123-1

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 "D" SAND OF THE LAMB FIELD, MORGAN COUNTY, COLORADO

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CAUSE NO. 123

ORDER NO. 123-1

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 13, 1959, at 10 a.m., in the Auditorium of the Department of Employment Building, Denver, Colorado, after publication of Notice of Hearing as required by law, on the application of the H L M Drilling Company for an order defining a gas well as a well with a gas-oil ratio in excess of 20,000 to 1; establishing a maximum daily allowable of 400,000 cubic feet of gas for oil wells; establishing a maximum daily allowable of 500,000 cubic feet of gas for gas wells, such gas allowable to be allocated to 160 contiguous acres, or, in the event a gas well has less acreage attributed to it, the allowable to be in the proportion that the acreage is to 160 acres; and defining the area of the Lamb Field.

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 "D₂" sand formation of the Lamb Field, as used herein, contains an oil reservoir, a portion of which is overlain by a gas cap; and that said "D₂" sand formation constitutes a common source of supply of oil and gas underlying the following described lands in Morgan County, Colorado, to-wit:

Township 3 North, Range 58 West, 6th P.M.

Section 9: SE¼	Section 16: All
Section 10: S½ SW¼	Section 21: All
Section 15: W½	Section 22: W½

4. That testimony presented at the hearing indicates that the production from the "D₂" sand of the Lamb Field is expected to be found in an irregular band, and since flexibility is needed for the locations of future wells, the general rules for spacing should apply.

5. That in order to prevent the blowing and releasing of gas in excessive and unreasonable amounts from wells producing both oil and gas; and to prevent the production of gas in such manner as would unreasonably reduce reservoir pressure or unreasonably diminish the quantity of oil or gas that might ultimately be produced from the "D" sand of the Lamb Field, the daily allowed gas production from each well should be 300,000 cubic feet; and that no well should vent more than an average of 50,000 cubic feet of gas per day during any one month, provided that no gas should be released directly or indirectly into the open air from wells having gas-oil ratios of 20,000 cubic feet of gas to one barrel of oil, or greater, except in cases of emergency or when otherwise authorized; and when any well reaches a gas-oil ratio of 20,000 cubic feet of gas to one barrel of oil, such well should be classified as a gas well.

6. That in order that the operators may produce any one lease in the most efficient manner possible, permission should be granted for the gas allowable for any one well or combination of wells on any given lease to be transferred and produced by any other well or combination of wells on the same lease.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall hereafter apply to the "D₂" sand formation of the Lamb Field, Morgan County, Colorado:

Rule 1. The Lamb Field, "D₂" sand formation hereby defined as follows, to-wit:

Southeast Quarter (SE¼) of Section Nine (9); South Half of the Southwest Quarter (S½ SW¼) of Section Ten (10); West Half (W½) of Section Fifteen (15); all of Sections Sixteen (16) and Twenty-one (21); and West Half (W½) of Section Twenty-two (22), Township Three (3) North, Range Fifty-eight (58) West of the 6th P.M., Morgan County, Colorado.

Rule 2. The daily allowed gas production from each well shall be Three Hundred Thousand (300,000) cubic feet; and no well shall vent more than an average of Fifty Thousand (50,000) cubic feet of gas per day during any one (1) month, provided that no gas shall be released directly or indirectly into the open air from wells having a gas-oil ratio of Twenty Thousand (20,000) cubic feet of gas to One (1) barrel of oil, or greater, except in cases of emergency or when otherwise authorized; and when any well reaches a gas-oil ratio of Twenty Thousand (20,000) cubic feet of gas to One (1) barrel of oil, such well shall be classified as a gas well.

(a)	No oil well shall produce during any twenty-four (24) hour period more than twice its daily gas allowable, unless otherwise authorized, provided that any such excess production shall be deducted in producing the next month's allowable. Any underproduction may be produced only during the month immediately following that in which the underproduction occurred.

