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. 2-8

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 a 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, Colorado;
	Benjamin E. Sweet, Attorney at Law, Denver, Colo.
	Charles I. 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.N. Williams, for Phillips Petroleum Corporation;
	F.L. Kirgis, for Phillips Petroleum Corporation;
	Nix S. Loy, for Sharples Oil Corporation;
	Phil Helmig, for Malco Refining Company;
	Donald D. Anderson, for Halco Refining Company;
	John Clinton, for Continental Oil Company;
	J.C. Gilbert, for the Rio Blanco Oil & Gas Company.

REPORT OF THE COMMISSION

On December 6, 1951, the Commission issued its Order No. 2-1 in the above entitled matter establishing rules and regulations governing the production of oil and gas from the Weber Sand Pool in the Rangely Field, and providing for the submission by the operating parties of plans to prevent waste and to inject gas into the Weber formation. On March 3, 1952, the Commission issued its notice of hearing for April 14, 1952 to consider the plans submitted by the operating parties in compliance with Order No. 2-1.

On March 6, 1952, the Union Pacific Railroad Company and the Texas Company filed an application for a rehearing on Order No. 2-1, said application in particular alleging error on the part of the Commission in making its findings Nos. 6, 8 and 9, and in entering Rule 3 of its Order No. 2-1.

On March 26, 1952, on the application for rehearing of the Union Pacific Railroad Company and the Texas Company, the Commission granted a rehearing as to Order No. 2-1, setting it down for hearing on April 15, 1952, and changed the notice of hearing on the plans submitted by the operating parties fixed for April 14, 1952 to April 15, 1952, and entered its Emergency Order No. 2-2 suspending Rule 3 of Order No. 2-1 until April 10, 1952. On April 9, 1952, the Commission entered its Emergency Order No. 2-3 further suspending Rule 3 of Order No. 2-1 until April 25, 1952.

On April 15, 1952, the Commission consolidated the two hearings fixed for that date and received testimony and evidence relative thereto, hearing in the matter being continued until May 22, 1952, at which time further testimony and evidence was presented and briefs were filed by all interested parties, and the matter was then and there taken under advisement.

Subsequent to its Emergency Order No. 2-3 suspending Rule 3 of Order No. 2-1 until April 25, 1952, the Commission has issued its Emergency Orders Nos. 2-4, 2-6 and 2-7, further suspending Rule 3 of Order No. 2-1 pending final determination of this matter, or until June 21, 1952.

The Commission now has before it all of the testimony and evidence relating to the production of oil and gas in the Rangely Field, is fully advised in all matters pertaining to operations of the field, and believes that it is now in a position to enter its order in this proceeding amending its Order No. 2-1 of December 6, 1951, and providing for further measures to be taken by the operators in said field to prevent the waste of oil and gas in the field.

The Commission believes that all of the operators in the Rangely Field favor conservation control and that said operators in the presentation of their viewpoints have been sincere and are desirous of being helpful to the Commission. However, there is a decided difference of opinion concerning some of the fundamental factors relating to conservation plans. Hence, it becomes the duty of this Commission, under applicable statutes, to determine proper and necessary regulations providing an effective plan for conservation in this field, so that the purposes of the statutes may be carried out.

FINDINGS

            The Commission finds as follows:

            1.      That due notice of the time, place and purpose of the hearing in these matters was given in all respects as required by law;

            2.      The Commission has jurisdiction over the subject Fatter embraced in said notice and of the parties interested therein, and jurisdiction to promulgate the following prescribed Order;

            3.      The Commission finds that its Findings and Order in its Order No. 2-1 heretofore entered on December 6, 1951, should be vacated, to be superseded by the Findings and Order hereinafter prescribed;

            4.      That the Rangely Field as used herein is that area in Townships 1 and 2 North, Ranges 101, 102, and 103 West, Rio Blanco County, Colorado, which is under-lain by the Weber Sand Pool;

            5.      That the Weber Sand Pool as used herein shall be construed to mean that underground reservoir below the base of 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 of Section 30, Township 2 North, Range 102 West, Rio Blanco County, Colorado ;

            6.      That the Weber Send 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;

            7.      The Weber Sand Pool is what is commonly known as a solution gas-drive reservoir, with a relatively small free gas—cap [sic] and a limited water drive. The reservoir behavior in a general way is described as follows:

                     (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.

