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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 "J" SAND OF THE ADENA FIELD, MORGAN COUNTY, COLORADO |
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CAUSE NO. 26
ORDER NO. 26-30 |
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission on July 2, 1956, at 10:00 a.m., in the State Capitol, Denver, Colorado, after publication of Notice of Hearing as required by law, on the application of The Pure Oil Company, as Unit Operator of the Adena "J Sand Unit Area, filed May 10, 1956 with the Commission, requesting an order amending the field rules established in Order No. 26-27. This hearing was held to determine whether or not the field rules and regulations for the "J" sand of the Adena Field should be modified or changed.
There are essentially two operators in the field; namely, The Pure Oil Company, operator for the Unit Area, and Petroleum, Incorporated, operator of all producing tracts in the Adena Field not included in the Unit.
The main issues to be considered by the Commission were to ascertain if each operator was receiving his just and equitable share of the oil and gas in the reservoir; and to ascertain if the reservoir as a whole was being produced in the most efficient manner possible so as to recover the maximum amount of oil from the "J" sand reservoir 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, based on the past performance of the "J" sand reservoir of the Adena Field, and detailed engineering and geologic data, the Adena Field can currently produce without waste 14,000 barrels of oil per day with a limiting gas-oil ratio of 1200 cubic feet of gas per barrel of oil produced; and that the production of oil from the field at this rate will tend to increase the ultimate recovery of oil from the field.
4. That, since the Adena Unit is considered as one single producing tract of land, there are six separately operated producing tracts of land in the field.
5. That, based on the evidence presented at the hearing, including the results of a bottom hole pressure survey taken in June 1956, there has developed serious pressure differentials between the various separately operated producing tracts of land. This is causing reasonably avoidable drainage of oil across lease lines, resulting in the violation of correlative rights of several of the owners and/or operators.
6. That efficient utilization of gas energy reader Order No. 26-27 will tend to continue the existing violations of correlative rights mentioned in Finding 5 above.
7. That in order to prevent insofar as is practicable, reasonably avoidable drainage between separately owned tracts of land resulting in one or more operators or owners in such pool producing more than his just and equitable share of oil and gas, an allocation of the permitted field oil and gas production should be made between the several separately operated tracts of land. The allocation should be based on the amount of oil and gas originally in place. This basis of allocation is a recognized and accepted menthol throughout the oil industry for evaluating oil and gas properties, and that such a basis is just and equitable. In addition to protecting correlative rights, the allocation of oil and gas pursuant to the order hereinafter promulgated will enable the various operators to best utilize the gas energy in the field, and to increase the ultimate recovery of oil.
8. That the engineering and geologic information necessary for a proper determination of oil and gas in place in the "J" sand of the Adena Field is available and herein utilized by the Commission in making the allocation of oil and gas production.
9. That owners of tracts of land in the area commonly known as the gas cap area should be allowed participation in the gas allowable, since the gas which is contained in the gas cap tends to migrate and expand into the oil zone, and the ultimate recovery of oil from the field is increased. In view of the utilization of the gas, as aforementioned, the gas allowable should be based on the amount of gas allowable per reservoir barrel of space in the oil zone times the reservoir barrels of space in the gas zone.
10. That in order to prevent waste, and to increase the ultimate recovery of oil, the gas cap area (which area is presently under the control of the Unit Operators) should not be allowed to produce. These tracts in the gas cap area should be granted a gas allowable which should be utilized in the production of oil by the Unit in the most efficient manner possible.
11. That the production of oil from wells having a gas-oil ratio of 10,000 cubic feet of gas per barrel of oil produced, or greater, is unreasonable and wasteful, and said wells should not be permitted to produce oil or gas.
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. The "J" sand reservoir 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 in Morgan County, Colorado, as defined in the Commission's Order No. 26-29. The Adena "J" sand unit area, (or "Unit Area") as referred to herein is that certain unitized portion of the Adena "J" sand field described in Rule 3 of the Commission's Order No. 26-27, and for the purposes of this order said Unit Area shall be deemed one producing property.
Rule 2. The maximum allowable production of oil from the "J" sand pool of the Adena Field shall not, during any one month, exceed a daily average of Fourteen Thousand (14,000) stock tank barrels, unless and until otherwise ordered by the Commission. Such oil allowable shall be allocated among the producing properties in the field on the basis hereinafter set forth. The maximum allowable production of gas from said pool shall not, during any one (1) month exceed a daily average of Twenty-five Million One Hundred Seventy-three Thousand (25,173,000) standard cubic feet of gas, unless and until otherwise ordered by the Commission. Such gas allowable shall be allocated among the producing properties in the field on the basis hereinafter set forth.
