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. 150100071
ORDER NO. 535-631 |
REPORT OF THE COMMISSION
The Commission heard this matter on January 26, 2015 at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-325 for Section 35, Township 11 North, Range 58 West, 6th P.M. and establish an approximate 640-acre drilling and spacing unit for Sections 26 and 35, Township 11 North, Range 58 West, 6th P.M. and approve up to 16 horizontal wells within the unit, 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. (Operator No. 10439) (“Carrizo” or “Applicant”) 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. Sections 26 and 35, Township 11 North, Range 58 West, 6th P.M. are subject to this Rule for the Niobrara Formation.
5. On May 6, 2013, the Commission entered Order No. 535-325 which established an approximate 640–acre drilling and spacing unit and approved the drilling of up to six horizontal wells for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation. Section 35, Township 11 North, Range 58 West, 6th P.M., is subject to this Order.
6. On November 17, 2014, Carrizo, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-325 for Section 35, Township 11 North, Range 58 West, 6th P.M. and establish an approximate 640-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 16 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of the 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, with the wells to be drilled from no more than four well pads, without exception being granted by the Director:
Township 11 North, Range 58 West, 6th P.M.
Section 26: S½
Section 35: N½
7. On January 5, 2015, 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.
8. On January 12, 2015, the Bureau of Land Management (“BLM”) and Carrizo reached an agreement wherein 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 agreed to submit a CA to the BLM within 90 days of the date of first production (as defined by in the COGCC Rules) from the initial well within the drilling and spacing unit. The Application Lands contain leased minerals managed by BLM.
9. Land testimony and exhibits submitted in support of the Application by Craig E. Wiest, Land Manager–Western US for Carrizo, showed that Carrizo holds oil and gas leasehold interests and has a right to drill in the Application Lands. The land testimony further stated that Carrizo would drill the wells from no more than four well pads in the unit without exception being granted by the Director.
10. Geologic testimony and exhibits submitted in support of the Application by Paul Fears, DJ Basin Geologist for Carrizo, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 370 feet thick, and is generally of uniform thickness throughout the Application Lands.
11. 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 are estimated at 30.2 acres, and an approximate 640-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by the proposed horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara Formation.
12. 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.
13. Carrizo agreed to be bound by oral order of the Commission.
14. 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 vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-325 for Section 35, Township 11 North, Range 58 West, 6th P.M. and establish an approximate 640-acre drilling and spacing unit for Sections 26 and 35, Township 11 North, Range 58 West, 6th P.M. and approve up to 16 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 640-acre drilling and spacing unit for Section 35, Township 11 North, Range 58 West, 6th P.M. is hereby vacated, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
2. An approximate 640-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 16 horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:
Township 11 North, Range 58 West, 6th P.M.
Section 26: S½
Section 35: N½
3. 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.
4. The wells shall be drilled from no more than four wellpads, without exception being granted by the Director.
5. Carrizo shall submit a Communitization Agreement (CA) to the BLM for any existing wells within 60 days of the entry of this order. Carrizo shall also submit a CA to the BLM within 90 days of the date of first production (as defined by in the COGCC Rules) from the initial well 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 _____ day of February, 2015, as of January 26, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Jill Dorancy, Acting Secretary