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 NIOBRARA FORMATION, UNNAMED FIELD, WELD COUNTY, COLORADO

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CAUSE NO.  535

 

DOCKET NO. 150400266

 

ORDER NO. 535-662

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on April 13, 2015, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to establish that the productive interval of the wellbore shall be located no closer than 150 feet from the productive interval of any other wellbore located in an approximate 640-acre drilling and spacing unit established for Section 36, Township 9 North, Range 59 West, 6th P.M. and an approximate 960-acre drilling and spacing unit established for Section 27 and the E˝ of Section 28, Township 10 North, Range 59 West 6th P.M., for the development and operation of the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.            Carrizo Oil and Gas, Inc. (Operator No. 10338) (“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 December 23, 2011, the Commission entered Order No. 535-99 which, among other things, established an approximate 640-acre drilling and spacing unit for a portion of DSU # 2 and allowed up to two horizontal wells in the unit for development and production of oil, gas and related hydrocarbons from the Niobrara Formation. 

 

5.            On December 12, 2011, Order No. 535-102 which established three approximate 640-acre drilling and spacing units for certain lands including DSU # 1 and allowed up to two horizontal wells in each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. 

 

6.            On May 29, 2012, the Commission entered Order No. 535-159 which pooled all interests in a portion of DSU # 2, for the development and production of oil, gas and associated hydrocarbons from the Niobrara Formation.  On November 15, 2012, the Commission entered Order No. 535-217, which approved up to four horizontal wells in DSU # 1, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. 

 

7.            On February 11, 2013, the Commission entered Order No. 535-264 which approved up to six horizontal wells in a portion of DSU # 2, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

8.            On February 11, 2013, the Commission entered Order No. 535-272 which established four approximate 640-acre exploratory drilling and spacing units for certain lands including a portion of DSU # 2, and approved one horizontal well within each unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

9.            On March 25, 2013, the Commission entered Order No. 535-292 which approved up to six horizontal wells in DSU # 1, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. 

 

10.          On May 6, 2013, the Commission entered Order No. 535-329 which vacated Order Nos. 535-99, 535-159, 535-272 and 535-264 and established two approximate 960-acre exploratory drilling and spacing unit for DSU # 2, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. 

 

11.          On June 17, 2013, the Commission entered Order No. 535-342 which approved up to 13 horizontal wells within DSU # 2 and established unit-boundary setbacks of 600 feet, with internal wellbores offset by 300 feet, and 100 foot “heel-and-toe” completed interval setbacks from the unit boundaries perpendicular to the well laterals apply so long as Applicant obtains exception location approvals pursuant to Rule 318.c., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. 

 

12.          On July 29, 2013, the Commission entered Order No. 535-364 which pooled all interests in the DSU # 2 for the development and operation the Niobrara Formation.

 

13.          On October 28, 2013, the Commission entered Order No. 535-424 which approved an additional nine horizontal wells, for a total of up to 15 horizontal wells in DSU # 1 with the productive interval of the wellbore to be located no closer than 600 feet from the south and east section lines which are adjacent to lands containing federal minerals, and no closer than 300 feet from the north and west section lines, 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. 

 

14.          On December 15, 2014, Order No. 535-584 approved an additional 19 horizontal wells, for a total of up to 32 horizontal wells in DSU # 2, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. 

 

15.          On December 15, 2014, the Commission entered Order No. 535-588 which approved an additional 17 horizontal wells, for a total of up to 32 horizontal wells, in DSU # 1, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. 

 

16.          On March 4, 2014, Carrizo Oil and Gas, Inc. (“Carrizo” or “Applicant”), by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to establish that the productive interval of the wellbore shall be located no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception granted by the Director for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:           

Township 9 North, Range 59 West, 6th P.M.  (DSU # 1)

Section 36:      All

 

Township 10 North, Range 59 West, 6th P.M.  (DSU # 2)

Section 27:      All

Section 28:      E˝  

17.       On March 23, 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.

18        Applicant noted that Order No. 535-588 authorized up to 32 wells in DSU # 1 and Order No. 535-584 authorized up to 32 wells in DSU # 2.  Due to a typographical error, these units were approved with 300 foot interwell setbacks.  The relief requested reduces the interwell setbacks so that each unit can accommodate the previously-approved 32 horizontal laterals.

19.       Land testimony and exhibits submitted in support of the Application by Ross D. Wardlaw, Senior Landman, for Applicant showed that the Applicant is an owner with the right to drill wells in the Application Lands.

20.       Geologic testimony and exhibits submitted in support of the Application by Paul Fears, Geologist for Applicant, showed that the Niobrara Formation underlies 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 for DSU # 1 and 340 feet for DSU # 2.  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.

21.       Engineering testimony and exhibits submitted in support of the Application by Andrew R. Agosto, Vice President of Business Development for Applicant, showed estimated drainage areas and drainage widths calculated for ten actual wells drilled and produced by Carrizo in the following areas: Township 9 North, Range 58 West; 6th P.M.; Township 9 North, Range 59 West; 6th P.M.; Township 9 North, Range 60 West, 6th P.M.  The average drainage area and width for these 10 wells is 69 acres and 573 feet, respectively, which is less than a 640-acre spacing unit.  All 10 of these wells were drilled into the Niobrara B-Zone.

22.       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.

23.       Carrizo agreed to be bound by oral order of the Commission. 

24.       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 establish that the productive interval of the wellbore shall be located no closer than 150 feet from the productive interval of any other wellbore located in an approximate 640-acre drilling and spacing unit established for Section 36, Township 9 North, Range 59 West, 6th P.M. and an approximate 960-acre drilling and spacing unit established for Section 27 and the E˝ of Section 28, Township 10 North, Range 59 West 6th P.M., for the development and operation of the Niobrara Formation.   

ORDER

 

            IT IS HEREBY ORDERED:

 

1.            The productive interval of the wellbore shall be located no closer than 150 feet from the productive interval of any other wellbore within the drilling and spacing units established for the below-described lands, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, without exception granted by the Director:

 

                        Township 9 North, Range 59 West, 6th P.M.  (DSU # 1)

                        Section 36:      All

 

Township 10 North, Range 59 West, 6th P.M.  (DSU # 2)

Section 27:      All

Section 28:      E˝  

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 27th day of April, 2015, as of April 13, 2015.            

           

 

OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

By: ____________________________________     

     Julie Murphy, Secretary