REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 20, 1981 at 9:00 a min Room 110, State Centennial Building, Denver, Colorado, after giving Notice of Hearing as required by law, on the application or Fuel Resources Development Co., for an order establishing 160-acre drilling and spacing units for the production of oil and gas from the Castlegate (Mancos "A") and Mancos "B" formations, and 320-acre drilling and spacing units for the production of oil and gas from the Dakota formation, underlying certain lands in Rio Blanco County, Colorado.

FINDINGS

The Commission finds as follows:

1. Fuel Resources Development Co., 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 said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4. Evidence presented at the hearing indicates that the Castlegate (Mancos "A") and Mancos "B" formations and the Dakota formation constitutes common sources of supply of oil and gas underlying the following described lands in Rio Blanco County Colorado, to-wit:

Township 3 South, Range 102 West, 6th P.M. Section 16: All Section 20: All Section 17: All Section 21: All

5. In order to prevent the waste of oil and gas, as defined by law; to pro-tect the correlative rights of all parties concerned; to prevent the drilling of unnecessary wells, and to insure proper and efficient development and promote conservation of the oil and gas resources of the State, an order should be made establishing 160-acre drilling and spacing units for the production of oil and gas from the Castlegate (Mancos "A ") and Mancos "B"formations and 320-acre drilling and spacing units for the production of oil and gas from the Dakota formation, common sources of supply underlying the lands defined herein; that said 160-acre units should consist of a quarter section, according to the governmental survey, with the permitted well k, rated no closer than 600 feet to the boundaries of the unit, and no closer than 1200 feet to an existing well producing from the same formation; and the 320-acre units should consist of the N/2 and S/2 or the E/2 and W/2 of each section, according to the governmental survey, with the permitted well located no closer than 600 feet to the boundaries of the unit and no closer than 1200 feet to an existing well producing from the same formation. Certain existing wells, as listed in the application, and listed in the following order, should be designated for the units upon which they are located.

6. All available geological and engineering data concerning said form-tions, indicate that one (1) well will efficiently and economically drain an area of approxi-mately 160-acres for the production of oil and gas from the Castlegate (Maneos "A") and

(over) Mancos "B" formations, and that one (1) well will efficiently and economically drain an area of approximately 320-acres for the production of oil and gas from the Dakota for-mation, and that the drilling units of the size and shape hereinabove described are not smaller than the maximum area that can be efficiently drained by one well producing from said formations.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regu-lations shall apply hereafter to wells drilled, completed, or recompleted in the Castle-gate (Mancos "A"), Mancos "B" and Dakota formations underlying lands in the Texas Mountain 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. One hundred sixty (160) acre drilling and spacing units shall be and the same are hereby established for the production of oil and gas from the Castlegate (Maneos "A") and Mancos "B" formations, and three hundred twenty (320) acre drilling and spacing units shall be and the same are hereby established for the production of oil and gas from the Dakota formation, underlying the following described lands in the Texas Mountain Field, Rio Blanco County, Colorado, to-wit:

Township 3 South, Range 102 West, 6th P.M. Section 16: All Section 20: All Section 17: All Section 21: All

Rule 2. Said 160-acre drilling units shall consist of a quarter section of land, according to the governmental survey and said 320-acre drilling units shall consist of the N/2 and S/2 or the E/2 and W/2 of each section, according to the governmental survey. The permitted well for each unit shall be at a location no closer than 600 feet to the boundaries of the unit and no closer than 1200 feet to an existing well producing from the same formation, and the following shall be designated the permitted well for the unit upon which each is located:

Township 3 South, Range 102 West, 6th P.M. Section 16: SE/2 16-1 Government Austral (Castlegate)

Section 16: SW/4 16-2 Federal (Fuelco) (Castlegate)

Section 17: S/4 17-1 Federal (Fuelco) (Castlegate)

Section 17: SW/4 17-2 Federal (Fuelco) (Castlegate)

Section 17: E/2 Texas Oil and Gas; Corp.

Federal # 1 (Permit Applied For) (Dakota)

Section 20: W/2 20-1 Government Austral (Dakota)

Section 20: SE/4 20-2 Government-Austral (Castlegate)

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Township 3 South., Range 102 West, 6th P.M. (Cont.) Section 21: NW/4 Federal 21-2 (Castlegate)

IT IS FURTHER ORDERED, that the rules and regulations 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 the above orders and rules and regulations.

ENTERED this 14th day of August 1981, as of July 20, 1981. OIL AND GAS CONSERVATION

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

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