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 WATTENBERG GAS SPACED AREA AND THE CODELL AND NIOBRARA SPACED AREA, WELD COUNTY, COLORADO	) ) ) )	CAUSE NO.   232 and 407 ORDER NO.   232-74 and 407-108

REPORT OF THE COMMISSION

                                  This cause came on for hearing before the Commission on July 20, 1992, in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing, as required by law on the verified application of Basin Operating Company for an order to amend Cause Nos. 407 and 232 to allow a well to be recompleted at an exception location for production from the "J" Sand Formation, and further, to allow the downhole commingling production of oil, gas and associated hydrocarbons from the "J" Sand Formation with production from the Codell‑Niobrara Formations.

FINDINGS

                                  The Commission finds as follows:

                                  1.  Basin Operating Company as applicant herein, is an interested party in the subject matter of the above‑referenced hearing.

                                  2.  Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

                                  3.  The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

                                  4.  In Order Nos. 407‑66 and 232-37, the Commission among other things, allowed wells drilled, completed or recompleted in the Codell and/or Niobrara Formations, where the production is commingled or dually completed with the "J" Formation, to be approved administratively, with additional rules established for well locations, unit designations and production allocation methods, for certain lands, including Section 29, Township 2 North, Range 68 West, 6th P.M.

                                  5.  The Milton H. Nelson "H" No. 1 Well was drilled, completed and produced at a legal location 660 feet FSL and 1980 feet FEL, in accordance with Order Nos. 407-1 and 407-10, for production from the Codell and Niobrara Formations.  Recompletion of the existing wellbore for production from the "J" Sand Formation should result in an increase of recoverable reserves and the downhole commingling of production from the "J" Sand, Codell and Niobrara Formations will not result in irremediable reservoir damage.

                                  6.  That evidence presented at an administrative hearing indicates that over eighty (80) percent of the working interest owners and approximately over eighty (80) percent of the royalty interest owners have approved the proposed allocation method for the three hundred and twenty (320) acre drilling and spacing unit consisting of the S1/2 of said Section 29, for production from the "J" Sand Formation.  In addition, over eighty (80) percent of the working interest owners and approximately over eighty (80) percent of the royalty interest owners have approved the proposed allocation method for the eighty (80) acre drilling and spacing unit consisting of the W1/2 SE1/4 of said Section 29, for production from the Codell and Niobrara Formations.

                                  7.  The matter was heard by the Hearing Officer who recommends approval based upon the testimony presented at the administrative hearing.

O R D E R

                                  NOW, THEREFORE, IT IS ORDERED, that an exception to allow the Milton H. Nelson "H" No. 1 Well located 660 feet FSL and 1980 feet FEL in the SW1/4 SE1/4 of Section 29, Township 2 North, Range 68 West, 6th P.M., to be recompleted for production from the "J" Sand Formation is hereby granted and the production from the "J" Sand Formation  shall be allowed to be commingled with the production from the Codell and Niobrara Formations.

                                    IT IS FURTHER ORDERED, that the allocation method described in Finding 6 shall be approved for the three hundred and twenty (320) acre drilling and spacing unit consisting of the S1/2 of said Section 29 for production from the "J" Sand Formation and for the eighty (80) acre drilling and spacing unit consisting of the W1/2 SE1/4 of said Section 29 for production from the Codell-Niobrara Formations. 

                                  IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.

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

                                  ENTERED this day of , 1992, as of July 20, 1992.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                               OF THE STATE OF COLORADO

                                                                        By

                                                                             Patricia C. Beaver, Secretary

Dated at Suite 380

1580 Logan Street

Denver, Colorado  80203

August 22, 1992