BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
IN THE MATTER OF THE INVESTIGATION TO TAKE MEASURES TO PREVENT WASTE OF OIL AND GAS IN THE RANGELY FIELD IN THE STATE OF COLORADO	) ) ) )	CAUSE NO. 2 ORDER NO. 2-1

APPEARANCES:
	J.J. Zorichak, for the Oil & Gas Conservation Commission:
	Ralph Sargent, Assistant Attorney General, for the Oil & Gas          Conservation Commission:
	J. K. Smith, Lewis Bond, Thomas Newman, C.F. Bedford, for          Stanolind Oil & Gas Company;
	Henry Mattson, R.L. Keyes, J.F. Blackwell, Walter Will,          S.A. Berthiaume, for the Texas Company:
	Woollen H. Walshe, Mr. Sullivan, Mr. Vitter, Mr. Tuller,          and Mr. Ashby, for the California Company;
	Lee S. Osborne, Mr. Winterburn, Mr. Kratka, for the          Union Pacific Railroad Company;
	W. C. Carpenter, Samuel Butler, for the Sharples Oil Corporation;
	Quilman Davis and Van Thompson, for the Southern Union             Gas Company;
	R.B. Laughlin, W.W. Heard, S.B. Richards, P.P. Manion,          W.M. Elias, R. G. Bechtel and Don Falkingham,          for the Stanolind Oil & Gas Company;
	Foster Morrell, U.S. Geological Survey, Roswell, N.M.
	J.R. Schwabrow, U. S. Geological Survey, Casper, Wyo.
	H.G. Barton, U.S. Geological Survey, Washington, D.C.
	G.G. Frazier, U.S. Geological Survey, Denver, Colo.
	Stuart McLaughlin, The California Oil Group, Ltd., Rangely, Colo.
	Benjamin E. Sweet, Attorney at Law, Denver, Colo.
	Charles L. Pickett, for the California Company;
	F.T. Chambers, for Stanolind Oil & Gas Company;
	L.D. Jacobs, for Public Service Company of Colorado;
	E.N. Dunlap, for the California Company;
	R.M. Williams, for Phillips Petroleum Corporation;
	F.L. Kirgis; Max S. Loy, for Sharples Oil Corporation; Phil Helmig,          for Malco Refining Company;
	Donald D. Anderson, for Malco Refining Company;
	John Clinton, for Continental Oil Company.

REPORT OF THE COMMISSION

This cause came on for hearing before the Oil and Gas Conservation Commission of the State of Colorado on the l4th day of November, 1951, in Denver, Colorado, upon motion and order of the Commission setting the cause for hearing and publication of notice of hearing according to law; at which time the Commission received evidence and took testimony in this cause from various parties interested in the production of oil and gas from the Rangely Field; the hearing in the above entitled matter was continued after November l4 1951 to November 29, 1951, at which time further evidence and testimony was taken.

The Commission, acting pursuant to the power delegated under the laws of the State of Colorado and, particularly, the Colorado Oil and Gas Conservation Act, and being full [sic] informed and advised in the premises promulgates the following Order as being reasonably necessary to conserve the oil and gas reserves of the State, to prevent waste as defined by law, and otherwise to carry out the provisions of the laws of this State.

FINDINGS

The Commission finds as follows:

            1.      That due notice by publication of the time place and purpose of the hearing was 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 Rangely Field as used herein is that area in Township 1 and 2 North, Ranges 101, 102, and 103 West, Rio Blanco County, Colorado, which is underlain by the Weber Sand Pool;

            4.      That the Weber Sand Pool as used herein shall be construed to mean that underground reservoir below the base or the Park City Lime and above the Morgan Sand containing a common accumulation of oil and gas, the top of which Weber Sand is found at a depth of -236 feet subsea in the California Company – Emerald No. 1 Well located in the Northeast Quarter of the Southwest Quarter Section 30, Township 2 North, Range 102 West, Rio Blanco Colorado;

            5.      That the Weber Sand Pool has been developed generally on a 40-acre spacing pattern; that the 40-acre spacing pattern should be confirmed and drilling units established. The acreage content of the units should be at least 40 surface contiguous acres, or a governmental quarter-quarter section containing not less than 36 acres, and the shape of the units should be approximately in the form of a square. Units of this size and shape are not smaller than the maximum area that can be efficiently drained by one well;

            6.      That any well which produces gas in excess of 1000 cubic feet of gas per barrel of oil and any well that produces gas in excess of 150,000 cubic feet per day, might cause waste as defined by law and should be restricted. This limit is the amount of gas that such a well can produce without waste in accordance with sound engineering practices, unless the Operator of the well returns to the formation from which produced all gas produced in excess of this gas limit;

            7.      That production of gas from the free gas cap area constitutes waste of reservoir energy;

            8.      That the flaring of approximately 20,000 Mcf residue gas daily from the Weber Pool constitutes waste;

            9.      That in order to prevent waste as defined by law and otherwise to carry out the provisions of the law, it is necessary that the following rules and regulations be adopted for the Weber Sand Pool of the Rangely Field.

