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, ARAPAHOE COUNTY, COLORADO.

)

)

)

)

)

)

)

CAUSE NO. 535

 

DOCKET NO. 170600307

 

TYPE: SPACING

 

ORDER NO. 535-804

           

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 vacate an approximate 1,280-acre drilling and spacing unit established by Order No. 535-517 for Section 19, Township 4 South, Range 63 West, 6th P.M., and Section 24, Township 4 South, Range 64 West, 6th P.M., and establish an approximate 1,280-acre drilling and spacing unit for Sections 23 and 24, Township 4 South, Range 64 West, 6th P.M., and approve up to 16 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 Exploration, LLC (“Bison” or “Applicant”), Operator No. 10646, 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 23, Township 4 South, Range 64 West, 6th P.M. is subject to this Rule for the Niobrara Formation.

 

5.            On July 28, 2014, the Commission entered Order No. 535-517 which, among other things, 1) vacated an approximate 640-acre drilling and spacing unit established by Order No. 535-244 for Section 24, Township 4 South, Range 64 West, 6th P.M., 2) established an approximate 1280-acre exploratory drilling and spacing unit for Section 19, Township 4 South, Range 63 West, 6th P.M., and Section 24, Township 4 South, Range 64 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, and 3) approved up to two horizontal wells within the unit with the productive interval of the permitted wells to be no closer than 960 feet from the productive interval of any other wellbore within the unit and no closer than 460 feet from the unit boundary, without exception being granted by the Director.  No horizontal wells have been permitted or drilled in the drilling and spacing unit established by Order No. 535-517.  Section 24, Township 4 South, Range 64 West, 6th P.M. subject to this Order for the Niobrara Formation. 

 

6.            On March 24, 2017 (amended April 21, 2017), Bison, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to vacate Order No. 535-517 and establish an approximate 1,280-acre drilling and spacing unit covering the below-described lands (“Application Lands”) and approve up to 16 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of any permitted wellbore within the unit to be located no closer than 150 feet from the productive interval of any other wellbore producing from the Niobrara Formation within the unit, and no closer than 460 feet from the unit boundaries, without exception being granted by the Director:

 

Township 4 South, Range 64 West, 6th P.M.

Section 23:      All

Section 24:      All

 

7.            On May 22, 2017, 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 Robert Pierini, Senior Landman for Bison Oil & Gas, LLC, as consulting landman 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 Oil & Gas, LLC, as consulting 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 averages approximately 350 feet in thickness.

 

10.          Engineering testimony and exhibits submitted in support of the Application by David Gonzales, President and Chief Operating Officer for Bison Oil & Gas, LLC, as consulting petroleum engineer for Bison, demonstrated the drainage area for a 2-mile horizontal well is estimated at 76 acres for a Niobrara Formation well. Thus, an approximate 1,280-acre drilling and spacing unit is therefore not less than the maximum area that can be efficiently, economically and effectively drained by 16 horizontal wells producing oil, gas and associated hydrocarbons from the benches of the Niobrara Formation.

 

11.          Bison agreed to be bound by oral order of the Commission. 

 

12.          Based on the facts stated in the verified Application and on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order to vacate an approximate 1,280-acre drilling and spacing unit established by Order No. 535-517 for Section 19, Township 4 South, Range 63 West, 6th P.M., and Section 24, Township 4 South, Range 64 West, 6th P.M., and establish an approximate 1,280-acre drilling and spacing unit for Sections 23 and 24, Township 4 South, Range 64 West, 6th P.M., and approve up to 16 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation.

 

ORDER

 

NOW, THEREFORE IT IS ORDERED, that:

 

1.            An approximate 1280-acre exploratory drilling and spacing unit established by Order No. 535-517 for Section 19, Township 4 South, Range 63 West, 6th P.M. and Section 24, Township 4 South, Range 64 West, 6th P.M., is hereby vacated, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation;

 

2.            An approximate 1,280-acre drilling and spacing unit for the below-described lands, is hereby established, and up to a total of 16 horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation:

 

Township 4 South, Range 64 West, 6th P.M.

Section 23:      All

Section 24:      All

 

3.            The productive interval of any permitted wellbore within the unit to be located no closer than 150 feet from the productive interval of any other wellbore producing from the Niobrara Formation within the unit, and no closer than 460 feet from the unit boundaries, without exception being granted by the Director.

 

4.            All wells permitted under this Order shall be drilled from no more than two wellpads within the unit, or from a legal location on adjacent lands, without exception from the Director.

 

5.            Section 19, Township 4 South, Range 63 West, 6th P.M. shall revert to unspaced lands pursuant to Rule 318.a.

 

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 23rd day of June, 2017, as of June 12, 2017

           

                                                            OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

 

 

By: ____________________________________     

                                                                                    Peter Gowen, Acting Secretary