120-1

BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER Of THE PROMULGATION OF FIELD RULES TO GOVERN OPERATIONS IN THE "J" SAND OF THE SPRUCE FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 120

ORDER NO. 120-1

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on June 17, 1958, at 10 a.m., in Room 330, State Office Building, Denver, Colorado, after publication of Notice of Hearing and service or appropriate waiver thereof, all as required by law, on the application of the Skelly Oil Company for an order establishing 320-acre drilling and spacing units for the production of gas from the Dakota "J" sand in the Spruce Field, and requiring the pooling of all interests in the Eller-Meyer Unit and the Weisal [sic] Unit, for the development and operation of each such respective drilling unit.

FINDINGS

The Commission finds as follows:

1. That due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

2. That 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.

3. That the "J" sand formation constitutes a common source of supply of gas underlying the following described lands in Weld County, Colorado, to-wit:

Township 8 North, Range 56 West, 6th P.M.

Section 2: SW¼	Section 3: SE¼
Section 10: NE¼	Section 11: NW¼

and such area is referred to as the Spruce Field.

4. That in order to prevent waste of oil and gas, as defined in the Oil and Gas Conservation Act; and to prevent the drilling of unnecessary wells, an order should be made establishing Three Hundred Twenty (320) acre drilling and spacing units for the production of gas from the "J" sand, common source of supply underlying said land as defined herein; that said drilling and spacing units should consist of Three Hundred Twenty (320) acres according to the governmental survey thereof, and are described as follows:

SW¼ of Section 2 and the NW¼ of Section 11, Township 8 North, Range 56 West, and that the permitted well for such unit should be the Eller-Meyer #1 well located in the SW¼ SW¼ SW¼ of Section 2, Township 8 North, Range 56 West 6th P.M., Weld County, Colorado.

SE¼ of Section 3 and the NE¼ of Section 10, Township 8 North, Range 56 West, and that the permitted well for such unit should be the Weisel #1 well located in the SE¼ SE¼ of Section 3, Township 8 North, Range 56 West, 6th P.M., Weld County, Colorado.

5. That all available geological and engineering data concerning the "J" sand formation in said Spruce Field indicates that one well should efficiently and economically drain an area of approximately Three Hundred Twenty (320) acres as to gas, and that the units of the size and shape hereinabove described are not smaller than the maximum area that can be efficiently drained by one gas well producing from the "J" sand, common source of supply.

6. That in order to insure proper and efficient development; to eliminate the drilling of unnecessary wells, and to promote conservation of the gas resources of the State, an order should be made pooling all interests in the Three Hundred Twenty (20) acre drilling unit described as the SW¼ of Section 2 and the NW¼ of Section 11, Township 8 North, Range 56 West, 6th P.M., Weld County, Colorado.

7. That an order of the Commission pooling all interests in said drilling unit is necessary, just and reasonable in order to afford each owner of interest in said drilling unit the opportunity to recover and receive his just and equitable share of the hydrocarbons from the common source of supply underlying said drilling unit.

8. That production of hydrocarbons obtained from said drilling unit should be allocated to each tract therein on the basis of the proportion that the number of acres in such tract bears to the total number of acres within said drilling unit.

9. That Petroleum, Inc., and others, are the owners and holders of the oil and gas lease covering the W½ SW¼ of Section 2, Township 8 North, Range 56 West, 6th P.M., on which the Eller-Meyer No. 1 well is located; and that Petroleum, Inc. is the operator of said well.

10. That Petroleum, Inc and other working interest owners are also the owners of an oil and gas lease covering the E½ NW¼ of Section 11, Township 8 North, Range 56 West, 6th P.M.

11. That Skelly Oil Company is the owner and holder of the oil and gas leases covering the E½ SW½ of Section 2, and the W½ NW¼ of Section 11, Township 8 North, Range 56 West, 6th P.M.

