REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on july 18, 1972, at 2 P.M., in Room 132, State Services Building, Denver, Colorado, as the result of Order No. 237-7 (Emergency) which granted temporary relief from production limitations as established by Order No. 273-6 in order to allow the operator of the Peoria (]as Pro-cessing Plant, which has been expanded, to load t.he plant with gas from the Poncho Field, as well as the Peoria, Peoria North., Latigo and Hombre Fields, and further ordered the operators in the fields to present all available production and test data in order for the Commission to determine field rules for production of oil and gas and to consider long range plans for allocation of gas to the expanded Peoria Gas Processing Plant.

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 the Commission by its Order No. 237-6, in order to prevent waste, limited the production from the "J" Sand reservoir of the Poncho Field not to exceed a daily allowable for each well of 100 barrels of oil or 100 Mcf of gas, whichever is first produced.

4. That the Peoria Gas Processing Plant has been expanded to handle approxi-mately 16, 000 Mcf of gas per day and the Commission by its Order No. 237-7 (Emergency) granted temporary relief from the limitations placed on production from the Poncho Field by Order No. 287-6 in order to allow the operator to load and test the design capabilities of the expanded plant.

5. That with the completion of the expansion of the Peoria Gas Processing Plant, the plant nomination should be allocated among the Hombre, Latigo, Peoria, Peoria North and Poncho Fields, in Adams and Arapahoe Counties, Colorado, and that 17500 to 2, 000 Mcf of gas per day is a reasonable allocation of the plant capacity for the Poncho Field.

6. That the limitations on production as established by Order No. 237-6 and defined in Finding S heroin, are no longer necessary and should be removed, except that the restriction placed on Well No. 4-3 UPRR Price, drilled as an exception and located in the NE/4 NW/4, Section 3, Township 4 South, Range 59 West, 6th P.M., should remain.

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

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 a hearing should be held in six months to review the plans concerning the allocation of gas to said expanded plant.

ORDER

NOW, THEREFORE, IT IS ORDERED: 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, of 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 p 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 nomination of 1,600 to 2,000 Mcf of gas per day by the operator of the Peoria Gas Processing Plant shall be the allocation of the plant capacity for the Poncho Field, herein described.

b. Each well that is not economically feasible to connect to the expanded Peoria Gas Processing Plant shall be permitted to produce oil and associated gas, with the produced gas flared, provided that such wells are not produced at a rate exceeding' the field per well allowable; and each well that is connected to the Peoria Gas Processing Plant shall be permitted to produce the amount of oil it is capable of producing subject to the limitations that will be imposed by the Commission from a determination of each lease's gas allowable for the month in accordance with the following procedure: Step l: As determined by tests required by Rule 2 hereof, determine which wells are incapable of producing the maximum Daily Gas Allowable. Classify such wells as Deficient Connected Wells.

Step 2: Determine a Daily Gas Allowable per well by the formula: Daily Gas Allowable per well (MCFD) = Gas Plant Nomination (MCFD) - Deficient Well MCFD Number of Connected Welds - Number of Deficient Connected Wells with the nomination for the field, within the limits of 1,500 MCFD to 2,000 MCFD, said nominations, to be submitted monthly by-the gas plant operator to the Commission and to other operators in the field. Such nominations shall be submitted to the Commission on or before the twenty-fifth (25th) day of the month prior to the month for which the nomina-tion is made. No nomination shall, without a hearing, exceed the limits as given above. .--2-(237-8)

Step 3, Add the Daily Gas Allowables determined in Step 1 and Step 2 for each lease within a governmental section and convert to a monthly basis to determine the monthly Lease Gas Allowable for each lease in the Poncho "J" Sand oil pool.

c. In order that the operators may produce their leases in the most efficient manner possible, the gas allowable of any one weld or combination of wells on any given lease may be transferred and produced from any other well or combination of wells on that lease; provided the transfer is to a well or wells with lower gas-oil ratios, provided further, that in no case shall an allowable greater than the capacity of the well be transferred.

d. Under-- arid overproduction of gas shall be adjusted on a monthly basis. Underproduction of gas during any/one month may be made up only during the month immediately following; and any over production of gas obtained during any one month shall be made up during the month immediately following Any overproduction of gas in excess of ten percent (10%) of the total monthly allowable shall be considered a violation, unless a valid reason is given.

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 volume of gas allowed to be produced 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 the pre-test rate with a 10, 70 tolerance. 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 test so that the Commission and offset operators will have an opportu-nity 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 60 F, and the gas-oil ratio shall be made and calculated in accordance with good engineering principles. High gas-oil ratio wells that have been shut in shall be tested quarterly, beginning in Sept. 1972, in the same manner as provided above.

b. Any operator may apply for an amended gas allowable upon submission of authorized test or retest results.

Rule 3. Production Reports

a. The Operator of the Peoria Gas Processing Plant shall file with the Commission a monthly report of gas take by leases in the Poncho "j" Sand oil pool measured at a pressure base of 15. 025 psia and a temperature of 60 F on or before the twenty-fifth (25th) day of each month succeeding the month in which the gas production occurs.

b. Operators and owners of wells producing from the aforemen-tioned "J" Sand oil pool shall file with the Commission a monthly report of oil production by wells, as required on OGCC From V, on or before the twenty-fifth (25th) day of each month succeeding the month in which the oil, production occurs. (Gas production by wells, at the Operator's option, does not need to be reported but may be reported on this same form, provided that gas not taken by the plant must be reported showing amount of production and disposition.

-- 3 --

(237-8)

Rule 4.

That a hearing shall be held in February, 1973 to review the plans concerning the allocation of gas to said expanded plant.

IT IS FURTHER ORDERED, that the rules and regulations as established by Order No. 237-6 are hereby rescinded; however, 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 this order shall become effective August 1, 1972.

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

ORDERED this 19th day of July 1972.

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

(237-8)