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. 2-27

REPORT OF THE COMMISSION

On the 16th day of May, 1955, the Supreme Court of Colorado rendered a decision in the Rangely case which invalidated Rule 3(b) of the Commission's Order No. 2-8, and put an end to the Commission's power to require the injection of gas in the Weber horizon. Among other things, the Court stated, "It is apparent that delegation of authority by the Legislature to the Oil and Gas Conservation Commission has been stintingly, sparingly, and almost grudgingly granted."

The 1955 General Assembly amended the 1951 Statute prior to the Supreme Court decision, but failed to clarify questionable provisions of the Statute or to provide legal means for compelling injection of excess gas into any horizon. A provision entitled "Agreements for Development", Paragraph No. 100-6-16 of the Oil and Gas Conservation Act, as amended, provides that the operators may voluntarily agree on a plan of gas injection; but, despite numerous attempts, the operators have failed to do so because of their inability to agree among themselves on the procedure.

It is the unanimous opinion of the Commission and the operators that the most effective and efficient method for operating the Rangely Field would be under a field-wide unit agreement. This would provide for complete utilization of excess gas and other operating practices generally used for effective conservation of oil and gas reservoirs. No such arrangement or agreement seems possible under current circumstances despite the fact that the Rangely Oil and Gas Field is a very large and valuable one with the current average daily production approximating 65,000 barrels of oil, and 115 million cubic feet of gas.

In the absence of any type of unit operation, it is important to all operators and other interested parties and the State of Colorado that the field be operated under proper regulations so as to conserve valuable oil and gas deposits, minimize waste of oil and gas; protect the reservoir energy, provide for disposition of excess gas produced; protect correlative rights of interested parties, including operators, and generally provide for an orderly and proper operation of so large and important a deposit of oil and gas. It was for these general purposes that the Colorado Oil and Gas Conservation Statute was enacted by the Legislature, effective July 1, 1951 and thereafter amended, and under which the Commission is authorized to function.

Following the decision of the Supreme Court in May 1955, curtailing the powers of the Commission in regard to the injection of gas and in certain other respects, the Commission held a number of hearings for the purpose of preparing an order under which the field might be operated in an orderly and cooperative manner. Each of these hearings afforded the operators an opportunity to agree upon regulations. At a hearing on November 21st, it appeared that there were two factions with opposing views as to important engineering and legal aspects of any order which might be issued. Each faction presented its respective plan. At this hearing, forceful arguments were presented calling attention to the limitation of the Commission's power under the Supreme Court decision and under the Statute of 1951, as amended. Owing to uncertainty as to the powers of the Commission, it became obvious that any order the Commission might issue would result in litigation and delay. It was impossible for the Commission to reconcile all of the legal, scientific and practical differences of opinion in drafting a proper order which would not be subject to litigation. The power of the Commission should depend upon legislative intent rather than Court decision. Therefore, the Commission finds itself in the following dilemma The operators have failed to agree among themselves on any plan of operation, and no request has been made of the Commission to approve any agreement among all operators pursuant to Section 100-6-16 of the Oil and Gas Conservation Act,

Due to the fact that there are so many doubtful points as to the authority of the Commission to formulate a valid order covering rules and regulations for the operation of the Rangely Field, it feels compelled to rescind Order No. 2-26 and refrain from issuing any rules and regulations for the operation of the field at this time. By this action the operators are in a position to operate the field without an order from this Commission until such time as the Commission may find itself in a position to review the situation again, hoping to find a correct basis upon which to issue a valid order. In the meantime, it is hoped that the Legislature will review the Statute and recognize the dilemma in which the Commission finds itself and provide amendments to the Statute so that the Commission can operate and conduct itself on a constructive and legal basis to the end that proper conservation practices may be pursued in the State of Colorado.

FINDINGS

The Commission finds as follows:

1.   That due notice of the time, place and purpose of the hearing in this matter 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 following prescribed order.

