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 ADENA FIELD, MORGAN COUNTY, COLORADO

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CAUSE NO. 26

 

ORDER NO. 26-60    CORRECTED

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission on May 21, 1990 at 8:30 a.m., in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Rex Monahan, for an order authorizing involuntary unit operations with enhanced recovery involving injection of fluids in the "D" Sand underlying certain lands in Adena Field, Morgan County, Colorado.

 

FINDINGS

 

The Commission finds as follows:

 

1.      That Rex Monaban, as applicant herein, is an interested party in the subject matter of the above-referenced hearing.

 

2.      That due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

 

3.      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.

 

4.      That the Muddy "D" Sand or "D" member of the Dakota Series commonly called the "D" Sand formation was encountered in the interval between the depths of 5639 feet and 5666 feet in the well L.J. Clar #1 located in the SE¼ NE¼ NW¼ Section 24, Township 1 North, Range 58 West, 6th P.M., Morgan County, Colorado. Said "D" Sand formation 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 Morgan County, Colorado, to-wit:

 

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

Section 13:

S½

Section 14:

S½ SE¼

Section 23:

NE¼, N½ SE¼

Section 24:

NW¼, N½ SW¼, E½

 

containing 1200 acres, more or less.

 

5.      That tile applicant, Rex Monahan, is the owner of all the working interest of the proposed unit and that no form of Unit Operating Agreement is necessary.

 

6.      That the terms and conditions provided by the Unit 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 the conduct of operations to recover oil and gas is necessary to increase the ultimate recovery and the value of the estimated additional recovery of oil and gas exceeds the estimated additional cost incident to conducting such operations.

 

7.      That the provisions contained in said Unit Agreement have been found to be just and reasonable as required by 34-60-114(4) C.R.S. 1973, as amended 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 Adena "D" Sand Unit of all tile 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 Adena "D" Sand unit 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 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 circumstance under which the unit operations shall terminate.

 

8.      That re-injection of produced gas and water from the "J" Sand reservoir underlying said unit area should be allowed in order to prevent waste and promote conservation and maintain pressure maintenance in the reservoir. In addition, outside sources of water may be used when deemed necessary.

 

9.      That the initial injection wells should be as listed below and that all injection wells should be approved by the Director in accordance with the rules and regulations of the Commission prior to any injection occurring:

 

L.J. Clar #2

SE/NE/SW -

Sec. 13-T1N-R58W

Dewey #3

SE/SW/NW -

Sec. 24-T1N-R58W

Nichols #3

SE/SW/NE -

Sec. 24-T1N-R58W

H.J. Clar #4

SE/NE/SE -

Sec. 13-T1N-R58W

 

10.    That testimony presented at the hearing indicates that said Unit Agreement has been approved in writing by more than 80% of the owners of the production and proceeds attributable to royalty, overriding royalty and production payments.

 

11.    That the provisions of Order No. 26-51 establishing a 560-acre drilling and spacing unit for the production of gas from the "D" Sand should be rescinded.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED, that:

 

1.      The Unit Agreement covering the "D" Sand formation underlying lands in the Adena "D" Sand Unit in Adena Field is hereby approved as being in the public interest for conservation.

 

2.      Said "D" Sand formation reservoir, common source of supply, underlies the following lands in Morgan County, Colorado to-wit:

 

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

Section 13:

S½

Section 14:

S½ SE¼

Section 23:

NE¼, N½ SE¼

Section 24:

NW¼, N½ SW¼, E½

 

containing 1200 acres, more or less.

 

3.      The provisions contained in said Unit 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 Adena "D" Sand Unit Area, as presented by the 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 indicated by developments in the course of the operations of the waterflood, the Unit Operator is authorized to make such changes in the operations 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.

 

7.      That the provisions of Order No. 26-51 establishing a 560-acre drilling and spacing unit for the production of gas from the "D" Sand underlying tile below listed lands are hereby rescinded:

 

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

Section 13:

NW¼, N½ SE¼

 

 

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

Section 7:

S½ SW¼

Section 18:

NW¼, N½ SW¼

 

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 24th day of May, 1990, as of May 21, 1990.

 

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By  Dennis R. Bicknell, Secretary

Dated at Suite 380

1580 Logan Street

Denver, Colorado  80203