2-30

BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE INVESTIGATION TO TAKE MEASURES TO PREVENT WASTE OF OIL AND GAS IN THE RANGELY FIELD IN THE STATE OF COLORADO

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CAUSE NO. 2

ORDER NO. 2-30

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on November 28, 1956, at 10:00 A.M. in the Colorado Room of the Shirley-Savoy Hotel, Denver, Colorado, pursuant to the Commission's own motion to consider whether or not it would be necessary to modify Order No, 2-28 in the interest of conservation; and, further, to consider the applications of the Stanolind Oil and Gas Company and The California Company requesting a revision of Order No. 2-28 to permit the transfer of daily oil allowables credited to gas injection wells to other injection areas in the Rangely Field. This hearing was originally scheduled for the 25th day of September, 1956, and subsequently, at the request of the Rangely operators, postponed until November 1, 1956, and again postponed until November 8, 1956, at which time a further extension was granted until November 28, 1956.

At the hearing, the Chairman of the Rangely Operators Committee reported to the Commission that the operators had agreed on a formula for participation percentages and are now in the process of developing the formal unit agreement which involves ready problems such as capital, adjustments and voting rights, all of which have not yet been discussed with underlying partners and other interests. It was the request of all operators that the current order remain unchanged, due to the pending development of a field-wide unit agreement was reported that since current production is the major factor in the participation formula any change affecting current production would jeopardize the delicate negotiations now in progress.

A request was made by the Stanolind Oil and Gas Company and The California Company that the provision of Order No. 2-28 which restricts the transfer of oil allowables of injection wells to specific injection areas be eliminated. It was indicated to the Commission that the granting of such a request would not endanger the agreements already reached as to the participation percentages for unitization.

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 operators are engaged in a sincere effort to unitize the Rangely Field, and that important progress has been made in that regard.

4. That the Commission should be kept advised of progress made by the operators toward effecting a unit agreement.

5. That the hearing regarding possible revisions of Order No. 2-28 should be continued until March 5, 1957.

6. That Rule 1 of Order No. 2-29, issued on the 17th day of July, 1956, provides, in part, that the Entrada gas injection experiment be allowed until January 17, 1957, and that this experiment should be allowed until further order of the Commission; and that Rule 2 of said order should be amended so that periodic reports should be made to the Commission as the Commission shall require, presenting the progress and results, if any, of the Entrada gas injection.

7. That Rule 3(a) of Order No. 2-28 should be modified so as to provide that the allowable credited to gas injection wells may be produced by the operator in whole or in part by any other well or wells of said operator.

ORDER

NOW, THEREFORE, IT IS ORDERED that the hearing to consider revisions of Order No. 2-28 be continued until March 5, 1957, subject to the following conditions:

1. That the Chairman of the Rangely Operators Committee shall verbally report to the Commission specifically on the 7th day of January, 1957 and on the 4th day of February, 1957, at 10:00 A.M., in Room 824 of the Equitable Building Denver, Colorado, and at such other times as the Commission may require, as to the work accomplished and progress made by the operators toward effecting a unitization agreement.

2. That should the Commission determine that the progress being made by the operators toward a unit agreement is not satisfactory, the Commission hereby expressly reserves the right to immediately call a hearing to review the operation of the Rangely Field, including the flaring of gas and any other form of waste, if any, as defined by the Oil and Gas Conservation Act.

IT IS FURTHER ORDERED, that Rule 3(a) of Order No. 2-28 be, and it is hereby amended to read as follows:

"All wells approved for injection by this rule and used for voluntary gas injection into the Weber reservoir shall be credited with a daily oil allowable of Three Hundred (300) barrels, which oil allowable may be transferred, and produced by the operator, in whole or in part to any other well or wells of said operator."

IT IS FURTHER ORDERED, that Rules 1 and 2 of Order No. 2-29 be and they are hereby amended to read as follows:

Rule 1. "The Entrada gas injection experiment is hereby authorized until further order of the Commission, so that further data may be obtained upon which to base an opinion as to the value of the Entrada reservoir for the storage of natural gas. Gas may be injected into the Entrada formation, using only the Texas U. P. Well No. 70-32, located in the Southwest Quarter of the Northeast Quarter of the Northwest Quarter (SW/4 NE/4 NW/4) of Section Thirty-two (32), Township Two (2) North, Range One Hundred Two (102) West of the Sixth (6th) P.M., Rio Blanco County, Colorado."

Rule 2. "Periodic reports shall be made to the Commission as the Commission shall require, presenting the progress and results, if any, of the Entrada gas injection experiment."

IT IS FURTHER ORDERED, that the rules and regulations contained herein shall become effective forthwith.

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, rules and regulations.

ORDERED this 28th day of November, 1956.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Annabel Hogsett, Secretary