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 NIOBRARA FORMATION, UNNAMED FIELD, WELD COUNTY, COLORADO |
) ) ) ) ) ) )
|
CAUSE NO. 535
DOCKET NO. 170300126
TYPE: SPACING
ORDER NO. 535-775 |
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: 1) maintain the 640-acre Kummer Exploratory State Unit established by Order No. 535-259 for the Kummer PC LE23-64HN Well and the Kummer PC LE23-65-1HN Well for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 640-acre drilling and spacing unit for Sections 23 and 24, Township 8 North, Range 61 West, 6th P.M., and approve one horizontal well 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. Noble Energy, Inc. (Operator No. 100322) (“Noble” 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 September 19, 2011 the Commission entered Order No. 535-69 which, among other things, established 40 approximate 640-acre drilling and spacing units and approved two horizontal wells within each unit to be located no closer than 600 feet from the unit boundaries, and also approved vertical wells provided that the bottomhole location of the vertical wells is not less than 150 feet from any existing or permitted oil or gas well, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation. Section 23, Township 8 North, Range 61 West, 6th P.M., was subject to this Order for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.
5. On January 7, 2013 the Commission entered Order No. 535-259 which, among other things, vacated an approximate 640 acre drilling and spacing unit established by Order No. 535-69 for Section 23, Township 8 North, Range 61 West, 6th P.M., and established the Kummer Exploratory State Unit pursuant to §34-60-118, C.R.S., being an approximate 640-acre exploratory drilling and spacing unit, located in Section 23, Township 8 North, Range 61 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Codell-Niobrara Formation, with the number of wells to be drilled in the unit to be determined by the unit operator, and the wells to be located no closer than 600 feet from the unit boundaries and no closer than 150 feet from the treated interval of any other wellbore located in the unit. Noble represented that the Kummer Exploratory State Unit is governed by a private unit agreement and private unit operating agreement between Noble and the sole mineral interest owner, Weld County, Colorado. Noble represented that it holds 100% interest in Section 23, Township 8 North, Range 61 West, 6th P.M.
6. On September 16, 2013, the Commission entered Order No. 535-419 which, among other things, vacated two 640-acre drilling and spacing units and established a 1,280 acre drilling and spacing unit for Section 13 and Section 24, Township 8 North, Range 61 West, 6th P.M. and approved up to two horizontal wells for the production of oil, gas and associated hydrocarbons in the Codell and Niobrara Formations. Noble represented that it holds a majority interest in this 1,280-acre drilling and spacing unit.
7. On January 19, 2017, Noble, by its attorneys, filed with the Commission a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) maintain the 640-acre Kummer Exploratory State Unit established by Order No. 535-259 for the Kummer PC LE23-64HN Well ((API No. 05-123-36679) and the Kummer PC LE23-65-1HN Well (API No. 05-123-36684) for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 640-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 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 600 feet from the northern boundary of the unit, 200 feet from the eastern and western boundaries of the unit, and 300 feet from the southern boundary of the unit, and the one horizontal well shall be no closer than 150 feet from the treated interval of another well producing from the same supply within the unit, unless an exception is granted by the Director:
Township 8 North, Range 61 West, 6th P.M.
Section 23: S˝
Section 24: S˝
8. Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than one new multi-well pad, without exception being granted by the Director.
9. On February 27, 2017, supplemented March 15, 2017, Noble, 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.
10. Applicant stated that it was withdrawing the Codell Formation from the Application, and that any horizontal wells would be drilled in an east-west orientation. Applicant also agreed to file an application to vacate the 1,280-acre drilling and spacing unit established by Order No. 535-419, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
11. Land testimony and exhibits submitted in support of the Application by Julie T. Jenkins, Land Manager for Noble, showed that Noble holds oil and gas leasehold interests and has a right to drill in the Application Lands. Land testimony further showed that the following wells have been drilled in Section 23, Township 8 North, Range 61 West, 6th P.M. pursuant to the existing Kummer Exploratory State Unit established in Order No. 535-259:
Land testimony further showed that the Kummer PC LE23-64HN Well ((API No. 05-123-36679) and the Kummer PC LE23-65-1HN Well ((API No. 05-123-36684) are currently producing and are located in the N˝S˝ of Section 23, Township 8 North, Range 61 West, 6th P.M., and should continue to pay to the 640-acre drilling and spacing unit established by Order No. 535-259. Land testimony further stated that Noble will not locate the horizontal well requested in the Application within 600 feet of an existing horizontal well producing from the Niobrara Formation.
12. Geologic testimony and exhibits submitted in support of the Application by Mark Nicholson, Geologist for Noble, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 280 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Niobrara Formation is a sequence of chalks, marls and limestones and is a common source of supply.
13. Engineering testimony and exhibits submitted in support of the Application by Mike Marini, Engineer for Noble, showed that the drainage area for a horizontal Niobrara Formation well is calculated at 138 acres, and an appropriate 640-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 Niobrara Formation.
14. Engineering testimony further showed that based upon estimated ultimate recovery analysis, it is appropriate to locate the productive interval of the wellbore for the horizontal well requested in the Application no closer than 600 feet from the northern boundary of the proposed drilling and spacing unit, 200 feet from the eastern and western boundaries of the proposed drilling and spacing unit, and 300 feet from the southern boundary of the proposed drilling and spacing unit.
15. 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.
16. Noble agreed to be bound by oral order of the Commission.
17. 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) maintain the 640-acre Kummer Exploratory State Unit established by Order No. 535-259 for the Kummer PC LE23-64HN Well and the Kummer PC LE23-65-1HN Well for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation; and 2) establish an approximate 640-acre drilling and spacing unit for Sections 23 and 24, Township 8 North, Range 61 West, 6th P.M., and approve one horizontal well within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. The 640-acre Kummer Exploratory State Unit established by Order No. 535-259 is hereby maintained for Kummer PC LE23-64HN Well ((API No. 05-123-36679) and the Kummer PC LE23-65-1HN Well ((API No. 05-123-36684), which are currently producing and located in the N˝S˝ of Section 23, Township 8 North, Range 61 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation. The Kummer PC LE23-64HN Well and the Kummer PC LE23-65-1HN Well shall continue to pay to the 640-acre Kummer Exploratory State Unit established by Order No. 535-259. No further wells shall be drilled in that portion of the approximate 640-acre Kummer Exploratory State Unit created by Order No. 535-259 that is located in the S˝ of Section 23, Township 8 North, Range 61 West, 6th P.M.
2. Applicant shall forthwith file an application to vacate the 1,280 acre drilling and spacing unit established by Order No. 535-419, for the production of oil, gas and associated hydrocarbons in the Codell and Niobrara Formations.
3. An approximate 640-acre drilling and spacing unit for the below-described lands is hereby established, and a total of up to one horizontal well within the unit is hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:
Township 8 North, Range 61 West, 6th P.M.
Section 23: S˝
Section 24: S˝
3. The productive interval of the wellbore will be located no closer than 600 feet from the northern boundary of the unit, 200 feet from the eastern and western boundaries of the unit, and 300 feet from the southern boundary of the unit. The productive interval of any wellbore drilled under this Order shall be located no closer than 600 feet from the productive interval of an existing horizontal well producing from the Niobrara Formation.
4. All wells permitted under this Order shall be drilled in an east-west orientation.
5. All wells permitted under this Order shall be drilled from no more than one well pad within the Application Lands, unless an exception is granted by the Director.
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