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 FORMATION, UNNAMED FIELD, ARAPAHOE COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 160800355
TYPE: SPACING
ORDER NO. 535-738 |
REPORT OF THE COMMISSION
The Commission heard this matter on August 29, 2016, Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-98 and 2) establish an approximate 960-acre drilling and spacing unit, and approve up to three 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. Bison Oil & Gas, LLC (“Bison” 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. 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. Section 16, Township 4 North, Range 64 West, 6th P.M. is subject to this Rule for the Niobrara Formation.
5. On December 16, 2011 (Corrected July 12, 2012), the Commission entered Order No. 535-98, which approved up to two horizontal wells in a 640-acre drilling and spacing unit covering all of Section 15, Township 4 South, Range 64 West, 6th P.M., and allowing for surface locations being located anywhere within Section 15 or surrounding lands but the lateral of such well may not enter the Niobrara Formation any closer than 300 feet from the section line, with treated interval of the permitted wellbore to be located no closer than 460 feet from the boundary of the section and no closer than 920 feet from the treated interval of any other well in the unit, without exception being granted by the Director. The W½ of Section 15, Township 4 South, Range 64 West, 6th P.M. is subject to this Order for the Niobrara Formation.
6. On June 30, 2016, Bison, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-98 covering all of Section 15, Township 4 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, and 2) establish one approximate 960-acre drilling and spacing unit for the below-described lands (“Application Lands”), and approve up to three 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 of any permitted wells in the unit to be located no closer than 300 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 4 South, Range 64 West, 6th P.M.
Section 15: W½
Section 16: All
Applicant states that the proposed wells shall be drilled from no more than one wellpad within the unit, or from a legal location on adjacent lands.
7. On August 8, 2016, Bison, 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 Ron Morgenstern, Vice President of Land and Manager of Business Development for Bison, showed Bison as the owner of a leasehold interest in the Application Lands.
9. Geologic testimony and exhibits submitted in support of the Application by Ian Hogan, Senior Geologist for Bison, included an analysis of the Niobrara Formation structure; an isopach map showing the gross thickness of the Niobrara Formation across the Application Lands; a type cross section of several wells in the vicinity of the Application Lands showing the Niobrara Formation is present across the Application Lands; and a volumetric analysis supporting horizontal wellbore density of up to three wells within the 960-acre drilling and spacing unit.
10. Engineering testimony and exhibits submitted in support of the Application by David Gonzalez, President and Chief Operating Officer for Bison, include economic analysis that demonstrates the economics of the project are sound.
11. The above-referenced testimony and exhibits show that granting the Application will allow efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.
12. This drilling and spacing unit contains Colorado State Board of Land Commissioners (“State Land Board”) leased and/or unleased minerals. A Communitization Agreement with the State Land Board will be required for all wells drilled under the terms of this order. A Communitization Agreement must be submitted prior to drilling operations that access any State Land Board minerals.
13. Bison 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: 1) vacate an approximate 640-acre drilling and spacing unit established by Order No. 535-98 and 2) establish an approximate 960-acre drilling and spacing unit, and approve up to three 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 640-acre drilling and spacing unit established by Order No. 535-98 for Section 15, Township 4 South, Range 64 West, 6th P.M. is vacated;
2. An approximate 960-acre drilling and spacing unit for the below-described lands is hereby established, and up to a total of three horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore of any permitted wells in the unit to be located no closer than 300 feet from the unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless an exception is granted by the Director:
Township 4 South, Range 64 West, 6th P.M.
Section 15: W½
Section 16: All
3. The wells shall be located on no more than one wellpad within the drilling and spacing unit or from a legal location on adjacent lands.
4. Bison shall submit a Communitization Agreement to the Colorado State Land Board prior to drilling operations that access any State Land Board minerals.
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 1st day of September, 2016, as of August 29, 2016
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Julie Murphy, Secretary