(b)	The maximum production of gas from any one gas well shall not exceed a daily average of Three Hundred Thousand (300,000) cubic feet of gas, which may be produced in the following manner:

1.		Six-month allowable periods are hereby established for the purpose of balancing or averaging the rate of daily gas production from each gas well producing from the "D₂" sand in the Lamb Field, the first period beginning at 7:00 a.m. on March 1 and ending at 7:00 a.m. on September 1, and the second period beginning at 7:00 a.m. on September 1 and ending at 7:00 a.m. on March 1 each year.

2.		The daily "D₂" sand allowable production from each gas well in said pool may be exceeded on any day or days during each six-month balancing period but shall not, during any such six-month period, exceed such daily allowable heretofore prescribed for such well multiplied by the number of days included in such six-month period, which total allowable is herein referred to as "current allowable” for each six-month period. It is provided, however, that any overproduction and underproduction of current allowable occurring in any such six-month allowable period shall be adjusted and carried to the extent hereinafter provided.

3.		For the purpose of computing and balancing overproduction and underproduction of gas wells in said pool, March 1 and September 1 at 7:00 a.m. are designated as "balancing dates", and each six-month balancing period shall be considered as a separate entity. No gas well in said pool shall produce during any balancing period more than its current allowable for such period plus the amount of underproduction, if any of current allowable occurring during the preceding six-month period. In the event a gas well fails to produce its current allowable during a balancing period, the underproduction of such current allowable occurring during such period may be carried for-ward to and produced during the next ensuing six-month period, in addition to the current allowable for such ensuing period. All gas produced from such gas well during said ensuing period shall be attributed primarily to the current allowable for said ensuing period, and any gas production from the well in excess of such current allowable shall be attributed to makeup of underage, if any, of current allowable for the preceding six-month period, to the extent of such underage. Any underage in current allowable for a gas well during any six-month balancing period shall be cancelled at the end of such succeeding period.

4.		Overproduction from a gas well occurring during a balancing period shall be subtracted from the overproducing gas well's allowable for the next balancing period. Any gas well overproduced as of a balancing date, and which well was also overproduced on the balancing date immediately preceding and remained overproduced for the entire period between the balancing dates, shall be shut in until the cumulative overpro-duction existing on the latter off such two balancing dates is made up.

		Except where a well is required to be shut in due to over-production as above provided, the overproduction existing as of any balancing date shall be made up during the balancing period immediately following and may be made up at any time during such period.

Rule 3. The operators and owners of wells producing from the "D₂" sand formation of the Lamb Field shall make a gas-oil-ratio test of each of their producing oil wells during every quarter, beginning with the months of January, April, July and October, unless otherwise authorized; and such tests shall be taken during the first fifteen (15) days of the last month of each quarter, the results of which such tests shall be reported to the Commission on or before the twenty-fifth (25th) day of the last month of every quarter; and such tests shall be the basis for calculating the volume of oil or gas allowed to be produced; and, immediately prior to making the test for a gas-oil ratio, subject well shall be produced in its normal manner for at least twenty-four (24) hours; and during such tests, subject well shall be produced at a volume equal to or not exceeding its daily allowable by more than twenty-five (25) percent, if capable; and a schedule shall be submitted to the office of the Commission and offset operators prior to testing, showing the wells and respective dates of tests; and 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° Fahrenheit.

Rule 4. In order that the operators may produce any one lease in the most efficient manner possible, the gas allowable for any one well or combination of wells on any given lease may be transferred and produced by any other well or combination of wells on the same lease.

Rule 5. The operators and owners of wells producing from the "D" sand formation of the Lamb Field shall file with the Commission a monthly report of production by wells, as required on Form OGCC-7A, covering the month next preceding the date of filing, on or before the twenty-fifth (25th) day of each month, unless otherwise authorized.

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

ORDERED this 11th day of February, 1959.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Annabel Hogsett, Secretary