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 AND CODELL FORMATIONS, UNNAMED FIELD, WELD COUNTY, COLORADO
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CAUSE NO. 535
DOCKET NO. 150900501
ORDER NO. 535-704
TYPE: SPACING
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REPORT OF THE COMMISSION
The Commission heard this matter on October 26, 2015, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver, Colorado, upon application for an order to vacate two approximate 640-acre drilling and spacing units established by Order Nos. 535-69 and 535-86, establish an approximate 960-acre drilling and spacing unit for Section 32, Township 9 North, Range 59 West, 6th P.M. and Section 5, Township 8 North, Range 59 West, 6th P.M., and approve up to 28 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
FINDINGS
The Commission finds as follows:
1. Crescent Point Energy U.S. Corp. (“Crescent Point” 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. On September 19, 2011, the Commission entered Order No. 535-69, which, among other things, established an approximate 640-acre drilling and spacing unit comprised of All of Section 32, Township 9 North, Range 59 West, 6th P.M., and approved up to two horizontal wells within the unit, for production of oil, gas and associated hydrocarbons from the Niobrara Formation.
5. On October 31, 2011, the Commission entered Order No. 535-86, which, among other things, established an approximate 640-acre drilling and spacing unit comprised of All of Section 5, Township 8 North, Range 59 West, 6th P.M., and approved up to two horizontal wells within the unit, for production of oil, gas and associated hydrocarbons from the Niobrara Formation.
6. On July 16, 2015, Crescent Point, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order vacate two approximate 640-acre drilling and spacing units established by Order Nos. 535-69 and 535-86, establish an approximate 960-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 28 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, with the productive interval of the wellbore to be no closer than 460 feet from the unit boundaries, and not less than 150 feet from the productive interval of any other wellbore located in the unit, unless an exception is granted by the Director:
Township 9 North, Range 59 West, 6th P.M.
Section 32: All
Township 8 North, Range 59 West, 6th P.M.
Section 5: N½
7. On September 5, 2015, Crescent Point, 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. Land testimony and exhibits submitted in support of the Application by Thomas Abell, Colorado Landman for Crescent Point, showed that Crescent Point holds oil and gas leasehold interests and has a right to drill in the Application Lands.
9. Geologic testimony and exhibits submitted in support of the Application by Jason Anderson, Senior Geologist for Crescent Point, showed that the Niobrara and Codell Formations are present throughout the Application Lands, and are approximately 305 feet thick from the top of the Niobrara to the bottom of the Codell, and are generally of uniform thickness throughout the Application Lands.
10. Engineering testimony and exhibits submitted in support of the Application by Pamela Bunz, Senior Development Engineer for Crescent Point, showed that the drainage area for analog horizontal Niobrara and Codell Formation wells are estimated at 108 to 118 acres, and an approximate 960-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 28 horizontal wells producing oil, gas and associated hydrocarbons from the benches of the Niobrara and Codell Formations.
11. 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.
12. On October 15, 2015, Crescent Point, by its attorneys, agreed that the drilling and spacing unit contains federal minerals. As such, Crescent Point agreed to submit a Communitization Agreement (“CA”) to the BLM for any existing wells within 60 days of the entry of this order. Crescent Point also agreed 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).
13. Crescent Point 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 two approximate 640-acre drilling and spacing units established by Order Nos. 535-69 and 535-86, establish an approximate 960-acre drilling and spacing unit for Section 32, Township 9 North, Range 59 West, 6th P.M. and Section 5, Township 8 North, Range 59 West, 6th P.M., and approve up to 28 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
ORDER
IT IS HEREBY ORDERED:
1. Order Nos. 535-69 and 535-86 are hereby vacated.
2. An approximate 960-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 28 horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:
Township 9 North, Range 59 West, 6th P.M.
Section 32: All
Township 8 North, Range 59 West, 6th P.M.
Section 5: N½
3. The productive interval of the wellbore will be no closer than 460 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in such unit, unless an exception is granted by the Director.
4. The wells will be drilled from no more than four well pads within the unit, unless an exception is granted by the Director.
5. Crescent Point will submit a Communitization Agreement (“CA”) to the BLM for any existing wells within 60 days of the entry of this order. Crescent Point 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 _____ day of November, 2015, as of October 26, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By__________________________________
Julie Murphy, Secretary