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 AND CODELL FORMATIONS, UNNAMED FIELD, WELD COUNTY, COLORADO

)

)

)

)

)

)

)

 

CAUSE NO. 535

 

DOCKET NO. 170500258

 

TYPE:  SPACING

 

ORDER NO. 535-789

REPORT OF THE COMMISSION

 

The Commission heard this matter on May 1, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado upon application for an order to: 1) amend Order No. 535-689 to include the Codell Formation in an approximate 640-acre drilling and spacing unit previously established for the Niobrara Formation in Section 30, Township 9 North, Range 58 West, 6th P.M.; and 2) approve up to 32 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Carrizo Oil & Gas, Inc. (Operator No. 10338) and Carrizo (Niobrara) LLC (Operator No. 10439) (together, “Carrizo” 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 22, 2015, the Commission entered Order No. 535-689, which, among other things, established an approximate 640-acre drilling and spacing unit for Section 30, Township 9 North, Range 58 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and approved up to 32 horizontal wells within the unit.   

5.         On March 2, 2017, amended March 16, 2017, Carrizo, by its attorneys, filed with the Commission a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) amend Order No. 535-689 to include the Codell Formation in an approximate 640-acre drilling and spacing unit established for the below described lands (“Application Lands”), for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations, with the productive interval of the wellbore to be no closer than 300 feet from the unit boundaries, no closer than 150 feet from the productive interval of any other wellbore located within the same bench of the Niobrara Formation or the Codell Formation in the drilling and spacing unit, and no closer than 100 feet from the productive interval of any other wellbore located in a bench above or below the bench where that wellbore is located in the drilling and spacing unit, unless an exception is granted by the Director; and 2) approve up to 32 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations:

 

Township 9 North, Range 58 West, 6th P.M.

Section 30:  All

 

6.         On April 10, 2017, supplemented April 19, 2017, Carrizo, 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.         Land testimony and exhibits submitted in support of the Application by Damian Katz, Landman for Carrizo, showed that Carrizo holds oil and gas leasehold interests and has a right to drill in the Application Lands.  Land testimony further stated that any horizontal wells to be drilled under this Application will be drilled from no more than four multi-well pads located on the Application Lands, or lands adjacent thereto, without exception being granted by the Director. 

 

8.         Geologic testimony and exhibits submitted in support of the Application by Lindsay Aldrich, Geologist for Carrizo, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 310 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.  Geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 10 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Codell Formation is made up of sandstone and is a common source of supply. 

 

9.         Engineering testimony and exhibits submitted in support of the Application by Thomas White, Operations Engineer for Carrizo, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 27.38 acres, and an approximate 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. Engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated at 136.30 acres, and an approximate 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 Codell Formation.

 

10.       Engineering testimony, based on both drainage calculations and frac modeling, showed that 150 feet is the proper minimum setback between wellbores within the same bench of the Niobrara Formation or in the Codell Formation to maximize resource recovery, prevent waste and protect correlative rights.

 

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.

 

12.       Carrizo agreed to be bound by oral order of the Commission.

 

13.       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 order to: 1) amend Order No. 535-689 to include the Codell Formation in an approximate 640-acre drilling and spacing unit previously established for the Niobrara Formation in Section 29, Township 9 North, Range 58 West, 6th P.M.; and 2) approve up to 16 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Order No. 535-689 is hereby amended to include the Codell Formation and to provide that an approximate 640-acre drilling and spacing unit for the below-described lands is hereby established, and a total of up to 32 horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:

 

Township 9 North, Range 58 West, 6th P.M.

Section 30:  All

 

2.         Order No. 535-689 is hereby further amended to provide that the productive interval of the wellbore producing from the Niobrara or Codell Formation will be located no closer than 300 feet from the unit boundaries, no closer than 150 feet from the productive interval of any other wellbore located within the same bench of the Niobrara Formation or the Codell Formation in the drilling and spacing unit, and no closer than 100 feet from the productive interval of any other wellbore located in a bench above or below the bench where that wellbore is located in the drilling and spacing unit, unless an exception is granted by the Director

 

3.         All wells permitted under this Order shall be drilled from no more than four multi-well pads within the Application Lands, or on adjacent lands, 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 10th day of May, 2017, as of May 1, 2017.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

Peter Gowen, Acting Secretary