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. 160400170

 

TYPE:  SPACING

 

ORDER NO. 535-735

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on August 29, 2016, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) vacate the approximate 960-acre drilling and spacing unit approved by Order No. 535-704 for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations, in so far as Order No. 535-704 pertains to the N½ of Section 5, Township 8 North, Range 59 West, 6th P.M.; and, 2) establish an approximate 480-acre drilling and spacing unit for Sections 5 and 6, Township 8 North, Range 59 West, 6th P.M., and approve up to 10 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Crescent Point Energy U.S. Corp. (Operator No. 10520) (“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 October 26, 2015 the Commission entered Order No. 535-704 which, among other things: (1) partially vacated Order No. 535-69, insofar as the same covered all of Section 5, Township 8 North, Range 59 West, 6th P.M.; (2) established a 960-acre drilling and spacing unit, for the production of oil, gas and associated hydrocarbons Codell and Niobrara Formations, comprised of all of Section 32, Township 9 North, Range 59 West, 6th P.M. and the N/2 of Section 5, Township 8 North, Range 59 West, 6th P.M.; and (3) approved the drilling, completion and operation of up to 28 horizontal wells, the treated intervals of which to be located: (i) no closer than 460 feet from the boundaries of such drilling and spacing unit and (ii) not less than 150 feet from any existing or permitted oil or gas wellbore, absent exception being granted by the Director or variance being granted by the Commission.

 

5.         On February 18, 2016, Crescent Point, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) vacate the approximate 960-acre drilling and spacing unit approved by Order No. 535-704 for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations, in so far as Order No. 535-704 pertains to of the N½ of Section 5, Township 8 North, Range 59 West, 6th P.M.; and, 2) establish an approximate 480-acre drilling and spacing unit for the below-described lands (“Application Lands”) and approve up to 10 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations, with the productive interval of each wellbore to be no closer than 150 feet from the productive interval of any other wellbore located within the unit, and no closer than 460 feet from a unit boundary, unless the Director grants an exception:

 

Township 8 North, Range 59 West, 6th P.M.

Section 5:       N½

Section 6:      NE¼

 

6.         On March 28, 2016, supplemented April 1, 2016, 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.

 

            7.         On April 4, 2016, Noble Energy, Inc., filed a Protest.  On August 7, 2016, Noble Energy, Inc., made a request to withdraw its Protest.  The Hearing Officer approved the withdrawal of Noble Energy, Inc.’s Protest on August 8, 2016.

 

8.         Land testimony and exhibits submitted in support of the Application by Thomas J. 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, Geologist for Crescent Point, showed that the Codell and Niobrara Formations are present throughout the Application Lands, have a combined thickness of approximately 305 feet, and are generally of uniform thickness throughout the Application Lands. Geologic testimony further showed that the Codell and Niobrara Formations between them have four separate zones or benches that may be productive.

 

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 Codell and Niobrara Formation wells is estimated at between 108 and 148  acres, and an approximate 480-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 10 horizontal wells producing oil, gas and associated hydrocarbons from the four zones or benches in the Codell and Niobrara Formations.

 

11.       Applicant stated that the wells will be drilled from no more than two multi-well pads.

 

12.       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.

 

13.       Crescent Point agreed to be bound by oral order of the Commission.

 

14.       Based on the facts stated in the verified Application, the Protest having been withdrawn, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to: 1) vacate the approximate 960-acre drilling and spacing unit approved by Order No. 535-704 for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations, in so far as Order No. 535-704 pertains to the N½ of Section 5, Township 8 North, Range 59 West, 6th P.M.; and, 2) establish an approximate 480-acre drilling and spacing unit for Sections 5 and 6, Township 8 North, Range 59 West, 6th P.M. and approve up to 10 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Codell and Niobrara Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         A 960-acre drilling and spacing unit approved by Order No. 535-704 is hereby vacated for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations, in so far as Order No. 535-704 pertains to the N½ of Section 5, Township 8 North, Range 59 West, 6th P.M.

 

2.      An approximate 480-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 10 horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations:

 

Township 8 North, Range 59 West, 6th P.M.

Section 5:       N½

Section 6:      NE¼

 

3.         The productive interval of each wellbore shall be no closer than 460 feet from a unit boundary, and no closer than 150 feet from the productive interval of any other wellbore located within the unit, unless the Director grants an exception.

 

4.         The wells shall be drilled from no more than two multi-well pads, unless the Director grants an exception.

 

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 31st day of August, 2016, as of August, 29, 2016.  

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By__________________________________

            Julie Murphy, Secretary