 8 North, Range 61 West, 6th P.M. shall no longer be subject to a spacing order and shall revert to Rule 318.a.
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 13th day of August, 2014, as of July 28, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary