3-12

BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RIFLES TO GOVERN OPERATIONS IN THE IGNACIO FIELD, LA PLATA AND ARCHULETA COUNTIES, COLORADO WITH PARTICULAR REFERENCE TO THAT KNOWN PRODUCING ZONE LOCATED THEREIN TERMED "FRUITLAND-PICTURED CLIFFS"

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CAUSE NO. 3

ORDER NO. 3-12

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 11, 1955, at 10:00 A.M., in the House of Representatives, State Capitol, Denver, Colorado, after publication of Notice of Hearing as required by law, on the application of the Pacific Northwest Pipeline Corporation, a Delaware Corporation, for an order from the Commission amending Order No. 3-11, by extending the area known as the Ignacio Field, with particular reference to that known producing zone located therein and termed "Fruitland-Pictured Cliffs", and for exceptions to Order No. 3-11, for eight wells drilled off the established spacing pattern, and providing that all rules and regulations promulgated by said Order No. 3-11 be in all respects applicable to the said extended area.

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 Fruitland-Pictured Cliffs formation in the Ignacio Field constitutes a common source of supply of gas underlying, in addition to the area set forth in Cause No. 3, Order No. 3-11, the following described lands in La Plata County, Colorado, to-wit:

Township 33 North, Range 9 West, N.MP.M.

Sections: 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 20, 21, 22

4. That in order to prevent waste of gas, as defined by law; to protect the correlative rights of all parties concerned; to insure proper and efficient development, and to promote conservation of the gas resources of the State, an order should be made establishing 320-acre drilling and spacing units for the production of gas from the Fruitland-Pictured Cliffs formation, single common source of supply underlying said land, as defined herein.

5. That all available geological and engineering data concerning the said Fruitland-Pictured Cliffs formation in the Ignacio Field, and in the additional area hereinabove described, indicate that one well will adequately and efficiently drain an area of at least 320 acres of land in said formation.

6. That the exceptions requested by the Pacific Northwest Pipeline Corporation should be allowed for the eight wells located as set forth in the following Order; and that each such well should be the permitted gas well for the drilling and spacing unit upon which it is located.

ORDER

NOW, THEREFORE, IT IS ORDERED that the following rules and regulations shall apply to wells heretofore and hereafter drilled and completed or recompleted in the Fruitland-Pictured Cliffs formation of the Ignacio Field, as herein defined, in addition other applicable rules, regulations and orders of the Commission heretofore adopted and not in conflict herewith.

Rule 1. Three Hundred Twenty (320) acre drilling and spacing units shall be, and the same are hereby established for the production of gas from the Fruitland-Pictured Cliffs formation, single common source of supply underlying the following described lands in La Plata and Archuleta Counties, Colorado, which include the original Ignacio Fruitland-Pictured Cliffs Field and the additional area herein described in the Findings:

Southwest Quarter (SW/4) of Section Two (2), Sections Three (3), Four (4), Five (5), Six (6) Seven (7), Eight (8), Nine (9), Ten (10), Eleven (11), Twelve (12), Thirteen, (13), Fourteen (14), Fifteen (15), Sixteen (16), Seventeen (17), Eighteen (18), Nineteen (19), Twenty (20), Twenty-one (21), Twenty-two (22), Twenty-three (23) and Twenty-four (24), Township Thirty-two (32) North, Range Six (6) West of the New Mexico P.M. Sections One (1) and Two (2), and the North Half (N/2) of Section Three (3), and Sections Eleven (11), Twelve (12), Thirteen (13), Fourteen (14), Twenty-three (23) and Twenty-four (24), Township Thirty-two (32) North, Range Seven (7) West of the New Mexico P.M.; Sections Eighteen (18), Nineteen (19), and Twenty (20), Township Thirty-two (32) North, Range Five (5) West of the New Mexico P.M.; and Sections Twenty-nine (29), Thirty (30), Thirty-one (31), Thirty-two (32) and Thirty-three (33), Township Thirty-three (33) North, Range Six (6) West of the New Mexico P.M.; South Half (S/2) of Section Five (5), Sections Six (6), Seven (7), Eight (8), Nine (9), and South Half (S/2) and Northwest Quarter (NW/4) of Section Fifteen (15), Sections Sixteen (16), Seventeen (17), Eighteen (18), Nineteen (19), Twenty (20), Twenty-one (21) and Twenty-two (22), Southwest Quarter (SW/4) of Section Twenty-three (23) and South Half (S/2) of Section Twenty-five (25), Sections Twenty-six (26), Twenty-seven (27), Twenty-eight (28) and Twenty-nine (29), North Half (N/2) of Section Thirty (30), and Sections Thirty-three (33), Thirty-four (34), Thirty-five (35), and Thirty-six (36), all in Township Thirty-three (33) North, Range Seven (7) West of the New Mexico P.M.; and Sections One (1), Two (2) and Three (3), and East Half (E/2) of Section Four (4), Sections Seven (7), Eight (8), Nine (9), Ten (10), Eleven (11), Twelve (12), Thirteen (13), Fourteen (14), Fifteen (15), Sixteen (16), Seventeen (17), Eighteen (18), North Half (N/2) of Sections Twenty-two (22), and Twenty-three (23), and all of Section Twenty-four (24), Township Thirty-three (33) North, Range Eight West of the New Mexico P.M.; and Sections Three (3), Four (4), Five (5), Six (6), Seven (7), Eight (8), Nine (9). Ten (10), Eleven (11), Twelve (12), Thirteen (13), Fourteen (14), Fifteen (15), Sixteen (16), Seventeen (17), Eighteen (18), Twenty (20), Twenty-one (21) and Twenty-two (22), Township Thirty-three (33) North, Range Nine (9) West of the New Mexico P.M.,

