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 McCLAVE FIELD, KIOWA COUNTY, COLORADO	) ) ) )	CAUSE NO. 105 ORDER NO. 105-31

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on July 18, 1994, in Room 610, State Services Building, 1525 Sherman Street, Denver, Colorado, on the application of D.E.A. Johnson, Inc. for an order allowing a well to be drilled at an exception location 660 feet FSL and 660 feet FWL in the SW1/4 SW1/4 of Section 7, Township 20 South, Range 48 West, 6th P.M., for production from the McClave Sand, for the 640-acre drilling and spacing unit consisting of said Section 7.

FINDINGS

The Commission finds as follows:

1.      D.E.A. Johnson, Inc., as applicant herein, is an interested party in the subject matter of the above-referenced matter.

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.      On May 15, 1957, the Commission issued Order No. 105-1 which established 640-acre drilling and spacing units for the production of oil and associated hydrocarbons from the McClave Sand underlying certain lands in the McClave Field, with the units to consist of a governmental section, with the permitted well to be located no closer than 990 feet from the center of the drilling and spacing unit upon which it is located.  Subsequent Order No. 105-2 included additional lands under the McClave Field, including Section 7, Township 20 South, Range 48 West, 6th P.M.

5.      The Planet Venture No. 33-7 Well and the Planet Venture No. 23-7X Well were drilled in the NW1/4 SE1/4 and the NE1/4 SW1/4, both in Section 7, Township 20 South, Range 48 West, 6th P.M., for production from the McClave Sand, and were plugged and abandoned in 1978 and 1994 respectively due to casing leaks.

6.      Geological evidence presented at the administrative hearing indicated that the optimum location to obtain production would require locating a well where riverbed sand development is present.  Engineering evidence indicated that approximately one (1) billion cubic feet of gas may remain under Section 7 and that a well located in the SW1/4 SW1/4 of said Section 7 is necessary in order to recover all the hydrocarbons in the McClave Sand underlying the 640-acre drilling and spacing unit.

7.      That in order to protect correlative rights and to prevent waste, the Pyles No. 14-7 Well should be authorized to be drilled at an exception location 660 feet FSL and 660 feet FWL in the SW1/4 SW1/4 of Section 7, Township 20 South, Range 48 West, 6th P.M., for production from the McClave Sand, for the 640-acre drilling and spacing unit consisting of said Section 7.

8.      At the time of the hearing, the Hearing Officer recommended approval of the application based on the facts stated in the application and on testimony presented at the administrative hearing.  The Commission requested that additional supporting documentation be provided to the Hearing Officer to supplement the request and continued the matter until such time as the information could be reviewed by the Hearing Officer and a revised recommendation could be made to the Commission.

9.      On August 3, 1994, after additional documentation was provided and reviewed by the Hearing Officer, a revised recommendation was made to a quorum of Commissioners via a telephone conference.

10.      The Hearing Officer recommends approval of the application, with the stipulation that the applicant submit geological and engineering evidence including initial reservoir pressure data, pressure build up data, and daily initial production data, for review by the Hearing Officer six (6) months from the date the well is completed so that the protection of correlative rights can be monitored.  The Commission should approve the request and amend Order No. 105-1 to allow an exception well to be drilled and completed for production from the McClave Sand in the SW1/4 SW1/4 of Section 7, Township 20 South, Range 45 West, 6th P.M.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order No. 105-1 is hereby amended and the Pyles No. 14-7 Well is authorized to be drilled at an exception location 660 feet FSL and 660 feet FWL in the SW1/4 SW1/4 of Section 7, Township 20 South, Range 48 West, 6th P.M., for production from the McClave Sand, for the 640-acre drilling and spacing unit consisting of said Section 7.

IT IS FURTHER ORDERED, that D.E.A. Johnson, Inc. shall submit geological and engineering evidence including initial reservoir pressure data, pressure build up [sic] data, and daily initial production data, for review by Hearing Officer six (6) months from the date the Pyles No. 14-7 Well is completed.

IT IS FURTHER ORDERED, that should a commercial well be completed at the location set forth above, the Commission shall, upon application of any interested person, take such action as will offset any advantage which the person securing the exception may have over other procedures by reason of the drilling of the well as an exception location.

IT IS FURTHER ORDERED, that the provisions 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 any and/or all of the above orders.

ENTERED this day of , 1994, as of July 18, 1994.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
	By  Patricia C. Beaver, Secretary

Dated at Suite 380

1580 Logan Street

Denver, Colorado  80203

August 15, 1994