Rule 3. The maximum daily "J" sand oil and gas allowables shall be allocated, respectively, on a tract basis as to producing tracts not within the Unit Area, and on a unit basis as to the Unit Area, by application of the formulae hereinafter set forth. For such purposes, the Commission shall adopt and make a part of these rules, two plats marked Exhibit "A" and Exhibit "B", Exhibit "A" showing the contour lines of equal reservoir barrels of "J" sand oil in place in said field; and Exhibit "B" showing the contour lines of equal reservoir barrels of "J sand gas in place in said field. The formula determining the basic daily "J" sand oil allowable for the entire Unit Area and for each producing tract in said field outside of the Unit Area is as follows:
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Daily Oil Allowable |
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Where: B = |
Barrels of maximum daily "J" sand pool oil allowable as prescribed in Rule 2 hereof. |
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A = |
Total reservoir barrels of "J" sand oil originally in place under the Unit Area and all other producing tracts in the Adena Field, as set out in Exhibit "C" hereof. |
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a = |
Reservoir barrels of "J" sand oil originally in place under the entire Unit Area (for the purpose of determining Unit Area daily allowable) or under the particular producing tract outside of Unit Area (for the purpose of determining daily allowable for such tract), as set forth in Exhibit "C" hereof. |
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The basic daily "J" sand gas allowable for the entire Unit Area and for each producing tract in said field outside of the Unit Area is as follows:
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Daily Gas Allowable. |
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Where: C = |
Thousand standard cubic feet of maximum daily "J" sand pool gas allowable as pres-cribed in Rule 2 hereof. |
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D = |
Total reservoir barrels of "J" sand oil and gas originally in place under She Unit Area and all other producing tracts in the Adena Field, as set out in Exhibit "C" hereof. |
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d = |
Reservoir barrels of "J" sand oil and gas originally in place under the entire Unit Area (for the purpose of determining Unit Area daily allowable), or under the particular producing tract outside of Unit Area (for the purpose of determining daily allowable for such tract), as set forth in Exhibit "C" hereof. |
Attached hereto as a part of the rules is a tabulation marked Exhibit "C", showing the description of each producing tract covered hereby.
Except as hereinafter otherwise specifically provided, neither the Unit Area nor any producing tract in said field outside of Unit Area shall produce in excess of its oil or gas allowable.
Rule 4. The operators and owners of each producing tract in said pool outside of the Unit Area, and of the Unit Area may, respectively, at any time, or from time to time produce the daily "J" sand oil and/or gas allowables attributed to such tract or to the Unit Area from any well or wells on said tract or within the Unit Area, and in accordance with non-wasteful production practices.
Rule 5. No oil or gas shall be produced from wells with a producing gas-oil ratio of Ten Thousand (10,000) cubic feet per barrel of oil, or greater. All produced gas shall be metered within practical limits.
Rule 6. All operators producing from the "J" sand pool of the Dakota Series shall file with the Commission a monthly report of production as required on a form prescribed by the Commission, covering the month preceding the date of filing, on or before the twenty-fifth (25th) day of each month. The oil production reported on said monthly report shall be that volume of stock tank oil reasonably measurable by the operator or owner. The gas production reported on said monthly report shall be the volume, in units of standard cubic feet at a base pressure of 15.025 psia and at a base temperature of 60 degrees F., of all gas produced. Any overproduction in excess of three (3) days' allowable shall be considered a violation of this Order, unless a valid reason is given. Such monthly reported volumes of oil and gas shall be used by the Commission to determine overproduction and underproduction. Over and under production of oil and gas for any one month shall be adjusted during the next full month directly following the date of filing of the monthly report of production for the month in which the over or under production occurred. Operators shall report oil and gas production by wells, in order that the Commission may determine whether each tract of land is being produced in a non-wasteful manner.
Rule 7. The operators and owners of wells producing from the "J" sand pool of the Adena Field shall make a gas-oil-ratio test of each producing well semi-annually, the testing periods to be the second and fourth quarters of each year beginning with the month of April and October, which tests shall be taken before the last fifteen (15) days of the end of each such quarter. Each said well shall be produced at its normal stabilized rate of production for a period of twenty-four (24) consecutive hours prior to said test, and the gas-oil-ratio test shall be completed at such stabilized rate during the twenty-four (24) hours directly following. The results of such tests shall be reported to the Commission on or before the twenty-fifth (25th) day of the last month of the testing period. Prior to conducting such tests, the operator or owner shall submit to the Commission and to offset operators a schedule showing the wells and respective dates of tests, in sufficient time to allow the Commission and offset operators the opportunity to witness said tests. All non-producing wells may be exempted by the Commission from the semi-annual gas-oil-ratio testing.
Rule 8. The datum reservoir pressure of certain key wells in the Adena "J" sand pool shall be determined semi-annually during the first fifteen (15) days of April and October each year. Key wells shall be selected by the operators and approved by the Commission. The results of each such semi-annual test shall be reported to the Commission by the operator of each key well on or before the twenty-fifth (25th) day of each test month. All pressure determinations shall be made at a datum of One Thousand and Fifty (1,050) feet below sea level. All wells capable of producing from said pool shall be shut in twenty-four (24) hours prior to testing and shall remain shut in until completion of the survey, except that the Commission may, by written approval for good cause shown, allow production from certain "J" sand wells before completion of said survey.
IT IS FURTHER ORDERED, that the field rules set forth herein shall become effective August 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 due to changed conditions in the field which may occur as a result of future drilling and development, or otherwise.
ORDERED this 31st day of July, 1956.
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OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
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By Annabel Hogsett, Secretary |