ORDER

            NOW, THEREFORE, IT IS ORDERED by the Oil and Gas Conservation Commission of the State of Colorado, that the following rules and regulations be and the same are hereby adopted for the Weber Sand Pool in the Rangely Field:

RULE 1.  SPACING OF WELLS

            a.      A drilling unit shall be established by the Commission for each and every well heretofore or hereafter drilled to and completed in the Weber Sand Pool as an area consisting of at least forty surface contiguous acres, or a governmental quarter-quarter section containing not less than thirty-six acres, upon which no other drilling or producible Weber Sand Pool well is located; the distance between any two points farthest apart of such drilling unit shall not exceed 2100 feet and no portion of such drilling unit shall be attributed in whole or in part to any other drilling or producing well in the Weber Sand Pool.

            b.      Every well drilled after this Order becomes effective shall be at least 330 feet from the exterior boundaries of the drilling unit and at least 660 feet from every other drilling or producible well in the Weber Sand Pool located in conformity with this rule.

            c.      The rights of all owners in the drilling unit upon which the well is located shall first be pooled or consolidated.

RULE 2.  APPROVAL OF DRILLING UNITS.

            a.      Within sixty (60) days from the effective date of this Order, each producer shall file with the Commission a plat of the drilling unit or units to be assigned to his well or wells in conformance with the requirements of Rule No. 1.  Approval of the plat by the Commission shall be considered as approval and establishment of the drilling unit or units shown thereon. Those units which have been established by voluntary agreement and which are now of record in Rio Blanco County, Colorado, shall be automatically approved by the Commission.

            b.      As to all future wells, each operator shall attach to the Notice of Intention to Drill a Well for Oil or Gas, Form OGCC No. 1, a plat designating the drilling unit which is to be assigned to the well. Said drilling unit shall conform in all respects with the requirements of Rule No. 1. Approval of the notice by the Commission shall be considered as approval and establishment of the drilling unit designated on the plat attached to the notice.

RULE 3.  GAS-OIL RATIOS, GAS PRODUCTION LIMIT, AND CREDIT FOR GAS INJECTION

            a.      The gas-oil ratio for any well producing from the Weber Sand Pool shall not exceed 1000 cubic feet of gas per barrel of oil produced and no such well may produce an amount of gas daily in excess of 150,000 cubic feet of gas per day; provided that such a well may produce an amount of gas in excess of 150,000 cubic feet of gas per day,

                     (1)     If the operator thereof returns .to the formation from which produced all gas produced in excess of the said 150,000 cubic feet of gas per day, or

                     (2)     If the gas production from an input well is transferred to said well in accordance with the provisions of Paragraph b. following hereinafter.

            When credit for gas injection is claimed, the operator shall furnish the Commission with all data that is required by it to show that the gas was actually returned to formation.

            b.      Whenever any well is used as an input well, the lease shall, nevertheless, be credited with its gas production under the gas limit of 150,000 cubic feet per day established herein, and such gas limit may be transferred to and produced from any other well or wells on the same lease. Before transferring such production, the operator must file a plat with the Commission showing the location of all wells on the lease, and designating thereon the proposed gas injection well or wells, and also designating thereon the well or wells from which the gas limit of the injection well or wells is to be produced, said designation to be subject to the approval of the Commission; and to support said plat with a schedule showing that portion of the gas limit of the injection well or wells that is to be produced from each such designated producing well. Any change in the designation of wells to produce the transferred gas limit of an injection well must be approved by the Commission in the manner set out above.

            c.      Upon approval by the Commission, after notice and hearing, gas from two or more leases may be injected into one or more injection wells located on one or more of the leases, and the gas injected may be credited to any well or wells on any of the leases. Whenever two or more leases are attributed to a common injection well, the operator or operators of such lease shall furnish a plat to the Commission and to all offset operators showing the location of such leases and the producing and injection wells located thereon.

            d.      Credit for injected gas may be cumulative for a period of sixty (60) days.

            e.      Any well producing free gas from the gas cap area shall be shut in, or corrective work shall be performed to exclude such free gas.

RULE 4.  GAS-OIL RATIO TESTS.

            a.      Tests for gas-oil ratio shall be made semi-annually on each well in the field according to the Commission's requirements on Form OGCC-4. The semi-annual testing periods shall be March and April and September and October of each year. Form OGCC-4 shall be filed on each well showing the results of the survey on or before June 15 and December 15, respectively.

            b.      Immediately prior to making the test for gas-oil ratio, each well shall be produced for at least three days at its normal rate of production. The tests shall be of twenty-four (24) hours duration, and the gas-oil ratios computed on the basis of the measurement of the oil and gas during this twenty-four (24) hour period. Such tests shall be witnessed by a Commission representative or an offset operator upon request by the Commission, and reported on Form OGCC-4 prepared by the Commission.

            c.      Within fifteen (15) days after any remedial work is done on a well which affects its gas-oil ratio, a test for gas-oil ratio shall be made and Form OGCC-4 filed in connection with subject well.

            d.      If a gas-oil ratio test is made during the course of a regularly scheduled gas-oil ratio survey or after workover, and an operator subsequently determines that such gas-oil ratio test is not representative, he may make another such test and submit the results to the Commission provided such test is carried out as specified in (b) above.

            e.      Each producing well shall be so equipped that gas-oil ratio test may be made in accordance with standard practice. All gas measurements shall be reported in cubic feet at a base pressure of 15.025 p.s.i.a. and a temperature of 60 degrees Fahrenheit.

