BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION OF FIELD RULES TO GOVERN THE SPACING AND DENSITY, OF OIL AND GAS WELLS IN THE ADENA FIELD, MORGAN COUNTY COLORADO AND IN THE MATTER OF THE APPLICATION OF THE PURE OIL COMPANY IN BEHALF OF INTERESTED PARTIES FOR AN ORDER FROM THE OIL AND GAS CONSERVATION COMMISSION ADOPTING AND APPROVING THAT CERTAIN UNIT AGREE-MENT, "J" SAND, ADENA FIELD, MORGAN COUNTY, COLORADO, AND DEVELOPMENT AND OPERATION THEREUNDER.

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CAUSE NO. 26

 

ORDER NO. 26-27

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission on December 20, 1955, at 10:00 a.m., in Room 243, State Capitol, Denver, Colorado after publication of Notice of Hearing as required by law on the application of the Pure Oil Company presented in behalf of interested parties to the Commission for consideration of a Unit Agreement, "J" Sand, Adena Field, Morgan County, Colorado, and upon the Commission’s own motion to extend the area of said Adena Field, and establish field rules to govern the operation of the Adena "J" Sand Unit Area and the non-unitized portion of the Adena Field.

 

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 of the Adena Field constitutes a common source of supply of oil and gas underlying, in addition to the area set forth in Cause No. 26, Order No. 26-26, the following described lands in Morgan County, Colorado, to-wit:

 

Township 1 North, Range 57 West, 6th P.M.

 

 

Section 31: N½ NE¼

 

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 forty (40) acre drilling and spacing units for the production of oil from the said "J" sand formation of the Dakota Series, common source of supply underlying said land, as defined herein; that said units should be forty (40) acre drilling and spacing units according to the governmental survey thereof, and the permitted oil well for each unit should be located in the center of the Southeast Quarter of each quarter quarter section according to the governmental survey thereof; and that a tolerance of fifty (50) feet in any direction from the prescribed location should be permitted to avoid surface hazards and obstructions.

 

5.      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 One Hundred Sixty (160) acre drilling and spacing units for the production of gas from the said "J" sand formation of the Dakota Series, common source of supply underlying said land, as defined herein; that said units should be One Hundred Sixty (160) acre drilling and spacing units according to the governmental survey thereof, and that the permitted gas well for each unit should be located in the center of the Southeast Quarter of any quarter quarter section contained in each said One Hundred Sixty (160) acre unit according to the governmental survey thereof; and that a tolerance of Fifty (50) feet in any direction from the prescribed location should be permitted to avoid surface hazards and obstructions.

 

6.      That the operators have completed the process of unitizing the greater portion of the "J" sand formation of the Dakota Series in the Adena Field, in accordance with the terms and provisions of Unit Agreement, "J" Sand, Adena Field, Morgan County, Colorado, dated July 18, 1955, which unitized area is herein referred to as the Adena "J" Sand Unit Area, and which unit area is composed of the "J" sand formation underlying the following lands:

 

Township 1 North, Range 57 West, 6th P.M.

 

 

Section 4:     All

Section 9:        All

Section 5:     All

Section 16:      W½

Section 6:     All

Section 17:      All

Section 7:     All

Section 18:      All

Section 8:     All

Section 19:      All

                  Section 20:      N½, SW¼, W½SE¼

                  Section 21:      NW¼

                  Section 30:      All

                  Section 31:      N½ NE¼

 

Township 1 North, Range 58 West, 6th P.M.

 

 

                  Section 1:

N½, SE¼

                  Section 12:

All

                  Section 13:

N½, N½SE¼

                  Section 14:

N½, SW¼, N½SE¼

                  Section 23:

E½, N½NW¼

                  Section 24:

S½, NE¼, S½NW¼

                  Section 25:

N½

 

 

Township 2 North, Range 57 West, 6th P.M.

 

 

Section 28:  W½

Section 31:      NE¼, S½

Section 29:  W½, SE¼                                                                                   W½                     W½, SE/

Section 32:      All

Section 30:  NE¼, SW¼

Section 33:      W½        

 

 

 

Township 2 North, Range 58 West, 6th P.M.

 

 

                  Section 36:

E½

 

7.      That said agreement and the unitized method of development and operation of said Unit Area, as proposed thereunder, are in the public interest for conservation, and are necessary to increase ultimate recovery of oil and gas from said Unit Area, and to prevent waste of oil and gas, and that said Unit Agreement should therefore be adopted and approved.

 

8.      That Petroleum, Inc. is the major operator of lands not committed to the Adena "J" Sand Unit, and has expressly stated that it has no objection to the adoption and approval of said agreement, proposed field rules, and the unitized method of development and operation pursuant to the Adena "J" Sand Unit Agreement.

 

9.      That in order to prevent undue waste, and pending further study of the "J" sand reservoir characteristics for unitized operations, field rules should be promulgated for the operation and development of the "J" sand reservoir, common source of supply in the Adena Field, as herein defined.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to the lands set forth in this Order, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

 

Rule 1.    That the "J" sand formation of the Dakota Series in the Adena Field, as used herein, constitutes a common source of supply underlying the area known as the Adena Field, as defined in Cause No. 26, Order No. 26-26, and including in addition thereto the North Half of the Northeast Quarter (N½NE¼) of Section Thirty-one (31), Township One (1) North, Range Fifty-seven (57) West, all in Morgan County, Colorado.

 

Rule 2.    Drilling and spacing units shall be, and the same are hereby established for the production of oil and gas from the "J" sand of the Dakota Series, common source of supply underlying said North Half of the Northeast Quarter (N½NE¼) of Section Thirty-one (31), Township One (1) North, Range Fifty-seven (57) West, in addition to all other tracts now constituting the Adena Field, as follows:

 

(a)     Forty (40) acre drilling and spacing units, according to the governmental survey thereof, for the production of oil.  The permitted oil well for each unit shall be located one (1) well in the center of the Southeast Quarter of each quarter quarter section according to the governmental survey thereof; and that a tolerance of fifty (50) feet in any direction from the prescribed location shall be permitted only where surface obstructions or hazards make it unduly hazardous or expensive to drill in the prescribed location.

 

(b)     One Hundred Sixty (160) acre drilling and spacing units, according to the governmental survey thereof, for the production of gas.  The permitted gas well for each unit shall be located one (1) well in the center of the Southeast Quarter of any quarter quarter section contained in each said 160-acre unit, according to the governmental survey thereof, and that a tolerance of fifty (50) feet in any direction from the prescribed location shall be permitted only where surface obstruction or hazards make it unduly hazardous or expensive to drill in the prescribed location.

 

The commencement of the drilling of any well or wells in the "J" sand formation of the Adena Field, as defined herein, for the purposes of producing oil and gas therefrom at a location other than authorized by this order, is hereby prohibited.

 

Rule 3.    That the Unit agreement, "J" Sand, Adena Field, Morgan County, Colorado, dated July 18, 1955, providing for unit development and operation of the "J" sand formation underlying the following described lands in the Adena Field:

 

Sections Four (4), Five (5), Six (6), Seven (7), Eight (8), Nine (9), West Half (W½) of Section Sixteen (16), Sections Seventeen (17), Eighteen (18), Nineteen (19), North Half, Southwest Quarter, and West Half of the Southeast Quarter (N½, SW¼, W½SE¼) of Section Twenty (20), Northwest Quarter (NW¼) of Section Twenty-one (21), Section Thirty (30), and North Half of Northeast Quarter (N½NE¼) of Section Thirty-one (31), all in Township One (1) North, Range Fifty-seven (57) West of the 6th P.M; North Half (N½) and Southeast Quarter (SE¼) of Section One (1), Section Twelve (12), North Half (N½) and North Half of the Southeast Quarter (N½SE¼) of Section Thirteen (13), North Half (N½), Southwest Quarter (SW¼), and North Half of Southeast Quarter (N½SE¼) of Section Fourteen (14), East Half (E½) and North Half of Northwest Quarter (N½NW¼) of Section Twenty-three (23), South Half (S½), Northeast Quarter (NE¼), and South Half of the Northwest Quarter (S½NW¼) of Section Twenty-four (24), and North Half (N½) of Section Twenty-five (25), all in Township One (1) North, Range Fifty-eight (58) West, 6th P.M; West Half (W½) of Section Twenty-eight (28), West Half (W½) and Southeast Quarter (SE¼) of Section Twenty-nine (29), Northeast Quarter (NE¼) and Southwest Quarter (SW¼) of Section Thirty (30), Northeast Quarter (NE¼) and South Half (S½) of Section Thirty-one (31), all of Section Thirty-two(32), [sic] and West Half (W½) of Section Thirty-three (33), all in Township Two (2) North, Range Fifty-seven (57) West, 6th P.M., and East Half (E½) of Section Thirty-six (36), Township Two (2) North, Range Fifty-eight (58) West, 6th P.M., Morgan County, Colorado,

