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 an APPROXIMATE 640-acre drilling and spacing unit for section 6 Township 7 north, RANGE 59 WEST, 6th P.M. for the Niobrara Formation, unnamed field, Weld County, Colorado

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CAUSE NO. 535

 

DOCKET NO. 1310-SP-1198

 

ORDER NO. 535-428

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on October 28, 2013, at the Limon Community Center, 477 D Avenue, Limon, Colorado, upon application for an order to establish an approximate 640-acre drilling and spacing unit for Section 6, Township 7 North, Range 59 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 6, Township 7 North, Range 59 West, 6th P.M. is subject to this Rule for the Niobrara Formation.

 

            5.         On August 29, 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 productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 200 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:   

 

Township 7 North, Range 59 West, 6th P.M.

Section 6: All

 

6.         On October 15, 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 in the Application Lands and that the lands are in the immediate vicinity of other Niobrara Formation wells that have been drilled, tested, and completed.  The land testimony also indicated that all of the names listed on Exhibit A to the Application received proper notice pursuant to the Commission Rule 507.

 

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 in a well located near the Application Lands indicating the thickness, composition, and depositional characteristics of the Niobrara Formation.  The geologic testimony also included a structure map of the Niobrara B Formation showing the regional dip from East to West. Additionally, the geologic testimony included a cross section showing the consistency of the Niobrara Formation and its members across the Application Lands.

 

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 ultimate recovery (“EUR”) from a nearby type well drilled and completed to the Niobrara Formation was expected to be 175 MBO of oil and 139 MMCF of gas, indicating favorable economics for the wells proposed in the Application.  Mr. Tyree also respectfully requested that the Commission take administrative notice of the engineering exhibits provided for 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 6, Township 7 North, Range 59 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 productive interval of the wellbore to be located no closer than 600 feet from the unit boundaries, and no closer than 200 feet from the productive interval of any other wellbore located in the unit, without exception being granted by the Director:   

 

Township 7 North, Range 59 West, 6th P.M.

Section 6: All

 

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 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   8th   day of November, 2013, as of October 28, 2013.

           

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

 

 

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary