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 "J" SAND IN THE GRAYLIN-NORTHWEST FIELD, LOGAN COUNTY, COLORADO

)

)

)

)

CAUSE NO. 25

 

ORDER NO. 25-11

 

REPORT OF THE COMMISSION

 

This cause came on for hearing on July 15, 1969, at 10 a.m., in Room 260, Columbine Building, Denver, Colorado, after publication of Notice of Hearing as required by law, and mailing of copies of the application pursuant to regulations of the Commission, on the application of Gulf Oil Corporation for an order (a) approving a Unit Agreement and Unit Operating Agreement attached to said application as Exhibits 3 and 4 respectively; (b) stating that such agreements constitute the Commission's plan for involuntary unit operations for subject lands; (c) approving a waterflood project on said lands for secondary recovery purposes.

 

FINDINGS

 

The Commission finds as follows:

 

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

 

2. That the Commission has jurisdiction over the subject matter embraced in said Notice, the voluntary participants to that certain Unit Agreement presented by the applicant, and owners of tracts as indicated in the Agreement submitted as Exhibit 3 attached to the application who were not voluntary participants and who were served, as provided for in the Rules of Practice and Procedure of the Commission.

 

3. That the "J" sand reservoir encountered in the Monroe-Riecke Well No. 2 located in the SW SE SE, Section 1, Township 8 North, Range 54 West, 6th P.M., Logan County, Colorado, between the approximate depths of 5044 feet and 5119 feet subsurface, has been defined and determined by drilling as underlying the following described lands in Logan County, Colorado, to-wit:

 

Township 8 North, Range 53 West, 6th P.M.

 

 

Section 6:

Lots 3, 4, 5, 6 and 7, SE NW

Section 7:

Lots 3 and 4

Section 18:

Lots 1 and 2, E NW, NW NE, S NE, N SE

 

 

Township 8 North, Range 54 West, 6th P.M.

 

 

Section 1:

Lots 1, 2, 6, 7 and 10, E Lot 8, E Lot 9, E SW, SE

Section 12:

NE, E SW, SE

Section 13:

NE

 

and that said reservoir constitutes a common source of supply; and that such lands should hereafter be referred to as the Graylin-Northwest "J" Sand Unit Area.

 

4. That Applicant, Gulf Oil Corporation, made diligent but unsuccessful attempts to create a voluntary unit operation.

 

5. That the Unit Agreement and Unit Operating Agreement as presented by Applicant as Exhibits 3 and 4, respectively, are necessary to increase the ultimate recovery of oil and gas from said reservoir, and that the terms provided therein are just and reasonable to all interests contained within said "J" Sand Unit Area.

 

6. That the proposed waterflood operation for secondary recovery is necessary to increase the ultimate recovery of oil and gas, and that such operation, pursuant to said Unit Agreement and Unit Operating Agreement, will result in an estimated additional recovery of oil and gas with a value in excess of the estimated additional cost incident to conducting such operation.

 

7. That testimony presented at the hearing stated that said Unit Agreement and Unit Operating Agreement have been approved in writing by those persons who, under the agreement, will be required to pay at least eighty per cent (80%) of the costs of the unit operation, and also by the owners of at least eighty per cent (80%) of the production or proceeds attributable to royalty, overriding royalty, and production payments.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED:

 

1. The Unit Agreement and Unit Operating Agreement covering lands in the Graylin-Northwest "J" Sand Unit Area, which agreements are attached to and made a part of the original order of this Commission on file in the office of the Commission, are approved as being in the public interest for conservation.

 

2. The "J" sand reservoir, common source of supply, underlies the following described lands in Logan County, Colorado, to-wit:

 

Township 8 North, Range 53 West, 6th P.M.

 

 

Section 6:

Lots 3, 4, 5, 6 and 7, SE NW

Section 7:

Lots 3 and 4

Section 18:

Lots 1 and 2, E NW, NW NE, S NE, N SE

 

 

Township 8 North, Range 54 West, 6th P.M.

 

 

Section 1:

Lots 1, 2, 6, 7 and 10, E Lot 8, E Lot 9, E SW, SE

Section 12:

NE, E SW, SE

Section 13:

NE

 

and such area shall hereafter be known as the Graylin-Northwest "J" Sand Unit Area.

3. The provisions contained in said Unit Agreement and Unit Operating Agreement as they pertain to:

 

a. The description of the pool to be so operated;

 

b. The nature of said operation;

 

c. The allocation to the separately owned tracts in the "J" Sand Unit Area of all the oil and gas that is produced from said "J" Sand Unit Area and is saved;

 

d. The provision for the credits and charges to be made in the adjustment among the owners in the Graylin-Northwest "J" Sand Unit Area for their respective investments in wells, tanks, pumps, machinery, materials, and equipment contributed to the unit operations;

 

e. The provision providing how the costs of Unit operations, including capital investments, shall be determined and charged to the separately owned tracts, and how said costs shall be paid, including the provision providing when, how, and by whom the Unit production allocated to an owner who does not pay the share of the cost of Unit operations charged to such owner, or the interest of such owners, may be sold and the proceeds applied to the payment of such costs.

 

f. The provision for financing persons who elect to be carried or otherwise financed, and the reasonable interest charge for such service payable out of such person's share of the production.

 

g. The provision for the supervision and conduct of the Unit operations, in respect to which each person shall have a vote with a value corresponding to the percentage of the costs of Unit operations chargeable against the interest of such person; and

 

h. The time when the Unit operations shall commence, and the manner in which, and the circumstances under which the Unit operations shall terminate,

 

are just and reasonable, and are incorporated herein as the Commission's plan of involuntary unit operations for such lands.

 

4. The waterflood project for the "J" sand reservoir of the Graylin-Northwest "J" Sand Unit Area, as presented by Applicant, is hereby approved as being necessary to increase the ultimate recovery from said reservoir, and the operator is authorized to inject water into said reservoir through injection wells in such quantities as shall be reasonably determined by the operator to best achieve the maximum recovery of oil without waste.

 

5. In the event that it becomes necessary in the future to convert additional producing wells to input wells; to plug and abandon certain wells in the Unit Area, or to drill additional producing or input wells as dictated by developments in the course of the operation of the waterflood, the Unit Operator is authorized to make such changes in the operation of the project as may be required to facilitate the efficient development thereof, subject to the approval of the Director.

 

IT IS FURTHER ORDERED, that the rules and regulations and orders contained herein shall become effective forthwith.

 

ORDERED this 15th day of July 1969.

 

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By Frank J. Piro, Secretary