 

herein referred to as the Adena "J" Sand Unit Area, is hereby adopted and approved; and the further development and operation of the Adena "J" Sand Unit Area, as defined herein, as a single unit under the terms and provisions of the "Unit Agreement, "J" Sand, Adena Field, Morgan County, Colorado", is hereby adopted and approved.

 

Rule 4.    That the maximum "J" sand production allowable for any one forty (40) acre tract located in the Adena Field shall not, during any one month, exceed a daily average of One Hundred Twenty-five (125) barrels of oil, or One Hundred Fifty Thousand (150,000) cubic feet of gas, whichever is produced first; provided, that the operators and owners of wells located on lands within the Adena Field and not within the Unit Area may, at any time, or from time to time, transfer, in whole or in part, the daily allowable attributed to any "J" sand well to any other "J" sand well or wells on the same lease from which the daily allowable of the well may be more efficiently produced and that operators and owners of wells located on lands within the Adena Field and within the Unit Area may, through the Unit Operator, at any time, or from time to time transfer, in whole or in part, the daily allowable attributed to any "J" sand well to any other "J" sand well or wells within the Unit Area from which the daily allowable of the well may be more efficiently produced; provided, however:

 

(a)     As to any "J" sand well in the Adena "J" Sand Unit Area which directly offsets a well not within said Unit Area, and as to any "J" sand well not within the Unit Area which directly offsets lands in the Unit Area, the daily production of such well shall not be in excess of that well's daily allowable, unless written waiver of objection by the lease operator or unit operator of the offset well or lands is obtained.

 

(b)     That in transferring allowables, the lease operator or unit operator shall exercise due care in the protection of the correlative rights of persons who might be adversely affected by such transfers.

 

Rule 5.    That the operators and owners of wells producing from the "J" sand pool of the Dakota Series of the Adena Field shall make a gas-oil-ratio test of each producing well during every quarter, beginning with the months of January, April, July and October; and that such tests shall not be taken within fifteen (15) days of the beginning or ending of each quarter, the results of such tests shall be reported to the Commission on or before the twentieth (20th) day of the last month of every quarter; and that a schedule shall be submitted to the Commission and to offset operators prior to testing, showing the wells and respective dates of tests, and that a schedule of tests shall be submitted in a sufficient amount of time to allow the Commission or offset operators an opportunity to witness said tests; and that such tests shall be the basis for attributing the daily oil and gas allowable to each well for each month for the following quarter, except that no well shall be assigned a daily oil and gas allowable in excess of its daily capacity to produce; that the well shall be produced at or in excess of its allowable rate for twenty-four (24) hours immediately preceding the test period; and that the volume of gas measured shall be reported in units of cubic feet at a base pressure of 15.025 psia, and a base temperature of 60° Fahrenheit; and that the tests for a gas-oil ratio shall be made and calculated in accordance with good engineering practices.

 

Rule 6.    That no gas shall be allowed to be released directly or indirectly into the open air on any lease, except for occasional emergencies, or when otherwise authorized in writing by the Commission; and that all produced gas shall be metered within practical limits, and such metered volumes of gas shall be reported to the Commission.

 

Rule 7.    That the operators and owners of wells producing from the "J" sand pool of the Dakota Series shall file with the Commission a monthly report of production by wells, as required on Form OGCC-7a, covering the month next preceding the date of filing, on or before the twentieth (20th) day of each month.

 

IT IS FURTHER ORDERED, that the orders defining the Adena Field and spacing the North Half (N½) of the Northeast Quarter (NE¼) of Section Thirty-one (31), Township One (1) North, Range Fifty-seven (57) West, as set forth in Rules 1 and 2 above; and the order approving the unit development of the Adena "J" Sand Unit Area as set forth in Rule 3 hereof, shall be effective immediately; that the field rules set forth in Rule 4 hereof shall become effective January 1, 1956.

 

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 22nd day of December, 1955.

 

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By  Annabel Hogsett, Secretary