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. 170700426
TYPE: SPACING
ORDER NO. 535-835
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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 amend Order No. 535-588 to include the Fort Hayes, Codell, and Carlile Formations in an approximate 640-acre drilling and spacing unit established for Section 36, Township 9 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. 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. 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. Section 36, Township 9 North, Range 59 West, 6th P.M., is subject to this Rule for the Fort Hayes, Codell, and Carlile Formations.
5. On December 12, 2011, the Commission entered Order No. 535-102, which, among other things, established an approximate 640-acre drilling and spacing unit for Section 36, Township 9 North, Range 59 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, and approved up to two horizontal wells within the unit.
6. On November 15, 2012, corrected March 11, 2013, the Commission entered Order No. 535-217, which, among other things, approved up to four horizontal wells in the 640-acre drilling and spacing unit previously established for Section 36, Township 9 North, Range 59 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
7. On March 25, 2013, the Commission entered Order No. 535-292, which, among other things, approved up to six horizontal wells in the 640-acre drilling and spacing unit previously established for Section 36, Township 9 North, Range 59 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
8. On October 28, 2013, the Commission entered Order No. 535-424, which, among other things, approved up to 15 horizontal wells in the 640-acre drilling and spacing unit previously established for Section 36, Township 9 North, Range 59 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation.
9. On January 7, 2015, the Commission entered Order No. 535-588, which, among other things, approved up to 32 horizontal wells drilled from no more than four well pads in the 640-acre drilling and spacing unit previously established for Section 36, Township 9 North, Range 59 West, 6th P.M., for the production of oil, gas, and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore to be located no closer than 300 feet from the unit boundaries, and no closer than 300 feet from the treated interval of any other wellbore located within the unit, without exception being granted by the Director.
10. On May 25, 2017, amended June 12, 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 amend Order No. 535-588 to include the Fort Hayes, Codell, and Carlile Formations in an approximate 640-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 150 feet from the productive interval of any other wellbore located in the unit, and no closer than 300 feet from the unit boundaries, without exception being granted by the Director:
Township 9 North, Range 59 West, 6th P.M.
Section 36: All
11. Applicant requested that any horizontal wells to be drilled under this Application be drilled from no more than eight multi-well pads on the Application Lands, or from a legal location on adjacent lands, without exception being granted by the Director.
12. On June 30, 2017, supplemented July 20, 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.
13. 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.
14. 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. Geologic testimony further showed that there are three potentially productive zones in the Niobrara Formation, the Niobrara A Bench, the Niobrara B Bench, and the Niobrara C Bench. 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 30 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Fort Hayes Formation is a limestone. Geologic testimony and exhibits 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 a sandstone, 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 80 feet thick, and is generally of uniform thickness throughout the Application Lands. Further testimony showed that the Carlile Formation is silty shale, and is a common source of supply.
15. Engineering testimony and exhibits submitted in support of the Application by Thomas White, Operations Engineer for Carrizo, showed that Carrizo plans to drill nine wells each in the Niobrara A Bench, Niobrara B Bench and Niobrara C Bench. Engineering testimony further showed that Carrizo plans to drill five 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 27.38 acres, the drainage area for analog horizontal Codell/Fort Hayes/Carlile 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 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 based on drainage calculations and frac modeling 150 feet is the appropriate minimum setback between producing wellbores to maximize resource recovery.
16. 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.
17. Carrizo agreed to be bound by oral order of the Commission.
18. 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 amend Order Nos. 535-102 and 535-588 to include the Fort Hayes, Codell, and Carlile Formations in an approximate 640-acre drilling and spacing unit established for Section 36, Township 9 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. 535-102 and Order No. 535-588 are hereby amended to include the Fort Hayes, Codell, and Carlile Formations in an approximate 640-acre drilling and spacing unit established for the below-described lands, 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 9 North, Range 59 West, 6th P.M.
Section 36: All
2. The productive interval of the wellbore of any permitted wells in the unit shall be located no closer than 150 feet from the productive interval of any other wellbore located in the unit, and no closer than 300 feet from a unit boundaries, unless the Director grants an exception.
3. 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 7th 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