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, MOFFAT COUNTY, COLORADO |
) ) ) ) ) ) ) )
|
CAUSE NO. 540
DOCKET NO. 170700511
TYPE: SPACING
ORDER NO. 540-68 CORRECTED |
REPORT OF THE COMMISSION
The Commission heard this matter on July 24, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln St., Suite 801, Denver, Colorado, upon application for an order to: 1) establish an approximate 960-acre horizontal exploratory drilling and spacing unit for horizontal development within the Application Lands and approve up one horizontal well within the exploratory unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) establish an approximate 634.94-acre vertical exploratory drilling and spacing unit for vertical well development within the Application Lands and approve up to three vertical wells within the new unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with no more than three new well pads in the vertical exploratory DSU, or adjacent thereto, unless an exception is granted by the Director; and 3) provide that any vertical well and/or any treated interval of a horizontal well shall be no closer than 600 feet from the boundaries of the respective unit (regardless of the lease lines within the unit) and any vertical and/or treated interval of a horizontal well shall be no closer than 100 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply, unless an exception is granted by the Commission or Applicant’s Application for Permit to Drill for the horizontal well otherwise allows the use of the existing vertical wellbore for horizontal development.
FINDINGS
The Commission finds as follows:
1. SWEPI, LP (“SWEPI” 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. Commission Rule 318.a. provides that wells “to be drilled two thousand five hundred (2,500) feet or greater shall be located not less than six hundred (600) feet from any lease line, and shall be located not less than one thousand two hundred (1,200) feet from any other producible or drilling oil or gas well when drilling to the same common source of supply, unless authorized by order of the Commission upon hearing.”
5. On May 25, 2017 (amended June 14, 2017), SWEPI, by its attorneys, filed with the Commission pursuant to §34-60-116, C.R.S., a verified application (“Application”) for an order to (1) establish an approximate 960-acre horizontal exploratory drilling and spacing unit for horizontal development within the below-described lands (“Application Lands for the Horizontal Exploratory Unit”) and approve up one horizontal well within the exploratory unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; (2) establish an approximate 634.94-acre vertical exploratory drilling and spacing unit for vertical well development within the below-described lands (“Application Lands for the Vertical Exploratory Unit and approve up to three vertical wells within the new unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with no more than three new well pads in the vertical exploratory DSU, or adjacent thereto, unless an exception is granted by the Director; and (3) provide that any vertical well and/or any productive interval of a horizontal well shall be no closer than 600 feet from the boundaries of the respective unit (regardless of the lease lines within the unit) and any vertical and/or productive interval of a horizontal well shall be no closer than 100 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply, unless an exception is granted by the Commission or Applicant’s Application for Permit to Drill for the horizontal well otherwise allows the use of the existing vertical wellbore for horizontal development:
Township 12 North, Range 90 West, 6th PM
Section 22: Lot 9 [39.68], Lot 16 [39.75]
Section 23: Lot 7 [39.59], Lot 8 [19.99], Lot 9 [19.59], Lot 16 [39.62], Lot 17 [39.63], Lot 18 [39.67], Lot 19 [39.66]
Section 26: Lot 4 [39.70], Lot 5 [39.72]
Section 27: Lot 1 [39.79], Lot 2 [39.81], Lot 7 [39.80], Lot 8 [39.80], Lot 9 [39.83], Lot 10 [39.84], Lot 11 [39.86], Lot 14 [39.85], Lot 15 [39.83], Lot 16 [39.83]
Section 34: Lot 2 [39.83], Lot 3 [39.86], Lot 6 [39.85], Lot 7 [39.82]
Containing 954.20 acres more or less, Moffat County, Colorado
(“Horizontal Exploratory DSU”)
Township 12 North, Range 90 West, 6th P.M.
Section 22: Lots 7 (39.66), Lot 8 (39.65), Lot 9 (39.68), Lot 10 (39.69), Lot 15 (39.76) and Lot 16 (39.75)
Section 23: Lot
7 (39.59), Lot 8 (19.99), Lot 9 (19.59), Lot 11 (2.85), Lot 16 (39.62),
Lot 17 (39.63), Lot 18 (39.67) and Lot 19 (39.66)
Section 26: Lot 3 (39.70) and Lot 4 (39.70)
Section 27: Lot 1 (39.79) and Lot 2 (39.81)
Containing 634.94 acres more or less, Moffat County, Colorado.
(“Vertical Exploratory DSU”)
6. On or before July 3, 2017, SWEPI, 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.
7. Land testimony and exhibits submitted in support of the Application by Andrew Frelier, Manager, Non-Operated Ventures for SWEPI, showed that both the mineral and surface interests in the Application Lands is in majority federal ownership, and that SWEPI owns leasehold ownership interest in the Application Lands.
