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 FORT HAYES, CARLILE, CODELL, AND NIOBRARA FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407 & 535
DOCKET NO. 170300124
TYPE: SPACING
ORDER NO. 407-1938 535-773
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REPORT OF THE COMMISSION
The Commission heard this matter on March 20, 2017, at the Larimer County Conference Center at The Ranch, First National Bank Building, 5280 Arena Circle, Loveland, Colorado upon application for an order to establish an approximate 1,280-acre drilling and spacing unit for Section 2, Township 7 North, Range 67 West, 6th P.M., and Section 35, Township 8 North, Range 67 West, 6th P.M., and approve eight horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Fort Hayes, Carlile, Codell, and Niobrara Formations.
FINDINGS
The Commission finds as follows:
1. Enerplus Resources (USA) Corporation (Operator No. 10177) (“Enerplus” 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. Section 2, Township 7 North, Range 67 West, 6th P.M., and Section 35, Township 8 North, Range 67 West, 6th P.M., are subject to Rule 318.a. for the Fort Hayes, Carlile, Codell, and Niobrara Formations.
5. On January 19, 2017, Enerplus, 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 1,280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve eight horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Fort Hayes, Carlile, Codell, and Niobrara Formations, with the productive interval of the wellbore to be located no closer than 600 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 67 West, 6th P.M.
Section 35: All
Township 7 North, Range 67 West, 6th P.M.
Section 2: All
Applicant stated that any horizontal wells to be drilled will be drilled from no more than two multi-well pads on the surface of the drilling unit, or on adjacent lands with consent of the landowner, unless an exception is granted by the Director.
6. On February 27, 2017, Enerplus, 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. The drilling and spacing unit contains federal minerals. As such, Enerplus agreed to submit a Communitization Agreement (“CA”) to the Bureau of Land Management (“BLM”) for any existing wells within 60 days of the entry of the Order, and Enerplus agreed to submit a CA to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission Rules) from the initial well drilled within the drilling and spacing unit.
8. Land testimony and exhibits submitted in support of the Application by Sean Gallagher, Senior Landman for Enerplus, showed that Enerplus 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 Jill Haynie, Senior Geoscientist for Enerplus, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 300 to 320 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony further showed that the Fort Hayes Formation is present throughout the Application Lands, is approximately 21 to 23 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 21 to 23 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony further showed that the Carlile Formation is present throughout the Application Lands, is approximately 47 to 50 feet thick, and is generally of uniform thickness throughout the Application Lands.
10. Engineering testimony and exhibits submitted in support of the Application by Cody Clickner, Reservoir Engineer for Enerplus, showed that the drainage area for analog horizontal Niobrara Formation wells are estimated at 243 acres and Codell Formation wells are estimated at 224 acres, and an approximate 1,280-acre 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 Codell and Niobrara Formations. Drainage calculations done for the Fort Hayes and Carlile Formations show an estimated drainage area of approximately 143 acres for the Fort Hayes Formation and approximately 45 acres for the Carlile Formation, and an approximate 1,280-acre 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 Fort Hayes and Carlile 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.
13. Enerplus 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 establish an approximate 1,280-acre drilling and spacing unit for Section 2, Township 7 North, Range 67 West, 6th P.M., and Section 35, Township 8 North, Range 67 West, 6th P.M., and approve eight horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Fort Hayes, Carlile, Codell, and Niobrara Formations.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 1,280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of eight horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Fort Hayes, Carlile, Codell, and Niobrara Formations:
Township 8 North, Range 67 West, 6th P.M.
Section 35: All
Township 7 North, Range 67 West, 6th P.M.
Section 2: All
2. The productive interval of the wellbore will be located no closer than 600 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, unless an exception is granted by the Director.
3. Any horizontal wells to be drilled shall be drilled from no more than two multi-well pads on the surface of the drilling unit, or on adjacent lands with consent of the landowner, unless an exception is granted by the Director.
4. Enerplus shall submit a Communitization Agreement to the BLM for any existing wells within 60 days of the entry of this Order. Enerplus shall submit a Communitization Agreement to the BLM at least 90 days before the anticipated date of first production (as defined in the Commission’s Rules) from the initial well drilled within the drilling and spacing unit for the above described lands.
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 28th day of March, 2017, as of March 20, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By_____________________________________
Peter Gowen, Acting Secretary