REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 15, 1972, at 9 A.M., in Room 132, State Services Building, Denver, Colorado, and was continued to.February 22, 1972, at 9 A.M., in. the Auditorium, Social Services Building, Denver, Colorado, as the result of Order No. 237-5 requesting all operators in the Poncho Field to present additional production and reservoir data in order for the Commission to determine what field rules should be adopted for the production of oil and gas in said field and plans for the disposition of the casinghead gas Also, as the result of letters from Midwest Oil Corporation and Tiger Oil Company, further information was obtained for the Commission to determine if more than one reservoir existed in the field and of any possible advantage that two wells being produced by Tiger Oil Company have over other producers by reason of their having been drilled as exceptions.

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 evidence presented at the hearing shows that there is present in part of the Poncho Field, a lower zone of the "J" Sand from which production is being obtained. However, the evidence indicates that such "J l" and "J 2" zones are sufficiently inter-connected that the "J"" Sand should be considered one common source of supply.

4. That the Commission by its Emergency Order No. 237-4 and Order No. 237-5 limited the production of oil from the Poncho Field to 100 barrels per day per well in order to reduce the flaring of casinghead gas from said field.

5. That, according to Commission records, Tiger Oil Company produced 3, 150 barrels of oil in excess of its allowed limitation from its Well No. 2-34 Noonen-State, located in the NE/4 SW/4 Section 34, Township e South, Range 59 West, and that such overproduction should be made up by allowing Tiger Oil Company to produce said well at 50% of the daily allowable to be established for the well in this Order until the overproduction is made up.

6. That in view of the expansion of the Peoria Gas Processing Plant, which is expected to be completed within five (5) months, prevention of the waste of gas during the interim period is required. For this to be accomplished, the Commission finds that the daily allowable for each well producing from the "J" Sand of the Poncho Field should not exceed 100 barrels of oil or 100 MCF of gas, whichever is first produced.

(over)

7. That in order to accumulate the necessary data for determination of the monthly allowable for each well, monthly gas-oil ratio tests should be conducted.

8. That in order for operators to produce any one lease in the most efficient manner possible, transfer of allowables within a given lease should be permitted.

9. That in the preceding month before the completion of the expansion of the Peoria Gas Processing Plant a hearing should be held to determine Held rules in order to provide the L 7 to 2 million cubic feet of gas per day from the Poncho Field to serve the expanded capacity of the Peoria Gas Processing Plant.

10. That the evidence indicates that in view of Finding No. 5 herein, which requires Tiger Oil Company to make up its overproduction and the transfer of allowables within a lease provided by Finding No. 8 herein, that Tiger Oil Company's Well No. 2-34 Noonen-State, located in the NE/4 SW/4 Section 34, Township 3 South, Range 59 West 6th P.M., will not have an advantage over other producers by reason of drilling the well as an exception during the period prior to the hearing provided for in Finding No. 9 herein. Therefore, no restriction should be placed on the allowable granted to this well by reason of it having been drilled as an exception. However, the Commission, at its hearing to be held pursuant to said Finding No. 9, will receive any additional evi-dence which may be offered on the question of advantage.

11. That the evidence indicates that Tiger Oil Company's Well No. 4-3 UPRR-Price located in the NE/4 NW/4 Section 3, Township 4 South, Range 59 West 6th P.M. does have an advantage over other producers by reason of drilling the well as an excep-tion, and in order to prevent production from the drilling unit upon which this well is located of more than its just and equitable share of oil and gas from the reservoir, a restriction of 75% of the daily allowable of a well as established by this Order should be placed on this well.

ORDER

NOW, THEREFORE, IT IS ORDERED that the following rules and regulations shall be, and the same are hereby adopted for the "J" Sand, common source of supply of oil and gas in the Poncho Field, Adams and Arapahoe Counties, Colorado, underlying the following described lands:

Adams County

Township 3 South, Range 59 West, 6th P.M. Section 33: All Section 34: All Arapahoe County.

