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. 1412-AW-32
ORDER NO. 535-583 |
REPORT OF THE COMMISSION
The Commission heard this matter on December 15, 2014, at the offices of the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to approve an additional two horizontal wells, for a total of up to 16 horizontal wells within an approximate 640-acre drilling and spacing unit established for Section 25, Township 9 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 February 22, 2011, the Commission entered Order No. 535-3 which established 160 approximate 640-acre drilling and spacing units for certain lands including the Application Lands and allowed one horizontal well in each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Section 25, Township 9 North, Range 60 West, 6th P.M. is subject to this Order for the Niobrara Formation.
5. On February 11, 2013, the Commission entered Order No. 535-265 which approved up to six horizontal wells within an approximate 640-acre drilling and spacing unit established for Section 25, Township 9 North, Range 60 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
6. On March 25, 2013, the Commission entered Order No 535-287 which pooled all interests within an approximate 640-acre drilling and spacing unit established for Section 25, Township 9 North, Range 60 West, 6th P.M., for the development and operation of the Niobrara Formation.
7. On December 16, 2013, the Commission entered Order No. 535-437 which approved up to 14 horizontal wells within an approximate 640-acre drilling and spacing unit, 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, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
8. On October 16, 2014, Carrizo, 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 two 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 treated interval of the wellbore to be located no closer than 300 feet from the unit boundaries, and no closer than 300 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director:
Township 9 North, Range 60 West, 6 th P.M.
Section 25: All
9. Applicant stated that the proposed wells shall be located on no more than four wellpads within the drilling and spacing unit.
10. On November 24, 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.
11. On December 3, 2014, Carrizo, by its attorneys, and the Bureau of Land Management (“BLM”) agreed that the Application Lands contain federal leased and/or unleased minerals. As such, Carrizo agrees to submit a Communitization Agreement (“CA”) to the BLM for any existing wells within 60 days of the entry of this order. Carrizo also agrees to submit a CA to the BLM within 90 days from the date of first production (as defined in the Commission Rules) from the initial well drilled within the exploratory drilling unit (or drilling and spacing unit).
12. Land testimony and exhibits submitted in support of the Application by Craig E. Wiest, Land Manager for Carrizo, showed that the Applicant is an owner with the right to drill wells in the Application Lands.
13. Geologic testimony and exhibits submitted in support of the Application by Paul Fears, Geologist for Carrizo, showed that the Niobrara Formation to be uniform in thickness and underlying 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 315 feet.
14. Engineering testimony and exhibits submitted in support of the Application by Andrew R. Agosto, Vice President of Business Development for Carrizo, showed that using reservoir properties, determined from performance of actual wells drilled by Carrizo as a basis for modeling, analog development scenarios resulted in efficient drainage of an area of approximately 35 acres per wellbore.
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 approve an additional two horizontal wells, for a total of up to 16 horizontal wells, within an approximate 640-acre drilling and spacing unit established for Section 25, Township 9 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. An additional two 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, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:
Township 9 North, Range 60 West, 6 th P.M.
Section 25: All
2. The productive interval of the wellbore shall be located no closer than 300 feet from the unit boundaries, and no closer than 300 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director.
3. The proposed wells shall be located on no more than four wellpads within the drilling and spacing unit, without exception being granted by the Director.
4. Carrizo agrees to submit a Communitization Agreement (“CA”) to the BLM for any existing wells within 60 days of the entry of this order. Carrizo also agrees to submit a CA to the BLM within 90 days from the date of first production (as defined in the Commission Rules) from the initial well drilled 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 30th day of December, 2014, as of December 15, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Jill Dorancy, Acting Secretary