RULE 5.  REPORTS OF OIL AND GAS PRODUCTION

            a.      Oil, gas and water production by wells shall be reported by the operator of each lease, by the twenty-fifth (25th) day of a given month for the preceding month. Such well production may be estimated by breaking down actual lease production on the basis of the production obtained during the gas-oil ratio tests herein required. The monthly production report prepared by the Rangely Engineering Committee will satisfy this requirement, provided that battery and lease sub-totals are shown, and figures submitted verified by letter by each operator.

            b.      Actual oil runs by batteries for each lease in the field shall be reported by the transporter of the oil by the 25th day of a given month for the preceding month, on a form provided by the Commission.

            c.      Actual gas production by meter stations for each lease in the field shall be reported by the plant operator by the 25th day of a given month for the preceding month, on a form provided by the Commission.

            d.      Where credit for gas injected is desired, the amount injected and the credit to be applied to certain specified wells, shall be reported by the operator by the 25th day of the month following the month for which injection credit is sought.

            e.      The Monthly Well Testing Report prepared by the Rangely Engineering Committee shall be submitted as soon as completed each month.

RULE 6.  RESERVOIR PRESSURE SURVEYS

            The datum reservoir pressure of certain key wells in the field shall be determined annually during the month of April. The key wells shall be selected by the operators with the approval of the Commission. The results of each annual survey shall be reported to the Commission on or before the fifteenth (15) day of May of each year. All pressure determinations shall be made at a datum of nine hundred (900) feet below sea level, and after the well has been shut in for a period of not less than seventy-two (72) hours.

            IT IS FURTHER ORDERED that each of the operators in the Rangely Weber Pool together with the owners of the various other working interests, on or before February 15, 1952, shall agree upon a plan for the measures necessary to prevent the waste of oil and gas, including a plan to inject residue gas into the Weber formation in the Rangely Field, and to bring about maximum ultimate recovery; if the parties are unable to agree upon a common plan, each of them shall be required on or before said date to file with the Commission, its pro-posed plan for the purpose above mentioned, and to state the differences between the parties which have prevented agreement upon a common plan; if the parties cannot agree upon a common plan within said time, or as the time may be extended, the Commission will undertake to make such rules and orders as may be necessary to accomplish the prevention of waste, and to bring about a maximum recovery of oil in the Rangely Field.

            All rules and regulations contained in any statewide order in effect or that might be promulgated by this Commission which are not inconsistent with the foregoing rules, are hereby adopted and will apply be reference.

            The Commission expressly reserves its right after notice and hearing, to alter, amend, or repeal any and all of the above rules and regulations.

            ORDERED this 6th day of December, 1951, BY THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO.

                                                                                    (Signed) JOHN E. CRONIN, Secretary

IN THE DISTRICT COURT WITHIN AND FOR THE CITY AND COUNTY OF DENVER AND STATE OF COLORADO _______________________
THE SHARPLES OIL CORPORATION, a corporation,                                                                        Plaintiff,             vs. OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO:  WARWICK M. DOWNING, CLARK F. BARB, RUSSELL VOLK, H.C. BRETSCHNEIDER and JOHN E. CRONIN, as individual members of said Commission; JOHN E. CRONIN as the State Oil Inspector of the State of Colorado,                                                                 Defendants, STANOLIND OIL AND GAS COMPANY, THE CALIFORNIA COMPANY, and PHILLIPS PETROLEUM COMPANY,                                                                  Intervenors.	) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )	CIVIL ACTION   No. A-84403   Div. 1
UNION PACIFIC RAILROAD COMPANY, a corporation, and THE TEXAS COMPANY, a corporation,                                                                      Plaintiffs,             vs. OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO:  WARWICK M. DOWNING, CLARK F. BARB, RUSSELL VOLK, H.C. BRETSCHNEIDER and JOHN E. CRONIN, as individual members of said Commission; JOHN E. CRONIN, as the State Oil Inspector of the State of Colorado,                                                                 Defendants, STANOLIND OIL AND GAS COMPANY, THE CALIFORNIA COMKPANY, and PHILLIPS PETROLEUM COMPANY,                                                                  Intervenors.	) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )	CIVIL ACTION   No. A-84408   Div. 1

Two separate complaints were filed by different plaintiffs against the Oil and Gas Conservation Commission of Colorado and the individual members thereof, and the State Oil and Gas Inspector. In both cases, Phillips Petroleum Company, The California Company, and Stanolind Oil and Gas Company were allowed to intervene as defendants, and thereafter the two cases were consolidated for trial and were tried as one case. The Sharples Oil Corporation was plaintiff in one of the cases and Union Pacific Railroad Company and The Texas Company were plaintiffs in the ether. In this opinion the parties will be referred to as though one case were being considered with the three named companies as plaintiffs and the Commission, its individual members, the State Oil Inspector, and the three intervening companies as defendants.

The subject matter of the litigation is the Rangely oil field, located in Rio Blanco County, Colorado. At the date of the orders of the Commission complained of by plaintiffs, approximately two-thirds of all the oil produced in Colorado came from the Weber Sand Reservoir in the Rangely field. The surface area embraced is approximately 20,000 acres. There are 478 producing wells in the field with an aggregate daily flow of about 60,000 barrels of oil. In addition to the oil, the wells produce about 39 million cubic feet of gas daily, of which 20 million cubic feet is being flared in the open air each day. There is no pipe line for gas near the field, and consequently, except for the small amount of gas used by the operators and others in the field, and by the residents in the Town of Rangely, the excess gas cannot be sold. The oil is carried from the wells by pipeline to points outside of Colorado.

The United States owns 8039.55 acres, or 4l.8% of the total area and has leased its land to the operating companies or their assignors.