                     (b)     While there has been some constructive conservation work done by setting packers in some high gas-oil ratio wells, nevertheless, there has been a failure by the operators to take adequate measures to minimize the decline in reservoir pressure, often referred to as "bottom-hole pressure". There has been, and now is, waste of gas caused by the escape, blowing and releasing into the open air, of gas from the wells, in an excessive or unreasonable amount, or approximately 20 million cubic feet of gas per day.

                              The production of gas has been in quantities and in such a manner that there has been an unreasonable reduction in reservoir pressure and a diminution of the quantity of oil that night be produced by effective conservation methods. The bottom-hole pressure or reservoir energy has declined from approximately 2,750 lbs. per square inch to 1,500 lbs. per square inch. The average solution gas-oil ratio originally ranged from 250 to 400 cu. ft. of gas per barrel of oil, whereas today the average producing gas-oil ratio is approximately 600 to 700 cu. ft. of gas per barrel of oil, with many, of the wells producing with ratios in excess of 1,000 cu. ft. of gas per barrel of oil; that the gas in excess of the solution gas-oil ratio so produced with each barrel of oil is gas robbed from and needed for the production of additional oil left in the ground. Flowing wells have declined in number from nearly 300 to 60.

                     (c)     The effective remedy to maintain reservoir energy and thus prevent waste in the Rangely Field, is by injecting the produced gas except as hereinafter ordered into the Weber Sand Reservoir. The greater 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 re-inject 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)     The Commission fends that proper conservation practice in accordance with this Order will prevent waste and ultimately increase the total recovery of oil from the field to a large degree, variously estimated as between 30 million barrels and 87 million barrels. Each of the witnesses a figure as a minimum, as it cannot now be determined how much greater the ultimate recovery of oil might be. 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 unreasonably diminishes the quantity of oil and gas that might ultimately be produced.

            8.      That the Commission recognizes that it will take time for the operators to comply with the Commission's orders in this matter. Pending the time herein allowed for conformance by the operators with the requirements hereinbelow set forth, the Commission finds that in order to prevent undue waste of oil and gas, and loss of reservoir energy, the maximum gas production in any well should not during any one month exceed a daily average of 150,000 cu. ft; that this limit is the amount of gas that such a well can produce without undue waste, in accordance with sound engineering practices, unless the operator of the well returns to tie formation from which produced, the gas produced in excess of this gas limit ;

            9.      That the return of gas to the Dakota Sand would not tend to build up the reservoir pressure of the Weber Sand and it has not been proven that the Dakota Sand would make a satisfactory gas storage reservoir.

           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.

ORDER

NOW, THEREFORE, IT IS ORDERED by the Oil and Gas Conservation Commission of the State of Colorado, that the Findings and Order of its Order No. 2-1, heretofore entered on December 6, 1951, are hereby vacated, to be superseded by the Findings and Order herein prescribed.

IT IS FURTHER ORDERED 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.  RESERVOIR PRESSURE MAINTENANCE

a.      During the six months period from July 1, 1952 to and including Dec. 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 a 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:

            (1)     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 cu. ft. 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 Flat 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.

            (2)     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.

            (3)     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.

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

            b.      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.

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

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 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 sixty (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 or 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.

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 c 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 o each such annual survey shall be reported to the Commission on or before the 15th day o of each year. All pressure determinations shall be made at a datum o 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 Emergency Order No. 2-7, heretofore entered on June 6, 1952, suspending Rule 3 of Order No. 2-1 until June 24, 1952, is hereby vacated, said Rule 3 to be superseded by the rules and regulations of this Order as hereinabove prescribed.

IT IS FURTHER ORDERED that all rules and regulations contained in any statewide order in effect, or that night be promulgated by this Commission, which are not inconsistent with the foregoing rules and regulations, are hereby adopted and will apply by reference.

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

IT IS FURTHER ORDERED that this Order shall become effective forthwith.

ORDERED this 20th day of June, 1952, by the Oil and Gas Conservation Commission of the State of Colorado.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
	By John E. Cronin, Secretary