BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE NILE FIELD, ADAMS COUNTY, COLORADO

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CAUSE NO. 216

 

ORDER NO. 216-5

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission on November 18, 1985 at 9:00 a.m., in Room 110, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Sundance Oil Exploration Company, for an order approving a certain Unit Agreement and Unit Operating Agreement for the Nile "D" Sand Unit Area, providing for involuntary unit operations of the reservoir consisting of the "D" Sand underlying certain lands in the Nile Field, Adams County, Colorado.

 

FINDINGS

 

The Commission finds as follows:

 

1.      Sundance Oil Exploration Company, 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.      The "D" Sand was encountered in the interval between the depths of 6409 feet to 6434 feet in Well No. 2-17 UPRR Ehn, located in the NE1/4SW1/4 Section 17, Township 1 South, Range 60 West, 6th P.M.  Said "D" Sand, as so encountered, is a common source of supply and has been defined and determined by drilling, to be productive underlying the following described lands in Washington County, Colorado, to-wit:

 

Township 1 South, Range 60 West, 6th P.M.

Section 17:  SW1/4, S1/2NW1/4, SE1/4

Section 18: SE1/4NE1/4, SE1/4

Section 19:  E1/2NE1/4

Section 20:  NW1/4, NE1/4

 

containing 1000 acres, more or less.

 

5.      The terms and conditions provided by the Unit Agreement and Unit Operating Agreement 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, providing for a secondary recovery program by the injection of water into the "D" Sand reservoir underlying the Nile "D" Unit Area, 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.

 

6.      The provisions contained in said Unit Agreement and Unit Operating Agreement 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 Nile "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 Vortex "J" 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 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 each 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.

 

8.      Testimony presented at the hearing indicates that said Unit Agreement and Unit Operating Agreement have been approved in writing by 99% of the working interest owners and 85% by owners of the production and proceeds attributable to royalty, overriding royalty and production payments.

 

9.      The provisions of Order No. 216-1 and 216-2 which established 80-acre drilling and spacing units for the production of oil and associated hydrocarbons from the "D" Sand should be rescinded for the lands described in Finding 4 herein since said lands will be subject to the terms and conditions of the Unit Agreement and Unit Operating Agreement.

 

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED,; [sic]

 

1.      The Unit Agreement and Unit Operating Agreement covering lands in the Nile "D" Sand Unit Area, 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 reservoir, common source of supply, underlies the following lands in Adams County, Colorado, to-wit:

 

Township 1 South, Range 60 West, 6th P.M.

Section 17:  SW1/4, S1/2NW1/4, SE1/4

Section 18: SE1/4NE1/4, SE1/4

Section 19:  E1/2NE1/4

Section 20:  NW1/4, NE1/4

 

containing 1000 acres, more or less.

 

3.      The provisions contained in said Unit Agreement and Unit Operating Agreement as they pertain to 34-60-118 of the Oil and Gas Conservation Act are just and reasonable, and are incorporated herein as the Commission's plan of involuntary unit operations for such lands.

 

4.      The secondary recovery project by the injection of water into the "D" Sand reservoir of the Nile "D" Sand Unit Area, as presented by applicant, is hereby approved as being necessary to increase the ultimate recovery from said reservoir, and the operator is authorized to inject into said reservoir through injection wells in such quantities as shall be reasonably determined by the operator to best achieve the maximum recovery of oil without waste.

 

5.      In the event that it becomes necessary in the future to convert additional producing wells to input wells; to plug and abandon certain wells in the Unit Area, or to drill additional producing or input wells as dictated by developments in the course of the operations of the waterflood, the Unit Operator is authorized to make such changes in the operation of the project as may be required to facilitate the efficient development thereof.

 

6.      All injection wells shall be approved by the Director in accordance with the rules and regulations of the Commission.

 

IT IS FURTHER ORDERED, that the provisions of Order No. 216-1 and 216-2 are hereby rescinded for the lands within the Nile "D" Sand Unit Area and described herein.

 

IT IS FURTHER ORDERED, that the provisions contained in the above order 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.


 

ENTERED this 12th day of December 1985, as of November 18, 1985.

 

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By 

Frank J. Piro, Secretary