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BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE BUSY BEE AND BARREL RANCH FIELDS, ADAMS COUNTY, COLORADO |
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CAUSE NO. 150
ORDER NO. 150-2 |
This cause came on for hearing before the Commission at 8:30 a.m. on October 30, 2000, at 1120 Lincoln Street, Suite 801, Denver, Colorado, after giving Notice of Hearing, as required by law on the verified application of Whiting Petroleum Corporation, by its attorney, for an order to establish unitization and unitized operation of the Busy Bee D-Sand Unit underlying portions of the Busy Bee and Barrel Ranch Fields for secondary recovery of production of oil and gas and associated hydrocarbons from the “D” Sand Formation.
FINDINGS
The Commission finds as follows:
1. Whiting Petroleum Corporation (“Whiting”), 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.
4. On September 11, 2000, Whiting Petroleum Corporation, by its attorney, filed with the Commission a verified application for an order to establish unitization and unitized operation of the Busy Bee D-Sand Unit underlying portions of the Busy Bee and Barrel Ranch Fields for secondary recovery of production of oil and gas and associated hydrocarbons from the “D” Sand Formation for the lands described below. The Cretaceous “D” Sand Formation, defined as the continuous stratigraphic interval underlying the proposed unit area and located between the base of the Graneros Shale Formation being found at a depth of 6,362’ below the surface and the top of the Huntsman Shale Formation being found at a depth of 6,434’ below the surface, or the top of the J Sand Formation being found at a depth of 6,446’ below the surface as recognized by the electric log run in the Linnebur #21-8 Well on October 18, 1999 and located in the NE¼ NW¼ (860’ FNL, 2,150’ FWL) of Section 8, Township 3 South, Range 60 West, 6th P.M.
Township 3 South, Range 60 West, 6th P.M.
Section 5: S½ SW¼ SE¼, NW¼ SW¼ SE¼, S½ SW¼, S½ NW¼ SW¼, NW¼ NW¼ SW¼, SW¼ SW¼ NW¼
Section 6: Lots 5, 6, NE of 7, N½ SE¼, SE¼ SE¼, N½ SW¼ SE¼, SE¼ SW¼ SE¼, SW¼ NE¼ , S½ SE¼ NE¼, SE¼ NW¼, N½ SE¼ SW¼, NE¼ SW¼
Section 7: NE¼ NE¼ NE¼
Section 8: N½ NW¼, SE¼ NW¼, NE¼ SW¼ NW¼, NW¼ NE¼, NW¼ SE¼, N½ NE¼ SW¼, SE¼ NE¼ SW¼, S½ NE¼ NE¼, NW¼ NE¼ NE¼, SE¼ NE¼, NE¼ SE¼, NE¼ SE¼ SE¼
Section 9: S½ NW¼ NE¼, S½ NE¼ NW¼, S½ NW¼, S½ NW¼ NW¼, NW¼ SE¼, W½ NE¼ SE¼, N½ SW¼ SW¼, N½ SE¼ SW¼, N½ SW¼ SE¼, NW¼ SE¼ SE¼
5. Testimony and exhibits presented at the administrative hearing showed that Whiting leases approximately 90% of the mineral interests in the application area and has obtained 99.8% of working interest owner approval for the unit and 98.35% mineral owner approval.
6. Testimony and exhibits presented at the administrative hearing indicated that Sovereign Energy LLC, operator of the Linnebur 42-1 Well located in the NE¼ of Section 1, Township 3 South, Range 61 West, does not want the Linnebur 42-1 Well to be included within the proposed unit.
7. Further testimony at the administrative hearing showed Sections 8 and 9 in the application lands were unitized in 1960 as the “Busy Bee Unit Area”, however, the unit was terminated in 1995 due to lack of production in accordance with the unit operating agreement.
8. Additional testimony and exhibits presented at the administrative hearing described the geology of the application area and showed yearly and cumulative production from wells in the area.
9. Further testimony indicated Whiting will test waterflooding in a pilot area and expand the area of waterflood if the pilot is successful. Whiting believes this waterflood will increase ultimate recovery by an additional 5% of the original oil in place or 380,000 barrels of oil, making this project economic.
