BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF FOUNDATION ENERGY MANAGEMENT, LLC for an order TO establish one APPROXIMATE
640-acre drilling and spacing unit AND APPROVE UP TO FOUR HORIZONTAL WELLS FOR
SECTION 34, Township 8 north, RANGE 60 WEST, 6TH p.m. FOR THE
NIOBRARA FORMATION, UNNAMED FIELD, Weld County, Colorado |
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CAUSE NO. 535
DOCKET NO. 1309-SP-1151
ORDER NO. 535-418 |
REPORT OF THE COMMISSION
The Commission heard this matter on September 16, 2013, at offices of the
Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Denver,
Colorado, upon application for an order to establish an approximate 640-acre
drilling and spacing unit for Section 34, Township 8 North, Range 60 West, 6th
P.M., and approve up to four 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.
Foundation Energy Fund III-A, L.P., Foundation Energy Fund III-B Holding,
L.L.C., Foundation Energy Fund IV-A, L.P., and Foundation Energy Fund IV-B
Holding, L.L.C., by and through Foundation Energy Management, L.L.C., as manager
of each of these four entities (“Foundation” 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.
Section 34, Township 8 North, Range 60 West, 6th P.M. is subject to
this Rule for the Niobrara Formation.
5.
On July 18, 2013, Foundation, by its attorneys, filed with the Commission
pursuant to §34-60-116 C.R.S., a verified application (“Application”) for an
order to establish an approximate 640-acre drilling and spacing unit for the
below-described lands (“Application
Lands”), and approve up to four horizontal wells within the unit, for the
production of oil, gas and associated hydrocarbons from the Niobrara Formation,
with the treated interval of the wellbore to be located no closer than 600 feet
from the unit boundaries, and no closer than 200 feet from the
treated interval of any other wellbore located in the unit, without exception
being granted by the Director:
Township 8 North, Range 60 West, 6th P.M.
Section 34: All
6.
On September 3, 2013, Foundation, 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
Scott Ryan, Landman for Foundation, showed Foundation is a leaseholder with the
right to drill in the Application Lands.
8.
Geologic testimony and exhibits submitted in support of the Application
by George Sartor, Manager of Geology for Foundation, included an analysis of a
cross-section from the Niobrara Formation showing the Niobrara, including the
Smokey Hill and Fort Hayes members, averages 285 feet thick. The geologic testimony also included
a structure map of the Niobrara B Formation showing the regional dip from East
to West.
9.
Engineering testimony and exhibits submitted in support of the
Application by Joseph Tyree, Reservoir Engineer for Foundation, included an
analysis of reservoir characteristics of the Niobrara Formation and a volumetric
calculation showing the estimated oil recovery from a well drilled and completed
in the Niobrara Formation is expected to be 175 MBO of oil at a 5% recovery
factor, indicating favorable economics for the proposed wells. Testimony requested that the
Commission take administrative notice of the Engineering exhibits provided in
Docket 1305-AW-20 (Order No. 535-314) in support of Foundation’s request that
the treated interval of the wellbore be no closer than 600 feet from the unit
boundaries and no closer than 200 feet from the treated interval of any other
wellbore located in the unit without exception being granted by the Director:
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.
Foundation 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 enter an order to establish an approximate 640-acre
drilling and spacing unit for Section 34, Township 8 North, Range 60 West, 6th
P.M., and approve up to four horizontal wells within the unit, for the
production of oil, gas and associated hydrocarbons from the Niobrara Formation.
ORDER
IT IS HEREBY ORDERED:
1.
An approximate 640-acre drilling and spacing unit for the below-described
lands, is hereby established, and up to four horizontal wells within the unit,
are hereby approved, for the production of oil, gas and associated hydrocarbons
from the Niobrara Formation, with the treated interval of the wellbore to be
located no closer than 600 feet from the unit boundaries, and no closer than 200
feet from the treated interval of any other wellbore located in the unit,
without exception being granted by the Director:
Township 8 North, Range 60 West, 6th P.M.
Section 34: All
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 30
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 11th day
of October, 2013, as of September 16, 2013.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert J. Frick, Secretary