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 TREND FIELD, MORGAN COUNTY, COLORADO

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CAUSE NO. 125

 

ORDER NO. 125-5

 

REPORT OF THE COMMISSION

 

This cause came on for hearing before the Commission on September 21, 1987, at 9:00 a.m., in Room 110, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Thermal Exploration, Inc., for an order approving a certain Unit Agreement and Unit Operating Agreement for the Tren [sic] (‘D’ [sic] Sand) Unit Area, providing for involuntary unit operations of the reservoir consisting of the ‘D’ [sic] Sand underlying certain lands in the Trend Field", Morgan County, Colorado.

 

FINDINGS

 

The Commission finds as follows:

 

1.      Thermal Exploration, Inc., 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 was encountered in the interval between the depths of 6180 feet to 6200 feet in Well No. 1 Longstreth, located in the NW1/4 SW1/4 Section 35, Township 5 North, Range 60 West, 6th P.M.  Said ‘D' [sic] Sand, 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 Morgan [sic] County, Colorado, to-wit:

 

Township 5 North, Range 60 West 6th PM [sic]

Sec. 34:  SE1/4, NE1/4 SW1/4, N1/2 SE1/4 SW1/4

Sec. 35:  N1/2 SW1/4, SW1/4 SW1/4, N1/2 SE1/4 SW1/4, NW1/4 SE1/4

 

containing 400 acres, more or less.

 

5.      The terms and conditions provided by the 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, providing for a secondary recovery program by the injection of water into the ‘D' [sic] Sand reservoir underlying the Trend (‘D' [sic] Sand) Unit Area, 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 additional cost incident to conducting such operations.

 

6.      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;

 

 

c.

The allocation to the separately owned tracts in the Tren [sic] (‘D' [sic] Sand) Unit Area of all the oil and gas that is produced from said Unit Area and is saved;

 

 

d.

The provisions for the credits and charges to be made in the adjustment among the owners in the Trend (‘D' [sic] Sand) Unit Area for their respective investments in wells, tanks, pumps, machinery, material and equipment contributed to the unit operations;

 

 

e.

The provisions 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 each person shall have a vote with a value corresponding to the percentage of the costs of unit operations chargeable against the interest of such persons; 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.      Testimony presented at the hearing indicates that said Unit Agreement and Unit Operating Agreement have been approved in writing by approximately 94% of the working interest owners and 94.22% by owners of the production and proceeds attributable to royalty overriding royalty and production payments.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED,: [sic]

 

1.      The Unit Agreement and Unit Operating Agreement covering lands in the Trend (‘D’ [sic] Sand) Unit Area, 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 ‘D’ [sic] Sand reservoir, common source of supply, underlies the following lands in Morgan County, Colorado, to-wit:

 

 

Township 5 North, Range 60 West 6th PM [sic]

Sec. 34:  SE1/4, NE1/4 SW1/4, N1/2 SE1/4 SW1/4

Sec. 35:  N1/2 SW1/4, SW1/4 SW1/4, N1/2 SE1/4 SW1/4, NW1/4 SE1/4

 

containing 400 acres, more or less.

 

3.      The provisions contained in said Unit Agreement and Unit Operating Agreement as they pertain to 34-60-118 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.      The secondary recovery project by the injection of water into the ‘D’ [sic] Sand reservoir of the Trend (‘D’ [sic] Sand) Unit Area, as presented by applicant, is hereby approved as being necessary to increase the ultimate recovery from said reservoir, and the operator is authorized to inject into said reservoir through injection wells in such quantities as shall be reasonably determined by the operator to best achieve the maximum recovery of oil without waste.

 

5.      In the event that it becomes necessary in the future to convert additional producing wells to input wells; to plug and abandon certain wells in the Unit Area, or to drill additional producing or input wells as dictated by developments in the source of the operations of the waterflood, the Unit Operator is authorized to make such changes in the operation of the project as may be required to facilitate the efficient development thereof.

 

6.      All injection wells 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 forthwith.

 

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

 

ENTERED this 9th day of October, 1987, as of September 21, 1987.

 

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By 

Frank J. Piro, Secretary