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. 160100005

 

TYPE: SPACING

 

ORDER NO. 535-725

 

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: 1) amend an approximate 1349-acre drilling and spacing units established by Order No. 535-570 for Section 13 (Lots 1-4) and Sections 24 and 25, Township 12 North, Range 65 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell Formation such that the drilling and spacing units cover only Section 25, Township 12 North, Range 65 West, 6th P.M.; and 2) amend an approximate 1349-acre drilling and spacing units established by Order No. 535-648 for Section 13 (Lots 1-4) and Sections 24 and 25, Township 12 North, Range 65 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, such that the drilling and spacing units cover only Section 25, Township 12 North, Range 65 West, 6th P.M.

 

FINDINGS

 

The Commission finds as follows:

 

            1.         Anadarko E&P Onshore LLC, Operator No. 2800 (“Anadarko” 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.         On April 4, 2011, the Commission entered Order No. 535-5 which, among other things, established drilling and spacing units for certain lands, including certain portions of Section 13 (Lots 1-4) and Sections 24 and 25, Township 12 North, Range 65 West, 6th P.M., and approved two horizontal wells for the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

            5.         On October 27, 2014, the Commission entered Order No. 535-570 which, among other things, established an approximate 1349-acre drilling and spacing unit for Section 13 (Lots 1-4) and Sections 24 and 25, Township 12 North, Range 65 West, 6th P.M., and approved one horizontal well within the unit, for the production of oil, gas and associated hydrocarbons from the Codell Formation.

 

            6.         On May 18, 2015, the Commission entered Order No. 535-648 which, among other things, 1) vacated the approximate 708.80-acre drilling and spacing unit established by Order No. 535-5 for Section 13 (Lots 1-4) and Section 24 (All), Township 12 North, Range 65 West, 6th P.M.; 2) established the approximate 1349-acre drilling and spacing unit established for Section 13 (Lots 1-4) and Sections 24 and 25, Township 12 North, Range 65 West, 6th P.M., and approved seven horizontal wells within the unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 3) approved an additional five horizontal wells, for a total of six horizontal wells, in the approximate 1349-acre drilling and spacing unit established for Section 13 (Lots 1-4) and Sections 24 and 25, Township 12 North, Range 65 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell Formation; and 4) required the productive intervals of the wellbore to be not less than 600 feet from the unit boundaries with an inter-well setback of not less than 600 feet from the treated interval of a well producing from the same common source of supply, without exception being granted by the Director.

 

            7.         On November 13, 2015, Applicant, by its attorneys, filed with the Commission a verified application (“Application”) for an order to amend the approximate 1349-acre drilling and spacing unit established by Order No. 535-570 for the below-described lands (“Application Lands”), for the production of oil, gas and associated hydrocarbons from the Codell Formation; and amend the approximate 1349-acre drilling and spacing unit established by Order No. 535-648 for the Application Lands, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

 

Township 12 North, Range 65 West, 6th P.M.

Section 13:      Lots 1 through 4 (approximately 69 acres), being that portion lying within the state of Colorado

Section 24:      All

Section 25:      All

 

            8.         Applicant requested that the Commission amend the approximate 1349-acre drilling and spacing units established by Order Nos. 535-570 and 535-648 for the Codell and Niobrara Formations, respectively, such that both drilling and spacing units cover only Section 25, Township 12 North, Range 65 West, 6th P.M.  Applicant notes that this request was due, in part, to a written request received from the owner of 100% of the working interest in Sections 13 and 24, Township 12 North, Range 65 West, 6th P.M.

 

            9.         Applicant further requested that the Commission amend the approximate 1349-acre drilling and spacing units established by Order Nos. 535-570 and 535-648 for the Codell and Niobrara Formations, respectively, such that the interwell setbacks of Rule 318.a. be modified to allow the productive intervals of the wellbore of any permitted wells within such drilling and spacing units to be located not less than 150 feet from the productive interval of any well being drilled or producing from the same formation, without exception being granted by the Director.

 

            10.       On February 12, 2016, Anadarko, 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.

 

            11.       Testimony and exhibits submitted in support of the Application by Jason Rayburn, Senior Landman for Applicant, showed that Anadarko owns substantial leasehold interests in the Application Lands.

 

            12.       Testimony and exhibits submitted in support of the Application by Thomas A. Berkman, Project Geological Advisor for Applicant, showed that showed that the Codell Sandstone is present throughout Sections 13, 24 and 25, Township 12 North, Range 65 West, 6th P.M., and that it is approximately 16 feet to 20 feet thick. Further testimony showed that the Niobrara Formation is present throughout Sections 13, 24 and 25, Township 12 North, Range 65 West, 6th P.M., and that the net thickness is approximately 135 feet to 140 feet thick.

 

            13.        Engineering testimony and exhibits submitted in support of the Application by Randy Anderson, Senior Exploration Engineer for Applicant, showed a calculated effective drainage area of between 72 and 74 acres per Codell Formation well, for a total drainage of between 432 and 444 acres for the six authorized wells in the Codell Formation, an area less than the 640-acre proposed amended drilling and spacing unit. Further testimony showed a calculated effective drainage area of between 64 acres per Niobrara Formation well, for a total drainage of 448 acres for the seven authorized wells in the Niobrara Formation, an area less than the 640-acre proposed amended drilling and spacing unit.  Thus, granting the application will prevent waste and protect correlative rights.

 

            14.       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.

 

            15.       Anadarko agrees to be bound by oral order of the Commission. 

 

            16.       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: 1) amend an approximate 1349-acre drilling and spacing units established by Order No. 535-570 for Section 13 (Lots 1-4) and Sections 24 and 25, Township 12 North, Range 65 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Codell Formation such that the drilling and spacing units cover only Section 25, Township 12 North, Range 65 West, 6th P.M.; and 2) amend an approximate 1349-acre drilling and spacing units established by Order No. 535-648 for Section 13 (Lots 1-4) and Sections 24 and 25, Township 12 North, Range 65 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, such that the drilling and spacing units cover only Section 25, Township 12 North, Range 65 West, 6th P.M.

 

ORDER

 

IT IS HEREBY ORDERED:

 

            1.         The approximate 1349-acre drilling and spacing unit established for certain portions of Section 13, and all of Sections 24 and 25, Township 12 North, Range 65 West, 6th P.M., is hereby amended so that such drilling and spacing unit covers only the approximate 640-acre drilling and spacing unit for the below-described lands, for the production of oil, gas and associated hydrocarbons from the Codell Formation.

           

Township 12 North, Range 65 West, 6th  P.M.

Section 25:      All

 

            2.         The approximate 1349-acre Niobrara Formation drilling and spacing unit established for certain portions of Section 13, and all of Sections 24 and 25, Township 12 North, Range 65 West, 6th P.M., is hereby amended so that such drilling and spacing unit covers only the approximate 640-acre drilling and spacing unit for the below-described lands, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

Township 12 North, Range 65 West, 6th  P.M.

Section 25:      All

 

3.         The productive intervals of the wellbore shall be located not less than 600 feet from the unit boundaries, and not less than 150 feet from any other well or productive interval of a well producing from the same formation, without exception being granted by the Director.

 

4.         Sections 13 and 24, Township 12 North, Range 65 West, 6th P.M. will be unspaced and shall revert to Rule 318.a.

 

IT IS FURTHER ORDERED:

 

            1.         The provisions contained in the above order shall become effective immediately.

 

            2.         The Commission expressly reserves the 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 15th day of March, 2016, as of March 7, 2016.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Julie Murphy, Secretary