3.   That unitization is the best possible means of operation of, the Rangely Field for effective conservation practices.

4.   That the operators have failed to agree on a plan of unitization.

5.   That the operators have failed to agree under Section 100-6-16 of the Statute other means for continued gas injection in the Weber horizon.

6.   That requests have been made to conduct pilot operations for the purpose of determining the feasibility of injecting gas into the Entrada formation. The Commission has no objection to operators conducting experiments by injecting excess gas for storage purposes into the Entrada formation. Any operator or operators beginning or undertaking this experiment should make adequate reports and information should be furnished the Commission as to progress and results obtained. The Commission reserves the right of review of this experimental operation at any time.

7.   That the Commission believes that gas injection is beneficial to the Weber Reservoir and that authorization should be granted for such a program.

8.   Under existing circumstances, it would be of no avail for the Commission to issue an order on any matters other than those hereinafter set forth. At best, any order which it may issue would either compromise the protection of natural resources in Colorado, or probably precipitate litigation which would result in serious delays of any constructive decision.

ORDER

NOW, THEREFORE, IT IS ORDERED that the following rules and regulations be, and the same are hereby adopted for the Weber Reservoir of the Rangely Field in Rio Blanco County, Colorado:

Rule 1.    That all field rules and regulations heretofore issued for the operation of the Rangely Oil Field are rescinded, except Rules 1 and 2 of Order No. 2-8, and Rule 6 of Order No. 2-8 (as amended by Order No. 2-18), and that, no other affirmative orders will remain in effect.

Rule 2.    That should any operator desire to conduct experiments directed toward ascertaining the feasibility of gas injection into the Entrada formation, such experiments are hereby authorized, and the operator in charge thereof shall report regularly to the Commission on the current status of such a program.

Rule 3.    That authorization to inject gas into the Weber Reservoir is hereby granted, and that the operators participating in such injection program shall submit a monthly report presenting information similar to that requested on Form OGCC-11.

Rule 4.    GAS-OIL-RATIO TESTS

(a)	Tests for a gas-Oil ratio shall be made monthly on each well in the field. Form OGCC-4 shall be completed and filed with the Commission by the 25th day of a given month to report results of tests taken the preceding month. Such testing requirements for certain wells may be waived by the Director upon review of a request for exemption or adjustment.
(b)	Immediately prior to making the test for a gas-oil ratio, the well to be tested shall be produced at its normal rate of production for at least 72 consecutive hour, and the test shall be for a period of 24 consecutive hours, and the gas-oil ratio completed on the basis of the measurement of oil and gas during this 24-hour period.
(c)	Each producing well shall be so equipped that gas-oil-ratio tests may be made in accordance with standard practice. All gas measurements shall be reported in cubic feet at a base pressure of 15.025 psia and a temperature of 60° Fahrenheit.
(d)	The monthly Well Testing Report prepared by the Rangely Engineering Committee will satisfy this requirement, provided that all testing detail required on Form OGCC-4 is shown and figures submitted for an operator are verified by a written statement by the respective operator.

Rule 5.    REPORTS OF OIL AND GAS PRODUCTION

(a)	Oil, gas and water production by wells and the disposition of produced gas by batteries shall be reported by the operator of each lease, by the 25th day of a given month for the preceding month. Such well production may be estimated by breaking down actual battery production on the basis of the production obtained during the gas-oil-ratio tests herein required. The monthly production report now prepared by the Rangely Engineering Committee will satisfy this requirement, provided that the disposition of gas is shown for each battery and lease, and figures submitted for an operator are verified by letter by the respective 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, Form OGCC-5.
(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, Form OGCC-6.

IT IS FURTHER ORDERED, that all rules and regulations in conflict herewith are hereby rescinded.

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 adore orders, rules and regulations.

ORDERED this 22nd day of November, 1955.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
	By  Annabel Hogsett, Secretary