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 NIOBRARA, FORT HAYES, CODELL, AND CARLILE FORMATIONS, UNNAMED FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 535
DOCKET NO. 170600328
TYPE: SPACING
ORDER NO. 535-828
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REPORT OF THE COMMISSION
The Commission heard this matter on July 24, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) vacate Order No. 535-659, which established a 960-acre drilling and spacing unit for Section 24 and the N½ of Section 25, Township 11 North, Range 59 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations; and 2) establish an approximate 1280-acre drilling and spacing unit for Sections 25 and 36, Township 11 North, Range 59 West, 6th P.M., and approve up to 32 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hayes, Codell, and Carlile Formations.
FINDINGS
The Commission finds as follows:
1. Whiting Oil and Gas Corporation (Operator No. 96155) (“Whiting” 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., 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. Sections 25 and 36, Township 11 North, Range 59 West, 6th P.M., are subject to this Rule for the Carlile and Fort Hayes Formations. The S½ of Section 25 and Section 36, Township 11 North, Range 59 West, 6th P.M., are subject to this Rule for the Codell and Niobrara Formations
5. On April 13, 2015, the Commission entered Order No. 535-659, which established one approximate 960-acre drilling and spacing unit and approved 32 horizontal wells in said drilling and spacing unit for the production of oil, gas and associated hydrocarbons from the Codell and Niobrara Formations. The N½ of Section 25, Township 11 North, Range 59 West, 6th P.M. is subject to this Order for the Codell and Niobrara Formations.
6. On April 13, 2017, Whiting, by its attorneys, filed with the Commission a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) vacate Order No. 535-659, which established a 960-acre drilling and spacing unit for Section 24 and the N½ of Section 25, Township 11 North, Range 59 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations; and 2) establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 32 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the, Niobrara, Fort Hayes, Codell, and Carlile Formations, with the productive interval of the wellbore of any permitted wells in the unit to be located no closer than 100 feet from the productive interval of any other wellbore located in the unit, and no closer than 100 feet from a unit boundary unless such boundary abuts or corners lands for which the Commission has not at the time of the drilling permit application granted the right to locate the treated interval of the wellbore no closer than 100 feet from a unit boundary, in which case, if the Commission has not at the time of the drilling permit application granted to the owners of the adjacent or cornering lands the right to locate the treated interval of the wellbore no closer than 100 feet from a unit boundary, then the treated interval of the wellbore shall be located no closer than 300 feet from the unit boundary, without exception being granted by the Director:
Township 11 North, Range 59 West, 6th P.M.
Section 25: All
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 on the Application Lands, or from a legal location on adjacent lands, without exception being granted by the Director.
8. On May 22, 2017, supplemented June 6, 2017 and June 30, 2017, Whiting, 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 Scott McDaniel, Regional Land Manager for Whiting, showed that Whiting holds oil and gas leasehold interests and has a right to drill in the Application Lands.
10. Geologic testimony and exhibits submitted in support of the Application by Samuel Z. Scott, Senior Geologist for Whiting, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 320 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony showed that Niobrara production is from three chalk zones known as the Niobrara A, B, and C Zones. Further testimony showed that the Niobrara Formation is a sequence of chalks, marls and limestones, and is a common source of supply. Geologic testimony and exhibits also showed that the Fort Hayes Formation is present throughout the Application Lands, is approximately 40 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Fort Hayes Formation is mainly chalk with silty marlstone laminations, and is a common source of supply. Geologic testimony and exhibits also showed that the Codell Formation is present throughout the Application Lands, is approximately 16 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Codell Formation is mainly fine-grained sandstones and silty shales, and is a common source of supply. Geologic testimony and exhibits also showed that the Carlile Formation is present throughout the Application Lands, is approximately 117 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Carlile Formation is mainly sandstone mixed with higher amounts of silt and clay than the rock found in the Codell Formation, and is a common source of supply.
11. Engineering testimony and exhibits submitted in support of the Application by Donald F. Koenig, Reservoir Engineering Manager for Whiting, showed that Whiting plans to drill eight wells each in the Niobrara A, B, and C Zones. The testimony further showed that Whiting plans to drill eight wells in the Codell Formation, but that the horizontal wellbore may deviate into the Fort Hayes and Carlile Formations, so those two formations also need to be included in the drilling and spacing unit. Engineering testimony and exhibits further showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 49 acres, the drainage area for analog horizontal Codell/Fort Hayes/Carlile Formation wells is estimated at 108 acres, and an approximate 1280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 32 horizontal wells producing oil, gas and associated hydrocarbons from the three zones in the Niobrara Formation and from the Codell Formation. Engineering testimony further showed that Rate Transient Analysis demonstrates an estimated fracture half-length of 84 feet, and therefore a 100-foot setback from the unit boundaries is appropriate.
12. 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. Whiting 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: 1) vacate Order No. 535-659, which established a 960-acre drilling and spacing unit for Section 24 and the N½ of Section 25, Township 11 North, Range 59 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations; and 2) establish an approximate 1280-acre drilling and spacing unit for Sections 25 and 36, Township 11 North, Range 59 West, 6th P.M., and approve up to 32 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara, Fort Hayes, Codell, and Carlile Formations.
ORDER
IT IS HEREBY ORDERED:
1. Order No. 535-659, which established a 960-acre drilling and spacing unit for Section 24 and the N½ of Section 25, Township 11 North, Range 59 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, is hereby vacated.
2. An approximate 1280-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, Fort Hayes, Codell and Carlile Formations:
Township 11 North, Range 59 West, 6th P.M.
Section 25: All
Section 36: All
3. The productive interval of the wellbore of any permitted wells in the unit shall be located no closer than 100 feet from the productive interval of any other wellbore located in the unit, and no closer than 100 feet from a unit boundary unless such boundary abuts or corners lands for which the Commission has not at the time of the drilling permit application granted the right to locate the treated interval of the wellbore no closer than 100 feet from a unit boundary. If the Commission has not at the time of the drilling permit application granted to the owners of the adjacent or cornering lands the right to locate the treated interval of the wellbore no closer than 100 feet from a unit boundary, then the treated interval of the wellbore shall be located no closer than 300 feet from the unit boundary, without exception being granted by the Director
4. All wells permitted under this Order shall be drilled from no more than four multi-well pads within the unit, or from a legal location 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 14th day of August, 2017, effective as of July 24, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ____________________________________
James P. Rouse, Acting Secretary