REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 16, 1979 at 9:00 A.M., in Room 110, State Centennial Building, Denver, Colorado, and was con-tinued to August 21, 1979, after giving Notice of Hearing, as required by law, on the application of Amoco Production Company for an order establishing 80-acre drilling and spacing units for the production of gas from the "J" Sand underlying certain lands in Adams County, Colorado.

FINDINGS

The Commission finds as follows:

1. Amoco Production Company, as applicant herein, is an interested party in the subject matter of the above-referenced hearing.

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

3. 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. The "J" Sand, which consists of lenticular sands of low permeability and porosity, constitutes a common source of supply of gas underlying the following described lands in Adams County, Colorado, to-wit:

Township 2 South, Range 63 West, 6th P.M. Section 25: All Section 34: E/2 Section 26: All Section 35: All Section 27: E/2 Section 36: All

5. Evidence presented at the hearing, which was uncontrovertible, indi-cates that the proper spacing for the area should be 160-acres. However, spacing the entire area on 160-acres is complicated by the 80-acre development existing in Section 35. The wells in this section were legally permitted when drilled and it would be inappro-priate to retroactively restrict production from any of the wells in this section.

6. A spacing pattern should be developed that would balance the proper spacing requirements with the protection of correlative rights. Therefore, Section 35 should continue to be developed on 80-acres and the remaining area should be spaced on 160-acres with the permitted well location such that it would offset the advantage wells in said Section 35 may have. This advantage can be offset by allowing the wells in the area outside said Section 35 to be located no closer than 600 feet from the unit boundary lines.

7. The 80-acre drilling and spacing units in Section 35 should consist of the N/2 and S/2 or the E/2 and W/2 of a quarter section, according to the governmental survey, with the permitted well located in the center of the NE/4 and SW/4 of the quarter section, with a tolerance of 150 feet for topography and/or surface hazards. For the remaining area, the 160-acre drilling and spacing units should consist of a quarter sec-tion, according to the governmental survey, and the permitted well should be located no closer than 600 feet to the boundaries of the quarter section upon which it is located. However, any well drilled, or a well location already approved for production of gas from said "J" Sand and not in conformance with the permitted well locations, should be consi-dered an exception and be the permitted well for the unit upon which it is located. (over)

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to a well drilled, completed, or recompleted in the "J" Sand underlying lands in the Quail Field herein described, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith.

Rule 1. Eighty (80) acre drilling and spacing units shall be and the same are hereby established for the production of gas from the "J" Sand underlying the follow-ing described lands in the Quail Field

Township 2 South, Range 63 West, 6th P.M. Section 35 All

A. Said drilling and spacing units shall consist of the N/2and S/2 or the E/2 and W/2 of a quarter section, according to the governmental survey thereof, and the permitted well shall be located in the NE/4 and SW/4 of the quarter section, with a toler-ance of 150 feet for topography and/or surface hazards.

Rule 2. One hundred sixty (160) acre drilling and spacing units shall be and the same are hereby established for the production of gas from the "J" Sand under-lying the following described lands in the Quail Field

Township 2 South, Range 63 West, 6th P.M. Section 25. All Section 34. E/2 Section 26. All Section 36. All Section 27. E/2

A. Said drilling and spacing units shall consist of a quarter section, according to the governmental survey thereof, with the permitted well located no closer than 600 feet from the boundaries of the quarter section upon which it is located.

Rule 3. Any well drilled, or a well location already approved [or pro-duction of gas from the "J" Sand and not in conformance with the permitted well locations, shall be considered an exception and be the permitted well for the unit upon which it is located.

IT IS FURTHER ORDERED, that the rules and regulations contained herein 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, rules and regulations.

ORDERED this 21st day of August, 1979.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary -- 3 --(#355-1)