8. Geoscience testimony and exhibits submitted in support of the Application by Thomas Arthur, Oil and Gas Asset Manager and Principal for Cherokee Ridge Resources, LLC, showed the Niobrara Formation is present throughout the Application Lands and averages approximately 1750 feet thick.
9. Engineering testimony and exhibits submitted in support of the Application by Thomas Arthur, Oil and Gas Asset Manager and Principal for Cherokee Ridge Resources, LLC, demonstrated that the average estimated drainage area for a 5000 ft. vertical section horizontal well is approximately 242 acres in North Park Basin while the average drainage area for vertical Niobrara wells in the Sand Wash Basin is 365 acres, and that the drilling, completion, and production of one (1) horizontal lateral well in the Application Lands, or up to three (3) vertical wells, will capture reserves from the reservoir and thereby prevent waste, while most importantly minimizing surface disturbance, and that this drilling, completion, and production will also protect correlative rights.
10. 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.
11. SWEPI agreed to be bound by oral order of the Commission.
12. 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) establish an approximate 960-acre horizontal exploratory drilling and spacing unit for horizontal development within the Application Lands and approve up one horizontal well within the exploratory unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation; 2) establish an approximate 634.94-acre vertical exploratory drilling and spacing unit for vertical well development within the Application Lands and approve up to three vertical wells within the new unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with no more than three new well pads in the vertical exploratory DSU, or adjacent thereto, unless an exception is granted by the Director; and 3) provide that any vertical well and/or any treated interval of a horizontal well shall be no closer than 600 feet from the boundaries of the respective unit (regardless of the lease lines within the unit) and any vertical and/or treated interval of a horizontal well shall be no closer than 100 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply, unless an exception is granted by the Commission or Applicant’s Application for Permit to Drill for the horizontal well otherwise allows the use of the existing vertical wellbore for horizontal development.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 960-acre horizontal exploratory drilling and spacing unit is hereby established for horizontal development within the below-described lands, and up to one horizontal well is hereby approved within the exploratory unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation;
Township 12 North, Range 90 West, 6th PM
Section 22: Lot 9 [39.68], Lot 16 [39.75]
Section 23: Lot 7 [39.59], Lot 8 [19.99], Lot 9 [19.59], Lot 16 [39.62], Lot 17 [39.63], Lot 18 [39.67], Lot 19 [39.66]
Section 26: Lot 4 [39.70], Lot 5 [39.72]
Section 27: Lot 1 [39.79], Lot 2 [39.81], Lot 7 [39.80], Lot 8 [39.80], Lot 9 [39.83], Lot 10 [39.84], Lot 11 [39.86], Lot 14 [39.85], Lot 15 [39.83], Lot 16 [39.83]
Section 34: Lot 2 [39.83], Lot 3 [39.86], Lot 6 [39.85], Lot 7 [39.82]
Containing 954.20 acres more or less, Moffat County, Colorado
(“Horizontal Exploratory DSU”)
2. An approximate 634.94-acre vertical exploratory drilling and spacing unit is hereby established for vertical well development within the below-described lands, and up to three vertical wells are hereby approved within the new unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with no more than three new well pads in the vertical exploratory DSU, or adjacent thereto, unless an exception is granted by the Director:
Township 12 North, Range 90 West, 6th P.M.
Section 22: Lots 7 (39.66), Lot 8 (39.65), Lot 9 (39.68), Lot 10 (39.69), Lot 15 (39.76) and Lot 16 (39.75)
Section 23: Lot
7 (39.59), Lot 8 (19.99), Lot 9 (19.59), Lot 11 (2.85), Lot 16 (39.62),
Lot 17 (39.63), Lot 18 (39.67) and Lot 19 (39.66)
Section 26: Lot 3 (39.70) and Lot 4 (39.70)
Section 27: Lot 1 (39.79) and Lot 2 (39.81)
Containing 634.94 acres more or less, Moffat County, Colorado.
(“Vertical Exploratory DSU”)
3. Any vertical well and/or any productive interval of a horizontal well shall be no closer than 600 feet from the boundaries of the respective unit (regardless of the lease lines within the unit) and any vertical and/or productive interval of a horizontal well shall be no closer than 100 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply, unless an exception is granted by the Commission or Applicant’s Application for Permit to Drill for the horizontal well otherwise allows the use of the existing vertical wellbore for horizontal development.
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 15th day of August, 2017, effective July 24, 2017.
CORRECTED this 7th day of September, 2017, effective July 24, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ____________________________________
James Rouse, Acting Secretary