The six companies named above as plaintiffs and defendants operate the field and control all of the land except 207.16 acres, and operate all of the wells except five. These five wells are not involved in this action. The proportion in which the various companies operate and control the field and the number of wells owned by each are as follows:

California Company	8160.72	acres	205	Wells
Stanolind	4716.30	“	115	“
Texas-Union Pacific	3540.00	“	89	“
Phillips Petroleum Co.	1918.61	“	48	“
Sharples Corporation	653.04	“	16	“

The Weber sand lies about one mile below the surface and has a gross thickness of 700 feet, with an average saturated thickness of 150 feet. The wells drilled into this sand are spaced one for each 40 acres and are 1320 feet apart.

Rangely has been classified as a gas solution drive field, which is well described and explained by one of the expert witnesses when he said at the trial:

         "Oil does not produce itself out of the reservoir rock into the wells. Rather, oil must be pushed out of the rock into the wells. Generally, nature provides two ways for pushing the oil out of the rock into the wells. One way, which is typical and characteristic of the Weber sand, is that the oil is pushed from the rock into wells by natural gas. Were it not for the presence of natural gas under pressure along with the oil within the body of the rock, there would be no oil production from the Weber sand, even though there might be oil itself in the rock. The fact is that crude oil is a dead and inactive substance. It will move only if it is pushed; and the expelling agent in this instance, in the Weber sand, is gas. It follows, then, without contest, that if there is no pressure or gas in the Weber sand, then there can be no oil production. It also follows, conversely, that there will be oil production only so long as there is gas pressure." (Herman F. Kaveler, Transcript, page 734.)

When the first well was completed into the Weber sand the gas pressure, called bottom-hole pressure, was 2750 lbs. per square inch. At the trial, in February, 1953, the average bottom-hole pressure in the field was said by one of the experts to be 1340 lbs. per square inch. It is obvious that when the gas pressure decreases to a point where it will not cause oil to flow into the wells, no more oil can be produced from the field and it will be abandoned; and it is likewise just as obvious that that time is sure to come.

The experts at the trial gave various estimates of the total amount of oil in place in the Weber reservoir at Rangely before production commenced. The lowest estimate was one and four-tenths billion barrels, and the highest, two and two-tenths billion barrels. The experts all agree that only a percentage of the oil in place can be recovered, no matter what methods for production are adopted, and their estimates for recovery under normal primary depletion procedure varied from 17% to 21.4%. If the lowest estimates of total oil in place and percentage of recovery under primary depletion methods be used, simple calculation will show that when the field is no longer capable of producing oil, there will be left in the Weber sand one billion, one hundred and sixty-two million barrels of oil.

The recovery of some of this oil is the principal object and purpose of the orders of the Commission, assailed by the plaintiffs and defended by the defendants. The amount of oil which it is believed can be recovered by compliance with the orders of the Commission, and which otherwise would remain in the ground, is variously estimated by defendants' experts to be between 30 million and 87 million barrels.

The Oil and Gas Conservation Commission of Colorado, one of the defendants, was created by act of the legislature in 1951. The act was amended in 1952, and is known as Colorado Oil and Gas Conservation Act of 1951. The Commission consists of five members each of whom shall have had at least five years' experience in the production of oil and gas. No question has been raised here concerning the qualifications of the members of the Commission, so it can be assumed that they have met the statutory requirements of experience in the production of oil and gas.

Cause No. 2 on the docket of the Commission is entitled, "In the Matter of the Investigation to take measures to prevent waste of oil and gas in the Rangely Field in the State of Colorado." Cause No. 1 concerned the adoption of general rules and regulations respecting conservation of oil and gas in all of Colorado. Thus it appears that the first activity of the Commission after its creation and organization was directed to the Rangely field.

Many hearings were held before the Commission in Cause No. 2 at which the operating companies in Rangely appeared. Much testimony was introduced and many of the expert witnesses who appeared in the trial before the court in this action testified before the Commission. The hearings started in the Fall of 1951 and were not concluded until May of 1952. On June 20, 1952, the Commission issued its Order No. 2-8. It is this order, and especially Rules and 3-b thereof, that is the main bone of contention in this litigation. Order 2-8 was followed on November 25, 1952, with Order 2-9, which provided for the submission by the operators to the Commission of proposed plans for putting into effect the provisions of Rule 3-b of Order 2-8.

Rule 3-a, so far as applicable, is as follows:

         "During the six months period from July 1, 1952 to and including December 31, 1952, the operators and owners in the field shall not produce gas from any one well in an amount, during any one month, exceeding a daily average of 150,000 cu. ft.; provided that such well may produce an amount of gas in excess of said daily average if the operator thereof returns to the formation from which produced all gas produced in excess of the said daily average, or if the allowed gas production from an input well is transferred to said well in accordance with the provisions of sub-paragraph (1) following hereinafter ***."

Rule 3-b is as follows:

         "On and after January 1, 1953, no gas shall be produced from the Weber Sand Reservoir unless all gas so produced shall be returned to said reservoir; provided, however, that the provisions of this paragraph shall not apply to gas required for lease development or operations, gas used as fuel or represented by shrinkage in gasoline plant or gas injection operations, and gas required to supply domestic or municipal needs in the immediate vicinity of the Rangely Field." (Extended to June 1, 1953; and Rule 3-a has been made effective to June 1, 1953.)

There are no wells in the Rangely field producing gas alone. The gas produced is in solution in the oil. The number of cubic feet of gas produced with a single barrel of oil is known as the gas-oil ratio. Thus, if for every barrel of oil 500 cubic feet of gas is produced along with the oil, the gas-oil ratio would be 500. As the pressure in the sand declines, the gas-oil ratio increases. Originally the gas-oil ratio in the field varied from a high of cubic feet per barrel to a low of 250 cubic feet per barrel. In December, 1952, the average over the field was 662 cubic feet of gas per barrel.