10. The terms and conditions provided by the Unit Agreement and the Unit Operating Agreement for the Busy Bee D-Sand Unit meet the requirements of the statute and are just and reasonable to all interests contained within said unit area. The plan for unit operations as presented by the Applicant, as described herein is necessary to increase the ultimate recovery of oil and gas and the value of the estimated additional recovery of oil and gas exceeds the estimated additional cost incident to conducting such operations.
11. The provisions contained in said Unit Agreement and Unit Operating Agreement are just and reasonable and include the following:
a. The description of the pool to be so operated;
b. The nature of said operation;
c. The allocation to the separately owned tracts in the Busy Bee D-Sand Unit Area of all the oil and gas that is produced from said Unit Area and is saved;
d. The provision for the credits and charges to be made in the adjustment among the owners in the Busy Bee D-Sand Unit Area for their respective investments in wells, tanks, pumps, machinery, materials, and equipment contributed to the unit operations;
e. The provision providing how the costs of unit operations, including capital investments, shall be determined and charged to the separately owned tracts, and how said costs shall be paid, including the provision providing when, how, and by whom the unit production allocated to an owner who does not pay the share of the cost of the unit operations charged to such owner, or the interest of such owners, may be sold and the proceeds applied to the payment of such costs;
f. The provision for the supervision and conduct of the unit operations, in respect to which person shall have a vote with a value corresponding to the percentage of the costs of unit operations chargeable against the interest of such person; and
g. The time when the unit operations shall commence, and the manner in which, and the circumstances under which the unit operations shall terminate.
12. At the time of the administrative hearing, Whiting Petroleum Corporation agreed to be bound by oral order of the Commission.
13. Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommends approval, the Commission should enter an order to establish unitization and unitized operation of the Busy Bee D-Sand Unit underlying portions of the Busy Bee and Barrel Ranch Fields for secondary recovery of production of oil and gas and associated hydrocarbons from the “D” Sand Formation for the lands described in Finding Number 4.
NOW, THEREFORE IT IS ORDERED, that:
1. The Unit Agreement and Unit Operating Agreement, covering lands in the Busy Bee and Barrel Ranch Fields, which agreements are attached to, and made a part of the original order of this Commission on file in the office of the Commission, are approved as being in the public interest for conservation.
2. The “D” Sand Formation, a common source of supply, underlies the following lands in Adams County, Colorado:
Township 3 South, Range 60 West, 6th P.M.
Section 5: S½ SW¼ SE¼, NW¼ SW¼ SE¼, S½ SW¼, S½ NW¼ SW¼, NW¼ NW¼ SW¼, SW¼ SW¼ NW¼
Section 6: Lots 5, 6, NE of 7, N½ SE¼, SE¼ SE¼, N½ SW¼ SE¼, SE¼ SW¼ SE¼, SW¼ NE¼ , S½ SE¼ NE¼, SE¼ NW¼, N½ SE¼ SW¼, NE¼ SW¼
Section 7: NE¼ NE¼ NE¼
Section 8: N½ NW¼, SE¼ NW¼, NE¼ SW¼ NW¼, NW¼ NE¼, NW¼ SE¼, N½ NE¼ SW¼, SE¼ NE¼ SW¼, S½ NE¼ NE¼, NW¼ NE¼ NE¼, SE¼ NE¼, NE¼ SE¼, NE¼ SE¼ SE¼
Section 9: S½ NW¼ NE¼, S½ NE¼ NW¼, S½ NW¼, S½ NW¼ NW¼, NW¼ SE¼, W½ NE¼ SE¼, N½ SW¼ SW¼, N½ SE¼ SW¼, N½ SW¼ SE¼, NW¼ SE¼ SE¼
3. The provisions contained in said Unit Agreement and Unit Operating Agreement as they pertain to C.R.S. Section 34-60-118, as amended, of the Oil and Gas Conservation Act are just and reasonable, and are incorporated herein as the Commission’s plan of involuntary operations for such lands.
4. Any injection well to be located in the Unit Area shall be approved by the Director in accordance with the rules and regulations of the Commission.
IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective November 1, 2000, and that the Unit Operator shall submit all documentation required including Form 10, Certificate of Clearance, for each well, and further that the Unit Operator shall advise the Commission in writing as to the termination of the unit.
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.
ENTERED this day of November, as of October 30, 2000.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By___________________________________________
Patricia C. Beaver, Hearing Officer
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
November 8, 2000