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 CODELL AND NIOBRARA FORMATIONS, UNNAMED FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 170500214
TYPE: SPACING
ORDER NO. 535-798 |
REPORT OF THE COMMISSION
The Commission heard this matter on June 12, 2017, at the Rio Blanco County Courthouse, 555 Main Street, Meeker, Colorado, upon application for an order to: 1) approve a total of up to six horizontal wells within an approximate 1,280-acre drilling and spacing unit established by Order No. 535-547 for Section 1, Township 11 North, Range 66 West, 6th P.M., and Section 36, Township 12 North, Range 66 West, 6th P.M., for the production of the oil, gas, and associated hydrocarbons from the Codell Formation; 2) modify Order No. 535-547 to provide that the treated intervals of the wells drilled in the Codell Formation shall be not less than 150 feet from the treated interval of another well producing from the same formation, without exception being granted by the Director; and 3) establish an approximate 1,280-acre drilling and spacing unit for Section 1, Township 11 North, Range 66 West, 6th P.M., and Section 36, Township 12 North, Range 66 West, 6th P.M., and approve up to seven 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. Longs Peak Resources, LLC (Operator No. 10611) (“Longs Peak” 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.
5. On September 15, 2014, the Commission entered Order No. 535-547 which, among other things, established an approximate 1,280-acre drilling and spacing unit for Section 1, Township 11 North, Range 66 West, 6th P.M., and Section 36, Township 12 North, Range 66 West, 6th P.M., and approved up to four horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Codell Formation, with the productive interval of any permitted well to be located no closer than 300 feet from the unit boundary and no closer than 660 feet from the productive interval of any well drilled or producing from the Codell Formation.
Township 11 North, Range 66 West, 6th P.M.
Section 1: Lot 1 (79.88 acres), Lot 2 (79.68 acres),
S˝N˝, S˝ [All]
Township 12 North, Range 66 West, 6th P.M.
Section 36: All
7. Applicant states that any horizontal wells to be drilled under this Application will be drilled from no more than four multi-well pads located on the surface of the drilling unit, or on adjacent lands with consent of the landowner, unless the Director grants an exception.
8. On April 10, 2017, supplemented April 20, 2017, Longs Peak, 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.
9. Land testimony and exhibits submitted in support of the Application by Kent Snider, Vice President of Land for Vertex Energy Partners, as agent for Longs Peak, showed that Longs Peak holds oil and gas leasehold interests and has a right to drill in the Application Lands.
10. Geoscience testimony and exhibits submitted in support of the Application by Derek Sondergaard, Geologist for Windmill Energy Services, working for Longs Peak, showed the Niobrara Formation is present throughout the Application Lands, is approximately 143 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. The geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 18 to 19 feet thick, and is generally of uniform thickness throughout the Application Lands.
11. Engineering testimony and exhibits submitted in support of the Application by Mark McNamee, Petroleum Engineer for Windmill Energy Services, working for Longs Peak, requested that the Commission take administrative notice of the Rule 511 engineering testimony and exhibits used to support the issuance of Orders 535-669 and 535-706 to support drainage calculations for wells producing from the Codell and Niobrara Formations. The Commission does so. The Rule 511 engineering testimony and exhibits used to support the issuance of Orders 535-669 and 535-706, and engineering testimony of Mark McNamee, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 115 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 seven horizontal wells producing oil, gas and associated hydrocarbons from the Niobrara Formation. The engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated at 163 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 six horizontal wells producing oil, gas and associated hydrocarbons from the Codell Formation.
12. Engineering testimony by Mark McNamee further showed that for the Niobrara formation, a calculated effective drainage radius of 256 feet, as testified to in the Rule 511 testimony for Order No. 535-706, shows that a setback for the treated interval of a horizontal well of 300 feet from the unit boundaries will prevent drainage of reserves from adjacent lands and will allow the production of reserves that otherwise would not be recovered from the Niobrara Formation underlying the Application Lands.
13. 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.
14. Longs Peak agreed to be bound by oral order of the Commission.
15. 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: 1) approve a total of up to six horizontal wells within an approximate 1,280-acre drilling and spacing unit established by Order No. 535-547 for Section 1, Township 11 North, Range 66 West, 6th P.M., and Section 36, Township 12 North, Range 66 West, 6th P.M., for the production of the oil, gas, and associated hydrocarbons from the Codell Formation; 2) modify Order No. 535-547 to provide that the treated intervals of the wells drilled in the Codell Formation shall be not less than 150 feet from the treated interval of another well producing from the same formation, without exception being granted by the Director; and 3) establish an approximate 1,280-acre drilling and spacing unit for Section 1, Township 11 North, Range 66 West, 6th P.M., and Section 36, Township 12 North, Range 66 West, 6th P.M., and approve up to seven horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1. A total of up to six horizontal wells within an approximate 1,280-acre drilling and spacing unit established by Order No. 535-547 for the below described lands are hereby approved for the production of oil, gas and associated hydrocarbons from the Codell Formation, with the productive interval of any horizontal wellbore to be 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 the Director grants an exception:
Township 11 North, Range 66 West, 6th P.M.
Section 1: Lot 1 (79.88 acres), Lot 2 (79.68 acres),
S˝N˝, S˝ [All]
Township 12 North, Range 66 West, 6th P.M.
Section 36: All
2. An approximate 1,280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to seven horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:
Township 11 North, Range 66 West, 6th P.M.
Section 1: Lot 1 (79.88 acres), Lot 2 (79.68 acres),
S˝N˝, S˝ [All]
Township 12 North, Range 66 West, 6th P.M.
Section 36: All
3. The productive interval of the wellbore in the unit shall 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 the Director grants an exception.
4. 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 with consent of the landowner, 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 22nd day of June, 2017, effective as of June 12, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ____________________________________
Peter Gowen, Acting Secretary