and such area is known as the Ignacio Fruitland-Pictured Cliffs Field.

Rule 2. No well shall be drilled and completed or recompleted in the said formation or pool, and no notice of intention to drill shall be approved by the Commission unless:

(a) Such well be located on a designated drilling unit of not less than 320 acres of land, more or less, according to legal subdivisions of the United States Land Surveys in which unit all of the interests are consolidated by a pooling agreement or otherwise, and on which no other well is completed or approved for completion in the same pool.

(b) Such drilling unit be in the shape of a rectangle, except for normal variations in legal subdivisions of the United States Land Surveys, the North Half (N/2) South Half (S/2), East Half (E/2), or West Half (W/2) of each section constituting the drilling unit.

(c) Such well be drilled no closer than Nine Hundred Ninety (990) feet to the boundaries of the quarter section upon which it is located.

(d) Such well, if drilled to the Ignacio Fruitland-Pictured Cliffs pool, be located in either the Northwest Quarter (NW/4) or Southeast Quarter (SE/4) of the section on which it is located, unless such well was completed prior to the date of this order.

Rule 3. The Commission may, by order entered after due notice and hearing, and to prevent waste or confiscation of property, or to prevent inclusion of unproductive land in a drilling unit, grant exceptions to the provisions of Rule 2 above; and the Commission may, without additional notice and hearing, grant exceptions to Rule 2(c) above, when, because of topographical reasons, it is necessary to locate such well closer than Nine Hundred Ninety (990) feet to the boundaries of the quarter section in which the well is drilled.

Rule 4. The casing program of all wells hereafter drilled in the Ignacio Fruitland-Pictured Cliffs pool shall include at least two (2) strings of casing which shall be set in accordance with the following:

(a) The surface casing shall consist of new or reconditioned pipe with the original mill test of not less than 1200 psi and shall be set and cemented at a point such that all fresh water and water of present or probable value for domestic, commercial or stock purposes shall be confined to their respective strata and shall be adequately protected against contamination by objectionable water, oil or gas, provided that the point at which the surface casing shall be set and cemented shall in no case be less than 200 feet below the surface of' the earth. Cementing shall be by the pump and plug method and sufficient cement shall be used to fill the annular space behind the pipe to the surface of the ground or the bottom of the cellar. Cement shall be allowed to stand a minimum of twenty-four (24) hours before drilling the plug or initiating tests. Before drilling the plug, a pump pressure of at least 1000 psi shall be applied. If at the end of thirty (30) minutes the pressure shows a drop of 100 psi or more, the casing shall be condemned. In lieu of the foregoing test the surface casing shall be tested after drilling the plug by bailing the hole dry. The hole shall remain dry for one (1) hour to constitute satisfactory proof of a water shutoff. In event the casing is condemned, it shall again be tested in the same manner after corrective operations are completed, and this string shall stand the required test before compliance with this rule shall have been made.

