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 BISON FIELD, WASHINGTON COUNTY, COLORADO

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CAUSE NO. 163

 

ORDER NO. 163-1

 

REPORT OF THE COMMISSION

 

On March 5, 1962, the Woodlin School District R-104, Washington County, Colorado, filed an application for an order establishing 40-acre drilling units for the production of oil from the "J" sand formation underlying certain lands in Washington County, Colorado, which matter was set for hearing on March 20, 1962.  At that time, at the request of the Tipps Drilling Company, Inc., the hearing in this cause was continued to May 22, 1962.

 

On March 30, 1962, Woodlin School District R-104 filed an application for an order requiring the pooling of interests in the NW¼ NW¼ of Section 18, Township 4 South, Range 53 West, 6th. P.M., Washington County, Colorado, for the development and operation of the "J" sand formation underlying said premises.  This application was also set for hearing on May 22, 1962, at which hearing the following interests appeared and were represented:  Woodlin School District R-104; Tipps Drilling Company, Inc; Neil Loudder, and Champlin Oil & Refining Company.

 

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 "J" sand formation constitutes a common source of supply of oil and gas underlying the following described lands in Washington County, Colorado, to-wit:

 

Township 4 South, Range 53 West, 6th P.M.

 

 

Section 6:

SE¼ SW¼

Section 7:

W½, W½ NE¼, SE¼

Section 18:

N½, N½ S½

 

 

Township 4 South, Range 54 West, 6th P.M.

 

 

Section 12:

E½ E½

 

and such area is referred to as the Bison Field.

 

4.      That the Bison Field has been developed on a 40-acre spacing pattern, and that the development within the field limits has been completed with the exception of a few fringe locations.

 

5.      That in view of the manner in which the operators developed the field, and the lack of evidence to justify a spacing pattern other than 40 acres; and to prevent waste and to protect correlative rights, the Commission should establish drilling units of approximately 40 acres; said 40-acre drilling units to be quarter-quarter sections according to governmental surveys thereof; and that the permitted well should be located not less than 600 feet from any drilling unit line provided that the Commission may grant exceptions because of topographical conditions; and provided, further, that the Commission may grant an exception when the owner proposing to drill a well files with the Commission a waiver, or consent in writing, signed by the lease owner towards whom the well location is proposed to be moved agreeing that said well may be located at the point at which the owner proposes to drill the well.

 

6.      That the drilling unit described as the NW¼ NW¼ of Section 18, Township 4 South, Range 53 West 6th P.M., Washington County, Colorado consists of 42.51 acres; and that the Woodlin School District R-104 is the owner of all oil, gas, and other minerals underlying 7.03125 acres, which acreage is unleased and is contained within said drilling unit and that the Tipps Drilling Company, Inc. is the lease owner of the remaining acreage contained within said drilling unit.

 

7.      That the Tipps Drilling Company, Inc. drilled its Decker B-1 well at a location 663 feet from the north drilling unit line and 684 feet from the west drilling unit line of the unit described as the NW¼ NW¼ of said Section 18, and that such location is approximately 250 feet from the Woodlin School District R-104 acreage, described in Finding 6 herein, and that although said company avers that it was without knowledge of any, ownership other than its own within said drilling unit at the time of rigging up and prior to completion of said, Decker B-1 well, said company violated Rule 317 of this Commissions Rules and Regulations and Rules of Practice and Procedure, effective April 30, 1956.

 

8.      That Tipps Drilling Company, Inc. Decker B-1 well, located in the NW¼ NW¼ of said Section 18, should be the permitted well for the drilling unit upon which it is located.

 

9.      That in the absence of voluntary pooling of the separately owned interests contained within the drilling unit described as the NW¼ NW¼ of Section 18, Township 4 South, Range 53 West; and in order to afford each owner of interest within said drilling unit an opportunity to recover or receive his just and equitable share of production, the Commission should enter an order pooling all interests in said drilling unit for the development and operation thereof.

 

10.      That all production obtained from said drilling unit should be allocated to each tract therein on the basis of the proportion that the number of surface acres in such tract bears to the total number of surface acres within said drilling unit and that such terms and conditions are just and reasonable.

 

11.      That the various interests in said drilling unit, excluding royalty or other interests not obligated to pay any part of the cost of drilling and operating, should pay a reasonable charge for storage and supervision, and should pay their share the actual costs of drilling and operating the permitted well for said drilling unit: and that such share should be determined as set forth in Finding 10 herein.

 

12.      That there is no disagreement, as to the reasonable actual costs of drilling and operating said Decker B-1 wells as such costs were presented on Exhibit "B" of Tipps Drilling Company, Inc; and that there is no disagreement as to a reasonable charge for supervision and storage, as testified to by the Woodlin School District R-104.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply to wells heretofore and hereafter drilled and completed or recompleted in the "J" sand formation on the Bison Field, as defined herein, in addition to other applicable rules, regulations and orders of the Commission heretofore adopted and not in conflict herewith:

 

Rule 1.    Drilling units of approximately forty (40) acres shall be, and the same are hereby established for the production of oil from the "J" sand formation underlying the following described lands in Washington County, Colorado, to-wit:

 

Township 4 South, Range 53 West, 6th P.M.

 

 

Section 6:

SE¼ SW¼

Section 7:

W½, W½ NE¼, SE¼

Section 18:

N½, N½ S½

 

 

Township 4 South, Range 54 West, 6th P.M.

 

 

Section 12:

E½ E½

 

and such area shall henceforth be known as the Bison Field.

 

Rule 2.    Said drilling units shall consist of approximately forty (40) acres, comprising quarter-quarter sections according to the governmental surveys thereof; and the permitted well for each such drilling unit shall be located not less than 600 feet from any drilling unit line provided that the Commission may grant exceptions because of topographical conditions, and provided, further, that this rule shall not be applicable where the owner proposing to drill a well files with the Commission a waiver, or consent in writing, signed by the lease owner towards whom the well location is proposed to be moved, agreeing that said well may be located at the point at which the owner proposes to drill the well.

 

Rule 3.    The Tipps Drilling Company, Inc. Decker B-1 well, located in the NW¼ NW¼ of Section 18, Township 4 South, Range 53 West, 6th P.M., Washington County, Colorado, shall be the permitted well for the drilling unit upon which it is located.

 

Rule 4.    Pursuant to the provisions of 100-6-4 of the Oil and Gas Conservation Act of the State of Colorado, all interests in the drilling unit described as the NW¼ NW¼ of Section 18, Township 4 South, Range 53 West, 6th P.M., Washington County, Colorado, are hereby pooled for the development and operation of the "J" sand formation underlying such drilling unit.

 

Rule 5.    The Woodlin School District R-104 shall be entitled to receive its share of all production from the permitted well for the drilling unit defined in Rule 4 hereof; and all production shall be allocated to each tract therein on the basis of the proportion that the number of surface acres in such tract bears to the total number of surface acres within said drilling unit.

 

Rule 6.    The Woodlin School District R-104 shall pay a reasonable charge for supervision and storage, and shall pay its share of all reasonable drilling and operating costs of the permitted well described in Rule 3 hereof, such share to be on the basis of the proportion that the number of surface acres owned by the Woodlin School District R-104 bears to the total number of surface acres within the drilling unit described in Rule 4 hereof.

 

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 rules., regulations and orders.

 

ORDERED this 8th day of June 1962.

 

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By 

D.V. Rogers, Secretary