IN THE MATTER OF GENERAL RULES AND REGULATIONS WITH RESPECT TO THE CONSERVATION OF OIL AND GAS IN THE STATE OF COLORADO, AND RULES OF PRACTICE AND PROCEDURE PERTAINING THERETO AND IN PARTICULAR WITH REFERENCE TO RULE 323

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 CLIFF "D" SAND UNIT AREA, CLIFF FIELD, LOGAN COUNTY, COLORADO

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CAUSE NO. 511

ORDER NO. 511-1

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on May 16, 1994 at 8:30 a.m. in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Rex Monahan, for an order approving a certain Unit Agreement and Unit Operating Agreement for the Cliff "D" Sand Unit, providing for unit operations and development of the reservoir consisting of the Cliff "D" Sand Formation underlying certain lands in Logan County, Colorado.

FINDINGS

The Commission finds as follows:

1. Rex Monahan 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 "D" Sand Formation was encountered in the stratigraphic interval between the depths of 5417 feet and 5460 feet measured from the Kelly Bushing, in the T & T Oil Company & UPRR No. 1 UPRR Casement Well located in the NW1/4 SW1/4 of Section 33, Township 12 North, Range 54 West, 6th P.M., Logan County, Colorado, and 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 Logan County, Colorado:

Township 11 North, Range 54 West, 6th P.M.

Section 4: All

Section 5: All

Section 8: NE1/4 NW1/4, N1/2 NE1/4

Section 9: N1/2 N1/2

Township 12 North, Range 54 West, 6th P.M.

Section 28: W1/2, SE1/4

Section 29: E1/2, SW1/4

Section 32: All

Section 33: All

5. Testimony presented at the administrative hearing indicated that the applicant proposes an enhanced recovery project initially utilizing high pressure air, with the possible addition of gas. A pilot injection test will be performed to determine if full scale operation would be feasible.

6. The terms and conditions provided by the Cliff "D" Sand Unit Agreement and Unit Operating 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, as described herein is necessary to increase the ultimate recovery of oil and gas and the value of the estimated additional recovery of oil and gas exceeds the estimated addition al cost incident to conducting such operations.

7. The provisions contained in said Unit Agreement and Unit Operating Agreement are just and reasonable and include the following:

a.	The description of the pool to be so operated;

b.	The nature of said operation: [sic]

c.	The allocation to the separately owned tracts in the Cliff "D" Sand Unit Area of all the 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 Cliff "D" Sand Unit Area 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 owner, or the interest of 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 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 circumstances under which the unit operations shall terminate.

8. At the time of the administrative hearing before the Commission, Rex Monahan indicated that in Phase I those persons having approximately ninety-nine percent (99%) of the working interests and in Phase II those persons having approximately ninety-eight percent (98%) of the working interests, and in Phase I those persons having approximately ninety-one percent (91%) of the non-cost bearing interests and in Phase II those persons having approximately ninety-five percent (95%) of the non-cost bearing interests had approved in writing the aforementioned plan of unit operations.

9. Based on the facts stated in the verified application, the Commission should enter an order approving the Cliff "D" Sand Unit Agreement and Unit Operating Agreement with an effective date of June 1, 1994.

ORDER

NOW, THEREFORE, IT IS ORDERED, that:

1. The Cliff "D" Sand Unit Agreement and Unit Operating Agreement, covering lands in the Cliff Field, which agreements are attached to, and made a part of the original order of this Commission on file in the office of the Commission, are approved as being in the public interest for conservation.

2. The Cliff "D" Sand reservoir, a common source of supply, underlies the following lands in Logan County, Colorado:

Township 11 North, Range 54 West, 6th P.M.

Section 4: All

Section 5: All

Section 8: NE1/4 NW1/4, N1/2 NE1/4

Section 9: N1/2 N1/2

Township 12 North, Range 54 West, 6th P.M.

Section 28: W1/2, SE1/4

Section 29: E1/2, SW1/4

Section 32: All

Section 33: All

3. The provisions contained in said Unit Agreement and Unit Operating Agreement as they pertain to C.R.S. Section 34-60-118, as amended, 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. Any injection well to be located in the Unit Area shall be approved by the Director in accordance with the rules and regulations of the Commission.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective June 1, 1994, and that the Unit Operator shall submit all documentation required including Form 10, Certificate of Clearance, for each well, and further that the Unit Operator shall advise the Commission in writing as to the termination of the unit.

IT IS FURTHER ORDERED, that the Commission expressly reserves it rights, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

ENTERED this 16^th day of June, 1994, as of May 16, 1994.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

June 7, 1994