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, MORGAN  COUNTY, COLORADO

)

)

)

)

)

CAUSE NO. 535

DOCKET NO. 150700439

TYPE: SPACING

 

ORDER NO. 535-684

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 vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-660 for Section 17, Township 5 North, Range 60 West, 6th P.M. and to establish one approximate 1280-acre drilling and spacing unit for Sections 17 and 20, Township 5 North, Range 60 West, 6th P.M. and approve up to 28 horizontal wells within the unit, with 24 horizontal wells to be drilled to the Niobrara Formation and four horizontal wells to be drilled to the Codell Formation, for the production of oil, gas, and associated hydrocarbons of the Codell and Niobrara Formations.

FINDINGS

The Commission finds as follows:

1.         Caerus WashCo LLC (“Caerus” 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. Section 20, Township 5 North, Range 60 West, 6th P.M. is subject to this Rule for the Niobrara and Codell Formations.

5.         On April 13, 2015, the Commission entered Order 535-660 which, among other things, established an approximate 640-acre drilling and spacing unit for Section 17, Township 5 North, Range 60 West, 6th P.M., and approved up to twenty-four horizontal wells in the Niobrara Formation and four horizontal wells in the Codell Formation within the unit, for the production of oil and gas and associated hydrocarbons from the Niobrara and Codell Formations

6.         On May 21, 2015, Caerus, 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 535-660 for Section 17, Township 6 North, Range 60 West, 6th P.M., and establish one approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries and no closer than 100 feet from the productive interval of any other wellbore producing from the Niobrara and/or Codell Formations, without exception being granted by the Director:

Township 5 North, Range 60 West, 6th P.M.

Section 17:  All
Section 20:  All

Applicant also requests that the proposed wells be located on no more than four wellpads within the unit or on adjacent lands, without exception granted by the Director.

6.         On June 29, 2015, Caerus, 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.

7.         Land testimony and exhibits submitted in support of the Application by Jeff Grisham, Landman for Caerus showed that Caerus owns a substantial leasehold interest and is an owner with the right to drill wells in the Application Lands.

8.         Geologic testimony and exhibits submitted in support of the Application by Lisa Gusek, Petroleum Geologist for Caerus, showed the Niobrara and Codell Formations are present, uniform, and are a common source of supply throughout the Application Lands. Testimony further showed that the Niobrara Formation has an average thickness of 292 - 302 feet and the Codell Formation has an average thickness of 10 feet across the Application Lands.

9.         Engineering testimony and exhibits submitted in support of the Application by Jeffery Baldauf, Reservoir Engineering Manager for Caerus, showed that the estimated drainage area for eight wells located in each of the A, B and C benches of the Niobrara Formation would be approximately 52 acres. Testimony concluded the drilling, completion, and production of horizontal Niobrara and Codell wells requested in the Application for the Application Lands, will increase recovery from the reservoir and thereby prevent waste, will protect correlative rights, and can be done economically and efficiently.

10.       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.

11.       Caerus agreed to be bound by oral order of the Commission. 

12.       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. 535-660 for Section 17, Township 5 North, Range 60 West, 6th P.M. and to establish one approximate 1280-acre drilling and spacing unit for Sections 17 and 20, Township 5 North, Range 60 West, 6th P.M. and approve up to 28 horizontal wells within the unit, with 24 horizontal wells to be drilled to the Niobrara Formation and four horizontal wells to be drilled to the Codell Formation, for the production of oil, gas, and associated hydrocarbons of the Codell and Niobrara Formations.

ORDER

IT IS HEREBY ORDERED:

1.         An approximate 640-acre drilling and spacing unit established by Order 535-660 for Section 17, Township 5 North, Range 60 West, 6th P.M., is hereby vacated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

2.         An approximate 1280-acre drilling and spacing unit, is hereby established, for the below-described lands, and up to 28 horizontal wells within the unit, with 24 horizontal wells to be drilled to the Niobrara Formation and four horizontal wells to be drilled to the Codell Formation, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations:

Township 5 North, Range 60 West, 6th P.M.

Section 17:    All
Section 20:    All

3.         The productive interval of any wellbore shall be located no closer than 600 feet from the unit boundaries and no closer than 100 feet from the productive interval of any other wellbore producing from the Niobrara and/or Codell Formations, without exception being granted by the Director.

4.         The proposed wells shall be located be located on no more than four wellpads within the unit or on adjacent lands, without exception granted by the Director.

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