Township 4 South, Range 59 West 6th P.M. Section 3: All Section 10: All Section 4: All Section 15: All Section 9: All Section 16: All

Rule 1. Production Limitation

a. The daily allowable calculated on a monthly basis, for any one (1) well capable of producing from the "J" Sand underlying said Poncho Field shall be One Hundred (100) barrels of oil or One Hundred (100) MCF of gas, whichever is first pro-duced. The daily gas allowable for any one (D well shall be limited to One Hundred (100)

- 2 - (#237-6) MCF of gas, and the daily oil allowable for any one (1) well shall be the maximum amount of oil it is capable of producing, as determined by tests required herein by' these rules, not to exceed One Hundred (100) barrels; provided, however, that wells which have a gas-oil ratio in excess of 1,000 cubic feet per barrel of oil shall be granted an allowable as determined by the following formula, not to exceed the oil capacity of such a well:

100 barrels x 1,000 cubic feet per barrel Daily Oil Allowable : ========================================= Gas-oil ratio of well

This limitation shall be in effect until the expansion of the Peoria Gas Processing Plant is completed and capable of receiving gas from said field.

b. in order that the operators may produce their leases in the most efficient manner possible, the allowable of any one (1) well or combination of wells on any given lease, within a governmental section, may be transferred and produced from any other well or combination of wells on that lease within said section, provided the transfer is to a well or wells with lower gas-oil ratios.

c. No well shall produce during any one twenty-four (24) hour period more than twice its daily allowable and the allowable production for an,y one (D month may not be exceeded by more than ten percent (10%) of the total monthly allowable; any over-production shall be made up during the month. immediately following and any underpro-duction may be made up only during the month immediately following.

d. The daily allowables for the month of March will be determined from the gas-oil ratio tests submitted at the hearing.

Rule 2. Gas-Oil Ratio Tests

a. Operators and owners of wells producing from the "J" Sand of the Poncho Field underlying the lands described in this Order shall make a monthly gas-oil ratio test of each producing well, such tests to be taken during the first fifteen (15) days of each month and the results to be received by the Commission on OGCC Form 9 on or before the twenty-fifth (25th) day of the same month. Such tests shall be the basis for calculating the allowable for the following month. Each well shall be produced at its normal rate of production for the last twenty-four (24) hours prior to the actual test and that during such test the well shall be produced at a rate not greater or less than 10% of the pre-test rate. Not less than ten (10) days prior to the testing of the well, a schedule shall be submitted to the Commission and to the offset operators showing the wells and the respective dates of tests so that the Commission and offset operators will have an opportunity to witness such tests. The volume of gas measured shall be reported in units of cubic feet at a base pressure of 15.025 psia and a base temperature of 600 F, and the gas-oil ratio shall be made and calculated in accordance with good engineering principle s.

Rule 3. Production Reports

a. Operators and owners of wells producing from the "J" Sand of the Poncho Field shall file with the Commission a monthly report of production by wells as re-quired on OGCC Form 7, on or before the twenty-fifth (25th) day of each month suc-ceeding the month in which the production occurs, unless otherwise authorized by the Director.

IT IS FURTHER ORDERED that Well No. 2-34 Noonen-State, located in the NE/4 SW/4 Section 34, Township 3 South, Range 59 West, 6th P.M., shall be restricted in production to fifty percent (50%) of the daily allowable established for the well by this Order until such time as the overproduction of 3,150 barrels of oil is made up. The well shall then be permitted to produce at the daily allowable of a well as established by this Order. - 3 - (#237-6)

IT IS FURTHER ORDERED that Well No. 4-3 UPRR-Price, located in the NE/4 NW/4 Section 3, Township 4 South, Range 59 West, 6th P.M., shall be restricted in production to seventy-five percent (75%)of the daily allowable of a well as established by this Order.

IT IS FURTHER ORDERED that upon proper notice, a hearing shall be held the month preceding the completion of the expansion of the Peoria Gas Processing Plant.

IT IS FURTHER ORDERED that this Order shall become effective March 1, 1972.

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 1st day of March 1972.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO By Frank J. Piro, Secretary

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