The gas being in solution in the oil, the order of the Commission (Rule 3-a) which limits the amount of gas that may be produced from any one weal during a stated period of time, also restricts and limits the amount of oil that may be produced during that period from that well. Rule 3-a is in truth but a temporary order and apparently is intended to be operative only up to the time when Rule 3-b is put into effect.

The report of the Commission, which concludes with Order No. 2-8, also contains findings of fact. Among these findings are the following:

         "(a)   As wells have been drilled in the reservoir and the oil and gas taken therefrom, the reservoir pressure has been reduced, permitting gas to escape from solution and fill a part of the void space formerly occupied by the oil and gas. As this process has proceeded, pressure has been reduced at distances progressively further away from the well and oil has been displaced from pores throughout the reservoir. This process of oil displacement through the agency of gas liberated from solution, is commonly referred to as the dissolved gas drive, and is the dominant mechanism of the field, and will be during its productive life. Reservoir energy of this field is the key factor which will determine the extent of the ultimate recovery of the field and minimize waste. The gas in solution not only exerts a propulsive force, driving the oil to the well bore, but also maintains the fluidity of the oil so that more oil can pass through the interstices and thus increase ultimate recovery. After the bubble point has been reached, increasing amounts of gas are evolved from solution and pressure drop is accelerated. This process will continue until the gas with the oil becomes so reduced that reservoir energy is no longer effectual, and necessarily production will cease through natural causes. The problem of conservation is to apply remedies or measures to maintain as far as possible, reservoir energy. Failure so to do is inefficient and contributes to dissipation of reservoir energy, and is waste.

         "(c)   The effective remedy to maintain reservoir energy and thus prevent waste in the Rangely Field, is by injecting the produced gas except as herein-after ordered, into the Weber Sand Reservoir. The greeter the amount of such gas injected into the reservoir, the greater will be the effect upon reservoir pressure, and to a corresponding degree there will be less waste of gas and reservoir energy.  Inasmuch as measures are available to prevent excessive and unreasonable production of gas causing waste, failure to reinject such gas into the Weber Sand will unreasonably reduce reservoir pressure and diminish the quantity of oil and gas that could ultimately be produced. Since it is not feasible to prevent all such waste immediately, it is the purpose of the Commission, by proper conservation measures, to minimize such waste until it is reasonable to require that all such gas be injected into the Weber Sand Reservoir.

         "(d)   *** At present the flaring or venting of approximately 20 million cu. ft. of gas daily from the Weber Reservoir constitutes waste to a highly excessive and unreasonable degree, and failure to return such gas to the Weber Reservoir unreasonably reduces reservoir pressure, and un-reasonable diminishes the quantity of oil and gas that might ultimately be produced.

         "10.   That in order to prevent waste as defined by law and otherwise to carry out the provisions of the law, it is necessary that the following rules and regulations be adopted for the Weber Sand pool of the Rangely Field."

Rules 3-a and 3-b are included in the rules that follow paragraph 10 above.

The complaints were filed in August, 1952. Plaintiffs allege that the orders of the Commission referred to above are invalid, unreasonable, unjust, arbitrary and capricious, deprive plaintiffs of valuable rights in contravention of the Constitution of the United States and of the State of Colorado, and fail to accomplish reasonably or otherwise the end that is the subject-matter of the Oil and Gas Conservation act, that is, the prevention of waste of oil and gas.

Plaintiffs pray that the court order and decree Orders No. 2-8 and 2-9 to be illegal and void and permanently enjoin their enforcement.

The defendants deny generally that the orders are invalid or otherwise vulnerable, allege that the orders will prevent waste of oil and gas in the Rangely Field, that the Commission acted in pursuance of its authority under the Conservation act, that the orders made by the Commission are in all respects valid and should be enforced, and pray that the complaints be dismissed. Other defenses were also pleaded in the answers.

The Conservation Act provides for review of rules, regulations or orders made by the Commission, at the instance of persons adversely affected.

Section 10 of the Act is as follows

         "Section 10. (a) Any person adversely affected by any rule, regulation or order made or issued under this Act, may within ninety days after the entry thereof bring a civil suit or action against the Commission or the State Oil inspector or both in the District Court of Denver County, or in the District Court of the county in which the complaining person resides, or in the U.S. District Court for Colorado (if it otherwise has jurisdiction), and not elsewhere, to test the validity of any provision of this Act, or rule, regulation, or order, and to secure an injunction and other appropriate relief, including all rights to writ of error or other writ under applicable rules of civil procedures. Any such case on appeal shall have precedence over any other case then pending in such courts of this state.

         "(c) A suit or writ of error or other writ involving a test of the validity of any provision of this Act, or a rule, regulation, or order shall be advanced for trial and be determined as expeditiously as feasible, and no postponement or continuance thereof shall be granted unless deemed imperative by the court. The trial court shall consider all the evidence, shall not be bound by any finding of fact or conclusion of law made by the Commission, shall hold a trial de novo, shall pass on the credibility of witnesses and the weight to be given to their testimony, and shall determine independently all issues of fact and of law with respect to the validity and reasonableness of the provision, rule, regulation, or order complained of. Any such court is hereby authorized to enjoin permanently the enforcement by the Commission of this Act, or any part thereof, or any act done or threatened thereunder, if the plaintiff shall show that as to him the act or conduct complained of is unreasonable, unjust, arbitrary or capricious, or violates any constitutional right of the plaintiff, or if the plaintiff shows that the act complained of does not constitute or result in waste, or does not in a reasonable manner accomplish an end that is the subject matter of this Act."