12. That Skelly Oil Company, Petroleum, Inc., and other working interest owners have heretofore entered into an agreement for the payment by the Skelly Oil Company of a sum of money to Petroleum, Inc. and the other interest owners for an interest in the Eller-Meyer No. 1 well; and for the operation thereof by Petroleum, Inc. upon the pooling of interests in the Eller-Meyer Unit consisting of the SW¼ of Section 2 and the NW¼ of Section 11, Township 8 North, Range 56 West, 6th P.M., Weld County, Colorado.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to a well drilled, completed, or recompleted in the "J" sand formation underlying the Spruce Field herein defined in the Findings which, by reference, are made a part hereof, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Rule 1. Three Hundred Twenty (320) acre drilling and spacing units shall be, and the same are hereby established for the production of gas from the "J" sand formation, common source of supply underlying the following described lands in Weld County, Colorado, to-wit:

Southwest Quarter (SW¼) of Section Two (2), South-east Quarter (SE¼) of Section Three (3), Northeast Quarter (NE¼) of Section Ten (10), and Northwest Quarter (NW¼) of Section Eleven (11), Township Eight (8) North, Range Fifty-six (56) West, 6th P.M.,

and such area shall henceforth be known as the Spruce Field.

Rule 2. The following drilling and spacing units are hereby established for the production of gas from the "J" sand formation, common source of supply underlying the Spruce Field as defined in Rule 1 hereof:

Southwest Quarter (SW¼) of Section Two (2) and the Northwest Quarter (NW¼) of Section Eleven (11), Township Eight (8) North, Range Fifty-six (56) West, and the permitted well for such unit shall be the Eller-Meyer No. 1 well located in the Southwest Quarter of the Southwest Quarter of the Southwest Quarter (SW¼ SW¼ SW¼ ) of Section Two (2), Township Eight (8) North, Range Fifty-six (56) West, 6th P.M., Weld County, Colorado; and

Southeast Quarter (SE¼) of Section Three (3) and the Northeast Quarter (NE¼) of Section Ten (10), Township Eight (8) North, Range Fifty-six (56) West, and the permitted well for such unit shall be the Weisel No. 1 well located in the Southeast Quarter of the Southeast Quarter (SE¼ SE¼ ) of Section Three (3), Township Eight (8) North, Range Fifty-six (56) West, 6th P.M., Weld County, Colorado.

IT IS FURTHER ORDERED, that pursuant to the provisions of 100-6-4 of the Oil and Gas Conservation Act of the State of Colorado, all interests in the drilling unit described as the Southwest Quarter (SW¼) of Section Two (2) and the Northwest Quarter (NW¼) of Section Eleven (11), Township Eight (8) North, Range Fifty-six (56) West of the 6th P.M., Weld County, Colorado, are hereby pooled for the development and operation of said drilling unit.

IT IS FURTHER ORDERED, that the production of hydrocarbons obtained from said drilling unit shall be allocated to each tract therein on the basis of the proportion that the number of acres in such tract bears to the total number of acres within said drilling unit, and each owner of interest in said tracts in said drilling unit shall be entitled to receive his share of the production of the well located or to be located on said drilling unit applicable to his interest in said drilling unit.

IT IS FURTHER ORDERED, that Petroleum, Inc. shall be the operator of the Eller-Meyer No. 1 well in the Eller-Meyer Unit consisting of the Southwest Quarter (SW¼) of Section Two (2) and the Northwest Quarter (NW¼) of Section Eleven (11), Township Eight (8) North, Range Fifty-six (56) West of the 6th P.M., Weld County, Colorado, according to the terms and provisions of the Operating Agreement heretofore entered into by the Skelly Oil Company, Petroleum, Inc., and the other working interest owners.

IT IS FURTHER ORDERED, that this order shall not affect the Agreement heretofore made by the Skelly Oil Company, Petroleum, Inc., and the other working interest owners in the Eller-Meyer Unit, for the payment of a sum of money by the Skelly Oil Company for an interest in the Eller-Meyer No. 1 well, which Agreement shall remain in full force and effect according to its terms.

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 rules and regulations.

ORDERED this 17th day of June, 1958.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Annabel Hogsett, Secretary, by Cecile Morris