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 CODELL AND NIOBRARA FORMATIONS, UNNAMED FIELD, WELD COUNTY, COLORADO

)

)

)

)

)

CAUSE NO. 535

DOCKET NO. 150700431

TYPE:  SPACING

 

ORDER NO. 535-680

 

REPORT OF THE COMMISSION

 

The Commission heard this matter on July 20, 2015, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to establish two approximate 640-acre drilling and spacing units for the Codell Formation for Sections 21 and 24, Township 9 North, Range 59 West, 6th P.M., and to approve up to 15 horizontal wells within the unit established for Section 21, Township 9 North, Range 59 West, 6th P.M. and up to 16 horizontal wells within the unit established for Section 24, Township 9 North, Range 59 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons of the Codell and Niobrara Formations.

 

FINDINGS

 

The Commission finds as follows:

 

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, 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 21 and 24, Township 9 North, Range 59 West, 6th P.M. are 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. Sections 21 and 24, Township 9 North, Range 59 West, 6th P.M. are subject to this Order for the Niobrara Formation.

6.         On June 17, 2014, the Commission entered Order No. 535-496 which, among other things, modified Order No. 535-3 to allow 300-foot setbacks for the southern section lines of Sections 22, 23, and 24, Township 9 North, Range 59 West, 6th P.M., the eastern section lines of Section 28 and 33, Township 9 North, Range 59 West, 6th P.M., and the northern section lines of Sections 3 and 4, Township 8 North, Range 59 West, 6th P.M., for the Codell and Niobrara Formations. Applicant seeks to modify Order No. 535-496 to allow 300-foot setbacks to all unit boundaries for the Codell and Niobrara Formations for Section 24, Township 9 North, Range 59 West, 6th P.M.

7.         On May 21, 2015, Noble, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to establish two approximate 640-acre drilling and spacing units for the Codell Formation for the below-described lands (“Application Lands”), and to approve up to 15 horizontal wells within DSU #1, and up to 16 horizontal wells within DSU #2, for the production of oil, gas, and associated hydrocarbons of the Codell and Niobrara Formations, with the productive interval of the wellbore to be located no closer than 300 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:

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

Section 21:      All

 

Township 9 North, Range 59 West, 6th P.M.              DSU #2

Section 24:      All

 

8.         On June 29, 2015, 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.

 

9.         On July 13, 2015, Noble and the Bureau of Land Management (“BLM”) agreed that the drilling and spacing unit contains federal leased and/or unleased minerals.  As such, Noble agrees to submit a Communitization Agreement (“CA”) to the BLM for any existing wells within 60 days of the entry of this order.  Noble also agrees to submit a CA to the BLM at least 90 days before the anticipated date of first production (as defined in the COGCC Rules) from the initial well drilled within the drilling and spacing unit.

 

10.       Land testimony and exhibits submitted in support of the Application by Charles A. Snure, Land Manager for Noble, showed that both the surface and the mineral interest in the Application Lands is owned both federally and in fee. The Bureau of Land Management owns approximately 50% of the mineral interest within DSU #1 and DSU #2. Applicant holds a leasehold interest of approximately 50% in DSU #1, and approximately 100% in DSU #2. Approximately 6.25% of the surface within the DSU #1 and DSU #2 is located on or adjacent to the Pawnee National Grasslands and is designated as “No Surface Occupancy” for purposes of oil and gas development on such surface. Land testimony also showed the location of four (4) new wellpads within the boundaries of DSU #2, and the location of four (4) adjacent new wellpads for the development of DSU #1, which are located within the Applicant’s corresponding 3840-acre drilling and spacing unit.

 

11.       Geoscience testimony and exhibits submitted in support of the Application by Mark Nicholson, Geologist for Noble, showed the Codell Formation is present throughout the Application Lands, and is approximately 8-10 feet thick. Further, Geoscience testimony and exhibits showed that the Niobrara Formation is present throughout the Application Lands, and is approximately 295-305 feet thick.

 

12.       Engineering testimony and exhibits submitted in support of the Application by Jenette Hilton, Senior Production Engineer for Noble, demonstrated the estimated oil equivalent in place and economic calculations estimated for wells drilled within the Application Lands, among other things. Applicant also requested that the Commission take administrative notice of the testimony filed in Order No. 535-615 to support the estimated drainage for the Codell and Niobrara Formations.

 

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 establish two approximate 640-acre drilling and spacing units for the Codell Formation for Sections 21 and 24, Township 9 North, Range 59 West, 6th P.M., and approve up to 15 horizontal wells within the unit established for Section 21, Township 9 North, Range 59 West, 6th P.M. and up to 16 horizontal wells within the unit established for Section 24, Township 9 North, Range 59 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons of the Codell and Niobrara Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Two approximate 640-acre drilling and spacing units for the below-described lands, is hereby established, for the production of oil, gas and associated hydrocarbons from the Codell Formation:

 

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

Section 21:      All

 

Township 9 North, Range 59 West, 6th P.M.              DSU #2

Section 24:      All

 

2.         Up to 15 horizontal wells within the DSU #1, and up to 16 horizontal wells within the DSU #2, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations.

 

 3.        The treated interval of the wellbores to be located no closer than 300 feet from the unit boundaries, and no closer than 150 feet from the treated interval of any other wellbore located in the unit, without exception being granted by the Director.

 

4.         The proposed wells in DSU #1 shall be drilled from wellpads located on adjacent lands and the proposed wells in DSU #2 shall be drilled from no more than four new wellpads within DSU #2.

 

5.         Noble agrees to submit a Communitization Agreement (“CA”) to the BLM for any existing wells within 60 days of the entry of this order.  Noble also agrees to submit a CA to the BLM at least 90 days before the anticipated date of first production (as defined in the COGCC Rules) from the initial well drilled within the exploratory drilling unit (or 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 4th day of August, 2015, as of July 20, 2015.

           

OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

By: ____________________________________     

     Julie Murphy, Secretary