A suit may be commenced, says the Act, "to test the validity of any provision of this Act, or rule, regulation or order" of the Commission. The court where such suit is filed shall "hold a trial de novo "says the Act, and "shall determine independently all issues of fact and of law with respect to the validity and reasonableness of the provision, rule, regulation or order complained of," and may enjoin the enforcement of any act done or threatened by the Commission "if the plaintiff shall show that as to him the act complained of is unreasonable, unjust, arbitrary or capricious or violates any constitutional right of the plaintiff, or if the plaintiff shows that the act complained of does not constitute or result in waste or does not in a reasonable manner accomplish an end that is the subject matter of this Act."

It seems clear from the language of the Act that in a suit filed such as this one, the burden is on the plaintiffs to prove by the rules applicable in all ordinary lawsuits, that is, by a preponderance of the evidence, that they are entitled to the relief prayed for.

While it is true that the proceedings in review must be conducted as a trial de novo, the issue at the trial de novo is whether or not the orders of the Commission complained of are valid. The court cannot determine in this case what should be done about the Rangely Oil Field, if anything, by way of conserving its natural resources of oil and gas. The Court cannot write the order for the Commission. The court cannot, for instance, say in this case that only certain portions of the field shall be subject to the gas reinjection program or that certain operators shall be exempt from the operation of the gas injection plan, or that the restriction on gas production contained in Order 3-a should be 100,000 cubic feet per day instead of 150,000 as the Commission ordered. All the court can say here is that the orders complained of are valid and should be enforced, or that they are not valid and should not be enforced. The court is not concerned with the wisdom or expediency of the orders.

In many statutory reviewing procedures where the acts of boards and commissions are under scrutiny by courts, the test of validity is whether or not the evidence upon which the board or commission based its findings and its orders is sufficient to warrant and support the orders. In such cases the courts look only to the record made before the board or commission to determine the question.

In passing upon the sufficiency of evidence, it has been held, generally, that if there is any evidence at all in the record to support the orders complained of, the reviewing tribunal will not disturb the findings, orders or awards of the inferior board or commission. This is not the rule to be applied here. The test to be used by this court is whether or not the evidence before the court will sustain the orders of the Commission; and whether the court heard more evidence or less than the Commission did, or the same evidence, is of no importance or significance.

The Commission has found that the failure to apply remedies or measures to maintain reservoir energy in the Weber Reservoir is waste, and that the orders it has made, including Orders 2-8 and 2-9, are necessary to prevent waste in the Rangely Field.

Section 1 of the Conservation Act provides that the waste of oil and gas or either of them in the State of Colorado is prohibited. Waste is defined in 'the Act. The Commission is empowered by the Act to "do whatever may reasonably be necessary to carry out the provisions of this Act (Sec. 7-a).

Plaintiffs claim that the Commission lacks authority to promulgate Rule 3 because the Act fails to fix standards to guide it in exercising its discretion in the performance of its duties, and cite the recent Colorado case of Prouty, et al, vs. Heron, among others, as authority in their favor. The Prouty case in my judgment is not controlling here. The very nature of the subject-matter of the Oil and Gas Conservation Act shows that much uncertainty, speculation, and con-jecture is inherent in any attempt to carry out legislation which has for its object the protection of the interests of the public in the natural oil and gas resources of the State.

No claim is made here that the Colorado Act is unconstitutional, and similar laws in many States have been repeatedly upheld by the highest courts in the land.

The regulation of the practice of engineering and land surveying, involved in the Prouty case, and the conservation of oil and gas and the prevention of waste of oil and gas, are so basically and fundamentally different that the legislative standards required in the one case by the Prouty decision are no criterion in considering the legislative enactment involved here.

The contention of plaintiffs that the Commission lacked the power to make Order 2-8 is without merit. It is the opinion of the court, and it is so hold, that the Colorado Oil and Gas Conservation Act of 1951, as amended, legally and properly delegates to the Commission the power and authority to promulgate Order 2-8, and especially Rules 3-a and 3-b thereof, and Order 2-9; and that in so doing the Commission acted within the scope of its authority and jurisdiction. Plaintiffs say that even if this is so, the order is arbitrary, unreasonable, unjust, capricious, violates constitutional rights of plaintiffs and does not in a reasonable manner accomplish an end that is the subject-matter of the Act.

The evidence before the court shows that before Order 2-8 was entered by the Commission, many hearings were held at which evidence was taken. Notices were sent to all interested parties of the dates of the hearings and the record shows that all of the operating companies in the Rangely Field participated in the proceedings before the Commission. The plaintiffs were given full opportunity at all times to present fully and in much detail their views and theories relating to the manner in which the field should be maintained and production of oil and gas consummated. Order No. 2-8 was not made until after the Commission had studied the facts, reports, plats, maps, and evidence of the experts, and must be viewed as the unanimous, considered judgment of the five members of the Commission, all of whom had actual experience for at least five years in the production of oil and gas. There is nothing arbitrary about the order, and the Commission did not act arbitrarily in making it.

