3-9

\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 IGNACIO FIELD, LA PLATA COUNTY, COLORADO, WITH PARTICULAR REFER-ENCE TO THAT KNOWN PRODUCING ZONE LOCAT-ED THEREIN TERMED"FRUITLAND-PICTURED CLIFFS"

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CAUSE NO. 3

ORDER NO. 3-9

REPORT OF THE COMMISSION

This matter came on for hearing before the Commission on April 20, 1954, 704 State Capitol Annex, Denver, Colorado, pursuant to application of the Stanolind Oil and Gas Company, as provided in Paragraph III of Interim Order No. 3-8.

FINDINGS

The Commission finds as follows:

1. That due notice of the time, place and purpose of this 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, after due consideration of all the evidence heretofore and presently submitted and after hearing arguments of counsel, the Commission finds that in order to prevent waste 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, it is necessary and in the public interest to promulgate field rules for the Fruitland-Pictured Cliffs formation in the Ignacio Field, La Plata County Colorado.

4. That the Ignacio Fruitland-Pictured Cliffs Field, La Plata County, Colorado, is hereby defined as the following described land in said County and State.

Township 32 North, Range 7 West
Sections 1, 2, and 3	N½

Township 33 North, Range 7 West
Section 5	S½
Sections 6, 7, 8, 9, 16, 17, 18, 19, 20, 21, and 22	All
Section 15	S½ and NW¼
Section 23	SW¼
Section 25	S½
Sections 26, 27, 28, and 29	All
Section 30	N½
Sections 33, 34, 35, and 36	All

Township 33 North, Range 8 West
Sections 1, 2, and 3	All
Section 4	E½
Sections 7 and 8	S½ All [sic]
Section 9	S½ and NE¼
Sections 10, 11, 12, 13, 14, 15, 16, 17, and 18	All
Sections 22 and 23	N½
Section 24	All

5. That the Fruitland-Pictured Cliffs formation of the Ignacio Field shall mean and include that geological strata the top of which was encountered at a depth of approximately 2350 feet and the base of which was encountered at a depth of approximately 2665 feet beneath the surface of the earth in Stanolind-Ute Indians B-1 well located in the Northeast Quarter of Section 18, Township 33 North, Range 7 West, N.MP.M., as shown by the Schlumberger electric log of the said well; and that the said Fruitland-Pictured Cliffs formation, insofar at as the same underlies the above described area, constitutes a single common source of supply or pool of gas in the said field.

6. That at the present time, 44 wells have been drilled in the Ignacio Fruitland-Pictured Cliffs Field; that for the purposes of this order, the field may as a practical matter be considered to be essentially completely developed, although a few additional wells may be drilled and completed therein.

7. That, based on the evidence heretofore and presently submitted relating to the drilling of said wells, the information developed therefrom, the testimony of witnesses relating thereto and other geological and engineering conclusions concerning the characteristics of the Ignacio Fruitland-Pictured Cliffs pool, the Commission finds that the estimated productive limits of the pool include the area shown within the red green [sic] lines on the map filed with the Commission as Stanolind Exhibit No. 10. à I [sic]

8. That further, the Commission finds that one well will adequately and efficiently drain an area of at least 320 acres of land in the Ignacio Fruitland-Pictured Cliffs pool.

9. That while the Ignacio Fruitland-Pictured Cliffs pool may, as a practical matter, be considered essentially completely developed, additional wells may be drilled; that it is essential, in order to prevent waste as defined by law and to protect the correlative rights of the interested parties, for the wells in this pool to be spaced in an efficient and orderly manner; and that in determining a proper spacing program within the provisions of Chapter 230, Session Laws of Colorado, 1951, as amended, it is necessary to consider the effective drainage area of the wells, their producing characteristics and other geological and engineering reservoir factors.

10. That, on September 26, 1952, Stanolind Oil and Gas Company, one of the operators in the Ignacio Field, and El Paso Natural Gas Company executed a contract providing for the sale by Stanolind to El Paso of gas produced from all horizons down to and including the Ignacio Fruitland-Pictured Cliffs pool underlying the approximately 21,800 acres of leases held by Stanolind in the Ignacio Field, and that subject to the provisions of the contract, the initial delivery of gas thereunder commenced January 2, 1954.

ORDER

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

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Rule 1

No well shall be drilled and completed or recompleted in the said pools 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 N/2, S/2, E/2 or W/2 of each section constituting the drilling unit.

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

Rule 2

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 1, above, and the Commission may, without additional notice and hearing, grant exceptions to RULE 1 (c) above, when, because of topographical reasons, it is necessary to locate such well closer than 990 feet to the boundaries of the quarter section in which the well is drilled.

Rule 3

The casing program of all wells hereafter drilled in the Ignacio Pictured Cliffs pool shall include at least 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 24 hours before drilling the plug or initiating tests. Before drilling the plug, a pump pressure of at least 1,000 psi shall be applied. If at the end of 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 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 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 30 minutes, the pressure shows a drop of 150 psi or more, the casing shall be condemned. In liew [sic] 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 leases upon lands contained within the boundaries hereinabove defined and desiring to drill a well or wells thereon, shall, by pooling agreement or otherwise, a 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 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 approve such unit, then the patented lands therein shall not be affected by the terms and requirements of this order, other than Rule 3 above.

IT IS FURTHER ORDERED, that this order shall become effective as of 1, 1954, and shall supersede all other orders heretofore issued by the Commission governing operations and development in the Ignacio Fruitland-Pictured Cliffs pool.

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 6th day of May, 1954, by the Oil and Gas Conservation Commission of the State of Colorado.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Annabel Hogsett, Assistant Secretary

May 19, 1954

MEMORANDUM

TO: All parties interested in the Ignacio Field

FROM: The Oil and Gas Conservation Commission

SUBJECT: Cause No. 3 - Order No. 3-9

Will you please make the following changes in your copy of our Order No. 3-9, Ignacio Field, dated May 6, 1954:

On Page 1, under Township. 33 North, Range 8 West, after Sections 7, 8, and 9, the Order should state All of these Sections, instead of the S/2 of Sections 7 and 8, and the S/2 and NE/4 of Section 9.

On Page 2, the last two lines of Paragraph 7 should refer to the green lines instead of the red lines of Stanolind's Exhibit No. 1, instead of Exhibit No. 10.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Annabel Hogsett, Assistant Secretary