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

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CAUSE NO. 535

 

DOCKET NO. 151200695

 

TYPE:  SPACING

 

ORDER NO. 535-724

 

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on March 7, 2016, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado upon application for an order to establish an approximate 640-acre exploratory drilling and spacing unit for Section 22, Township 8 North, Range 66 West, 6th P.M., and approve one horizontal well 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.         Great Western Operating Company, LLC (Operator No. 10110) (“Great Western” 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.         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.  The Application Lands are subject to Rule 318.a. for the Codell and Niobrara Formations.

 

5.         On October 7, 2015 (amended December 9, 2015), Great Western, by its attorneys, filed with the Commission a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 640-acre exploratory drilling and spacing unit for the below-described lands (“Application Lands”) and to approve one horizontal well 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 located no closer than 330 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 8 North, Range 66 West, 6th P.M.

Section 22:      All

 

6.         On February 12, 2016, supplemented on February 25, 2016, Great Western, 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.         On February 24, 2016, Great Western, by its attorneys, and the Bureau of Land Management (BLM) agreed that the exploratory drilling and spacing unit contains federal leased and/or unleased minerals.  As such, Great Western agreed to submit a Communitization Agreement (“CA”) to the BLM for any existing wells within 60 days of the entry of this Order.  Great Western also agreed to submit a CA to the BLM within 90 days from the date of first production (as defined in the Commission’s Rules) from the initial well drilled within the exploratory drilling and spacing unit.

 

            8.         Land testimony and exhibits submitted in support of the Application by Santiago Rodriguez, Senior Landman for Great Western, showed that Great Western 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 Willis E. Wilcoxon, Geologist for Great Western, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 280 to 320 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony further showed that the Codell Formation is present throughout the Application Lands, is approximately 25 to 33 feet thick, and is generally of uniform thickness throughout the Application Lands.

 

10.       Engineering testimony and exhibits submitted in support of the Application by Zack Warren, Reservoir Engineering Manager for Great Western, and by Jay Smith, Senior Vice President of Engineering for Great Western, showed that the drainage area for the proposed horizontal exploratory well is estimated at 60 acres, and an approximate 640-acre exploratory drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from 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.       Great Western agreed to be bound by oral order of the Commission.

 

13.       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 640-acre exploratory drilling and spacing unit for Section 22, Township 8 North, Range 66 West, 6th P.M., and approve one horizontal well within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

 

 

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         An approximate 640-acre exploratory drilling and spacing unit for the below-described lands, is hereby established, and a total of one horizontal well within the unit is hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:

 

Township 8 North, Range 66 West, 6th P.M.

Section 22:      All

 

 

2.         The productive interval of the wellbore will be located no closer than 330 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore producing from the same source of supply within the unit, without exception being granted by the Director.

 

3.         Great Western shall submit a CA to the BLM for any existing wells within 60 days of the entry of this order.  Great Western shall also submit a CA to the BLM within 90 days from the date of first production (as defined in the Commission’s Rules) from the initial well drilled within the exploratory 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 14th day of March, 2016, as of March 7, 2016.      

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By__________________________________

Julie Murphy, Secretary