The use of secondary methods to increase production of oil is not new in the oil business, and the injection of gas into the sand to maintain gas pressures and increase ultimate recovery of oil is standard procedure in the oil-production industry, and has been adopted and used by many large producing oil companies and in many large oil and gas fields. One of the defendants in this case at the date of the trial was actively engaged in seventeen gas-injection projects in oil fields in the United States other than Rangely.  The Commission did not invent the gas reinjection program for Rangely, nor did the Commission originate the idea of restricting the amount of gas that could be produced from a well during a certain period of time. These methods of regulation looking to the prevention of waste are tried and true in the industry generally, There is nothing bizarre, fanciful or fantastic in the general idea of gas injection and limitation of gas production. The order is not capricious and the Commission did not act capriciously.

Plaintiffs complain that their rights guaranteed by the Constitutions, both Federal and .State, have been invaded by the action of the Commission; that their property is being taken without due process of law and that they have been denied the equal protection of the laws. Cases in all courts, State and Federal, are legion discussing the rights of States under the guise of the police power to interfere with personal and property rights of the individual, and time will not permit a discussion or analysis of these decisions to any substantial degree. Suffice it to say that the court is convinced, and so holds, that plaintiffs have not been deprived of their property or their rights without due process of law and will not be so deprived by the enforcement of the orders of the Commission.

The greater part of the trial was devoted to the taking of testimony of experts on both sides of the controversy. The experts are in hopeless conflict in their opinions relative to what will happen in the Rangely Field if the gas-injection program and project ordered by the Commission is put into effect. Plaintiffs' experts say it will not work, will not result in an ultimate increase in the recovery of oil. They say the expenses necessary to put the plan in operation will far exceed any benefit that might be realized from increased recovery of oil. Some of them say that the gas-injection plan will have the effect of actually reducing the amount of oil that would and could be recovered under normal primary depletion measures, because, among other factors, the oil in place under the lands operated by them under lease will be pushed across surface lease lines into the wells of their competitors. Plaintiffs' experts maintain that the experiment actually conducted in the Rangely Field commencing in 1950, when two wells were used for the injection of gas, and are still being operated as pilot-injection gas wells, conclusively show and prove that field-wide gas injection will be a failure and will not reason-ably or at all accomplish an end that is the subject-matter of the Conservation Act, that is, the prevention of waste by causing the maximum amount of oil to be produced out of the Weber Reservoir. Plaintiffs' witnesses assert that any effective supervision of the gas-injection program will entail an administrative expense far in excess of any funds available to the Commission, and consequently it will fail for that, if for no other reason. Plaintiffs contend that the only hope of success in field-wide gas-injection programs lies in the unitization of the field, that is, the operation of the field. as a unit, all. of the operators being parties to the plan, and that unitized management in Rangely has not and cannot be adopted by voluntary agreement among the operators, and that the Commission has no power to compel unit operation and control. Plaintiffs advance other reasons why gas-injection should not be forced upon the operators in Rangely, all of their objections going to show, as plaintiffs contend, that Orders No. 2-8 and 2-9 are unreasonable, invalid, arbitrary, unjust, capricious, and do not and will not prevent waste.

Defendants' experts disagree with those who testified on behalf of plaintiffs. They believe the gas-injection plan will work. They say it will produce from thirty million to eighty-seven million barrels of oil otherwise not recoverable. They say they are willing to spend several million dollars on gas-injection measures in order to realize a great deal more. They point out that the pilot-injection wells have far exceeded their fondest expectations in the results obtained, and that with field-wide, controlled, supervised gas-injection operations, they fully expect their estimates of ultimate increased recovery to be exceeded substantially. They agree that unitization is desirable but believe it not essential. Defendants' witnesses, based upon their own opinions, answered all of the plaintiffs' objections to the enforcement of Orders 2-8 and 2-9.

Plaintiffs' experts based their belief that the plan would fail upon several theories, the main one being that Rangely Field is far from being homogeneous and is shot throughout with fractures in the sand-bearing rock, which will cause the injected gas to follow regular channels, to bypass the oil it is expected to propel into the wells, and eventually to find its way into other wells where it will be reproduced. Also, it is their belief that the extreme variations in the permeability of the sand in the Weber pool demonstrated that gas-injection cannot be counted on to produce the desired results of increasing the ultimate production of oil.

Defendants' experts do not deny that fractures exist in the sand or that the permeability varies 'throughout the structure, but say that the small amount of fracturing which they have been able to ascertain from the core samples and other data, and the variations in the permeable characteristics of the rock, are insignificant and will not materially prevent or impede the success of the gas-injection plan.

From the above it can readily be seen how far apart the trained, skilled experts in petroleum engineering are in their opinions and beliefs, as expressed from the witness stand at the trial.

To elaborate fully in this opinion on the great mass of testimony given at the trial and to discuss the many reports, maps, sketches, diagrams, graphs and other documents used at the trial by the witnesses in explanation and in support of their various ideas and opinions, would be tedious indeed, and will not be done.

In connection with the plaintiffs claim that the Commission's order ought not to be allowed to stand because the Commission manifestly cannot properly administer and supervise the many complicated things that must be done in order for the program to even have a chance of succeeding, especially because of the apparent lack of funds necessary to do the work required, the court would observe that it cannot be assumed or presumed that the State of Colorado, having created a Commission changed with the duty of conserving the oil and gas resources of the State, will allow its agency to fail because of lack of funds or personnel; and the fact that sufficient funds to carry out an expensive and long-range project such as the Commission has ordered are not now plainly available, is no ground or justification in itself for nullifying the actions of the Commission.

