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. 150900491 ORDER NO. 535-692 TYPE: SPACING

REPORT OF THE COMMISSION

            The Commission heard this matter on September 14, 2015, at the Western State Colorado University, University Center, South Ballroom, 600 North Adams Street, Gunnison, Colorado, upon application for an order to establish an approximate 320-acre drilling and spacing unit for the N1/2 of Section 35, Township 9 North, Range 58 West, 6^th 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 (Niobrara) LLC (“Carrizo” or “Applicant”) (Operator No. 10439) 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. 

5.           On June 22, 2015, Carrizo, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116 C.R.S. for an order to establish an approximate 320-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 no closer than 300 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located within the same bench of the Niobrara Formation in the unit, and no closer than 100 feet from the productive interval of any other wellbore located in a bench above or below the bench where that wellbore is located in the Unit, unless an exception is granted by the Director:

Township 9 North, Range 58 West, 6^th P.M.

                                    Section 35:      N½

6.         On August 25, 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.

            7.         Land testimony and exhibits submitted in support of the Application by Ross Wardlaw, Senior Landman for Carrizo, showed that Carrizo holds oil and gas leasehold interests and has a right to drill in the Application Lands.      

8.         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 300 feet thick, and is generally of uniform thickness throughout the Application Lands.

9.         Engineering testimony and exhibits submitted in support of the Application by Andrew Agosto, Vice President of Business Development for Carrizo, showed that the drainage area for analog horizontal Niobrara Formation wells are estimated at 40 acres, and an approximate 320-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 16 horizontal wells producing oil, gas and associated hydrocarbons from the benches of the Niobrara Formation.

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.       Carrizo 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 establish an approximate 320-acre drilling and spacing unit for the N1/2 of Section 35, Township 9 North, Range 58 West, 6^th 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 320-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 9 North, Range 58 West, 6^th P.M.

                                    Section 35:      N½

2.         The productive interval of the wellbore will be no closer than 300 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located within the same bench of the Niobrara Formation in the unit, and no closer than 100 feet from the productive interval of any other wellbore located in a bench above or below the bench where that wellbore is located in the Unit, unless an exception is granted by the Director.

3.         The wells will be drilled from no more than two well pads within the unit, unless an exception is 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 _____ day of September, 2015, as of September 14, 2015.          

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By__________________________________

Julie Murphy, Secretary