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 IN AN UNNAMED FIELD,

WELD COUNTY, COLORADO

 

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CAUSE NO. 535

 

ORDER NO. 535-91

 

REPORT OF COMMISSION

 

                        The Commission heard this matter on October 31, 2011, at the City of Littleton Council Chambers, 2255 West Berry Avenue, Littleton, Colorado 80120 upon application for an order to establish two approximate 640-acre drilling and spacing units for Sections 26 and 35, Township 8 North, Range 60 West, 6th P.M., Weld County, and authorize drilling up to two horizontal wells within each unit, for the development and production of oil, gas and related hydrocarbons from the Niobrara Formation.

 

FINDINGS

 

The Commission finds as follows:

 

1.     Carrizo Oil & Gas, Inc. (“Carrizo” 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.

 

4.  Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that 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.  The below-listed lands are subject to this Rule for the Niobrara Formation:

 

Township 8 North, Range 60 West 6th P.M.

Sections 14, 26, and 35 

 

5.  On August 31, 2011, Carrizo, by its attorneys, filed with the Commission a verified application (“Application”) for an order to: 1) establish three approximate 640-acre drilling and  spacing units for the below-listed lands; and 2) approve up to two horizontal wells within each unit for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the permitted wellbore to be located no closer than 600 feet from the boundary of the unit and no closer than 1200 feet from the treated interval of any other wellbore completed in the Niobrara, without exception being granted by the Director:

 

Township 8 North, Range 60 West 6th P.M.

Sections 14, 26, and 35

 

6.  On October 5, 2011, Carrizo, by its attorneys, withdrew Section 14, Township 8 North, Range 60 West, 6th P.M. from the application.  The below described lands remain subject to the application (“Application Lands”):

 

Township 8 North, Range 60 West 6th P.M.

Sections 26, and 35

 

7.  On October 18, 2011, 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.

 

                        8.  Land testimony and exhibits submitted in support of the Application by Craig Wiest, Western US Land Manager for Carrizo, showed Carrizo owns a leasehold interest in the Application Lands.

 

                        9.  Geologic testimony and exhibits submitted in support of the Application by Phillip Szymcek, Geologist for Carrizo, showed the Niobrara Formation underlying the Application Lands is fairly uniform in thickness and contiguous throughout the entire spacing area.  Production data collected from Type Wells nearby lead Carrizo to conclude oil and gas can economically be produced from the Application Lands.

 

                        10.  Engineering testimony and exhibits submitted in support of the Application by Stephen C. Peters, Manager of Reservoir Engineering for Carrizo, contrasted drainage areas of vertical wells with horizontal wells. Calculated drainage areas for the top 35 horizontal wells in the nearby Silo Field ranged from 41 to 356 acres, with an average drainage area for a sample of 65 wells at 78 acres. He concluded use of horizontal well technology will promote efficient drainage in the Application Lands.

 

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.  The Application was reviewed by the Colorado Department of Public Health and Environment (“CDPHE”) pursuant to consultation provisions of Rule 306.d.  In a letter dated October 21, 2011, the CDPHE Oil & Gas Coordinator indicated that CDPHE does not believe any additional conditions of approval are necessary for approving the amended Application.

 

13.  Carrizo 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 establish two approximate 640-acre drilling and spacing units for Sections 26 and 35, Township 8 North, Range 60 West, 6th P.M., Weld County, and authorize up to two horizontal wells within each unit, for the development and production of oil, gas and related hydrocarbons from the Niobrara Formation.

 

ORDER

 

                        NOW, THEREFORE IT IS ORDERED, that two approximate 640-acre drilling and  spacing units, are hereby established, for the below-listed lands, and up to two horizontal wells within each unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the treated interval of the permitted wellbore to be located no closer than 600 feet from the boundary of the unit and no closer than 1200 feet from the treated interval of any other wellbore completed in the Niobrara, without exception being granted by the Director:

 

Township 8 North, Range 60 West 6th P.M.

Sections 26, and 35

 

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.

           

                        IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

 

                        IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 30 days after the date this Order is mailed by the Commission.

                       

                        IT IS FURTHER ORDERED, that 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 November, 2011, as of October 31, 2011.

           

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Peter J. Gowen, Acting Secretary

 

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

November 7, 2011