It should be noted here that the Government of the United States, owner of almost half of the Rangely Field, and therefore vitally interested in the amount of oil produced or to be produced from the field, stands with the defendants in favoring, approving and supporting the orders of the Commission. Section 13 of the Act as amended provides that as to lands of the United States the Act applies only if the officer of the United States approves the order of the Commission purporting to affect such lands. The approval of the proper officer of the Unites States of the orders of the Commission is in the record before the court.

As stated supra, the burden is on the plaintiffs to prove by a preponderance of the evidence that the orders of the Commission complained of are illegal, invalid, unreasonable, unjust, arbitrary, or capricious, or do not in a reasonable manner accomplish an end that is the subject-matter of the Oil and Gas Conservation Act of 1951. In my judgment, not only have the plaintiffs failed to discharge this burden, but the weight of the evidence is decidedly against their contentions.

Supporting the orders of the Commission are the members of the Commission itself, all of them having had at least five years actual experience in the production of oil and gas; the Oil Inspector of the State of Colorado; the Government of the United States, through its department of Geological Survey, and the three intervening companies, California, Stanolind, and Phillips, who operate and control over 77 % of the acreage in the field.

Opposing the Commission are the three plaintiffs, Texas, Union Pacific, and Sharples, operating about 21% of the field.

The following quotations from decided cases seem particularly pertinent in the determination of the issues before the court:

In Railroad Commission vs. Rowan & Nichols Oil Co., 310 U. S. 573, the United States Supreme Court said:

         "Certainly in a domain of knowledge still shifting and growing, and in a field where judgment is necessarily beset by the necessity of inferences bordering on conjecture even for those learned in the art, it would be presumptuous for courts, on the basis of conflicting expert testimony, to deem the view of the administrative tribunal, acting under legislative authority, offensive to the 14th Amendment."

In Railroad Commission vs. Sterling Oil & Refining Co., 218 S.W. (2d) 415, the Texas Supreme Court said:

         "It clearly appears from this record that the Commission is trying to carry out the mandate of the Legislature and prevent the waste of a very valuable and important natural resource, and in doing so that it will not wilfully [sic] act in a tyrannical or arbitrary manner. Its members show an inclination to cooperate with the operators in preventing waste, and if a bona fide effort is made to comply with an order of the Commission, the Commission will not be unreasonable, and will make exceptions to prevent unnecessary damage or loss to the operators. If this gas, which is an important natural resource, is to be conserved, some action is necessary to prevent its further unnecessary waste. It will be too late to speculate on what to do when the gas is exhausted through waste."

As to issues of law, it is adjudged and decreed by the court, from the evidence and arguments before the court, independently and without regard to the findings or conclusions of the Commission:

1.      That the legislature of Colorado has by the passage of the Oil and Gas Conservation Act, duly and legally delegated to the Commission the jurisdiction, power and authority to make and enter the orders and rules referred to in this opinion, and specifically Orders No. 2-8 and 2-9 and Rules 3-a and 3-b thereof.

2.      That the Commission, in making, entering and promulgating said orders and rules, acted within its authority and jurisdiction conferred upon it by the Oil and Gas Conservation Act.

3.      That the plaintiffs have not thereby been deprived of their property or their rights without due process of law as guaranteed by the Constitution of the United States or the Constitution of the State of Colorado, nor have the plaintiffs been denied the equal protection of the laws under said Constitutions, nor will they be so deprived or so denied by the enforcement of said orders.

As to issues of fact, it is the finding, judgment and decree of the court, from a preponderance of the evidence introduced at the trial de novo, independently and without regard to the findings and conclusions of the Commission:

1.      That waste as defined by the Colorado Oil and Gas Conservation Act of 1951 is being committed in the Rangely Field, Rio Blanco County, Colorado.

2.      That it is the duty of the Commission under said Act to take measures and to make orders to prevent waste.

3.      That the production of gas from any one well in the Rangely oil field in an amount during any one month exceeding a daily average of 150,000 cubic feet, unless such excess be returned to the formation from which produced, constitutes waste and is not in accordance with sound engineering practices.

4.      That the flaring or venting of approximately 20 million cubic feet of gas daily from the Weber Reservoir constitutes waste to an excessive and unreasonable degree.

5.      That the return of gas produced from the Weber Sand Reservoir to the reservoir, as provided in Rule 3-b of Order 2-8, will substantially increase the ultimate recovery of oil from the Weber Reservoir.

6.      That the injection of gas into the Weber Reservoir as provided by Orders 2-8 and 2-9 is feasible and economically sound from a field-wide standpoint.

7.      That the Orders and Rules of the Commission made and entered in Cause No. 2, and especially Orders 2-8 and are not unreasonable, unjust, arbitrary, or capricious, do not violate any constitutional rights of the plaintiffs or any of them, and said orders do in a reasonable manner accomplish an end that is the subject-matter of the Colorado Oil and Gas Conservation Act.

8.      That Orders No. 2-8 and 2-9 entered by the Commission are valid and enforceable in all respects.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED by the Court that:

1.      The issues joined are found in favor of the defendants and against the plaintiffs.

2.      The plaintiffs are not entitled to any of the relief prayed for in their complaints.

3.      The plaintiffs's [sic] complaints are dismissed.

4.      The necessity of the filing of motions for a new trial is dispensed with.

5.      Plaintiffs exceptions to the findings, orders and judgment of the court are noted, and plaintiffs are allowed thirty (30) days from this date within which to present a .Reporter's Transcript and record on error.

Done and signed in Open Court this 4th day of June, A. D. 1953.

                                                                                    BY THE COURT:

                                                                                    (Sgd.) Robert W. Steele, Judge