(b) The producing or oil string shall consist of new or reconditioned pipe with an original mill test of not less than 2000 psi. This string of casing shall be set and cemented at such a point that all oil, gas and water encountered above the producing formation and below the surface casing shall be adequately confined to their respective strata. Cementing shall be by the pump and plug method, and the volume of cement, used shall be that calculated to bring the top of the cement 600 feet above the highest formation which is indicated to be commercially productive of oil or gas. The cement shall be allowed to stand a minimum of twenty-four (24) hours before drilling the plug or initiating tests. Before drilling the plug, a pump pressure of at least 1500 psi shall be applied. If at the end of thirty (30) minutes, the pressure shows a drop of 150 psi or more, the casing shall be condemned. In lieu of the foregoing test the surface casing shall be tested after drilling the plug by bailing the hole dry. The hole shall remain dry for one hour to constitute satisfactory proof of a water shutoff. In the event the casing is condemned, it shall again be tested in the same manner after corrective operations are completed, and this string shall stand the required tests before compliance with this rule shall have been made.

IT IS FURTHER PROVIDED, that any operator or operators owning oil and gas leases upon lands contained within the boundaries hereinabove defined, and desiring to drill a well or wells thereon, shall, by pooling agreement or otherwise, form a Three Hundred Twenty (320) acre unit or units, in conformity with the spacing pattern herein established, provided that the rights of all parties affected hereby to apply to the Commission for the formation of a 320-acre unit or units under the provisions of Chapter 230 of 1951 Session Laws of the State of Colorado shall not be prejudiced by the entry of this order; and provided that, in the event of the proposed formation of a 320-acre unit to conform with the spacing pattern herein established which contains patented lands and Indian lands, if the Department of Interior fails to approve such unit, then the patented lands therein shall not be affected by the terms and requirements of this order, other than Rule 4 above.

IT IS FURTHER ORDERED, that exceptions shall be allowed for the eight wells requested by the Pacific Northwest Pipeline Corporation, located as follows:

1. Pacific Northwest Pipeline Corporation Bondad 33-9, Well #5-3, located Eighteen Hundred Forty (1840) feet from the South line and Nine Hundred Sixty (960) feet from the West line of Section Three (3), Township Thirty-three (33) North, Range Nine (9) West.

2. Pacific Northwest pipeline Corporation Bondad 33-9 Well #6-7, located Fifteen Hundred and eight (1508) feet from the North line and Sixteen Hundred and Sixty-five (1665) feet from the East line of Section Seven (7), Township Thirty-three (33) North, Range Nine (9) West.

3. Pubco Development Ute Well #2, located Fifteen Hundred Ninety (1590) feet from the South line and Fourteen Hundred Fifty (1450) feet from the West line of Section Ten (10), Township Thirty-three (33) North, Range Nine (9) West.

4. U.S. Smelting, Refining & Mining Company Ute Well #1-16, located One Thousand (1000) feet from the North line and One Thousand Two Hundred (1200) feet from the East line of Section Sixteen (16), Township Thirty-three (33) North, Range Nine (9) West.

5. U.S. Smelting, Refining & Mining Company Ute Well #2-16, located Nineteen Hundred Eighty (1980) feet from the South line and Nineteen Hundred Eighty (1980) feet from the West Pine of Section Sixteen (16), Township Thirty-three (33) North, Range Nine (9) West.

6. U.S. Smelting, Refining & Mining Company S Ute Well #1-21, located twenty-three Hundred Sixty (2350) feet from the North line and Fifteen Hundred Sixty (1560) feet from the West line of Section Twenty-one (21), Township Thirty-three (33) North, Range Nine (9) West.

7. U.S. Smelting, Refining & Mining Company S. Ute Well #2-21X, located Six Hundred Forty (640) feet from the North line, and Eleven Hundred Sixty-five (1165) feet from the East line of Section Twenty-one (21), Township Thirty-three (33) North, Range Nine (9) West.

8. U.S. Smelting, Refining & Mining Company S. Ute Well #1-22, located Six Hundred Sixty (660) feet from the North line and Sixteen Hundred Fifty (1600) feet from the West line of Section Twenty-two (22), Township Thirty-three (33) North, Range Nine (9) West., and that each of the above wells shall be the permitted gas well for the drilling and spacing unit upon which it is located.

IT IS FURTHER ORDERED, that the rules and regulations contained herein shall become effective forthwith, and henceforth the commencement of the drilling of any well or wells in the Fruitland-Pictured Cliffs pool of the Ignacio Field, as defined herein, for the purpose of producing gas therefrom at a location other than authorized by this Order, is hereby prohibited.

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 rules and regulations.

ORDERED, this 11th day of October, 1955.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Annabel Hogsett, Secretary