IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE SPINDLE FIELD, WELD AND BOULDER COUNTIES, COLORADO Cause No. 250 Order No. 250-22

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 16, 1979 at 9:00 A.M., in Room 110, State Centennial Building, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Vessels Oil and Gas Company, for an order establishing 160-acre drilling and spacing units for the produc-tion of gas and associated hydrocarbons from the Shannon formation underlying certain lands in Weld and Boulder Counties, Colorado.

FINDINGS

The Commission finds as follows:

1. Vessels Oil and Gas 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. Evidence presented at the hearing indicates that the Shannon formation constitutes a common source of supply of gas and associated hydrocarbons underlying the following described lands in Weld and Boulder Counties, Colorado, to-wit: Weld County Township 2 North, Range 68 West, 6th P.M. Section 19: All Section 30: All Boulder County Township 2 North, Range 69 West, 6th P.M. Section 24: All Section 25: All

5. In order to prevent the waste of gas, as defined by law; to protect the correlative rights of all parties concerned; to prevent the drilling of unnecessary wells, and to insure proper and efficient development and promote conservation of the gas resources of the State, an order should be made establishing 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Shannon formation, common source of supply underlying the lands defined herein; that said units should be 160-acre drilling units, and consist of a quarter section of land according to the govern-mental survey thereof, and that the permitted well for each such drilling unit should be located in the center of the SE/4 of each quarter section with a tolerance of 200 feet in any direction for topography and surface hazards; however, Well No. 2 A.C.N.O. located in the NE/4 SW/4 Section 30 and Well No. 1 Lamar located in the NE/4 NE/4 Section 30, Town-ship 2 North, Range 68 West, 6th P.M., should be considered exceptions and be the per-mirred wells for the units upon which each is located.

6. All available geological and engineering data concerning said Shannon formation indicate that one well will efficiently and economically drain an area of appro-ximately 160-acres, and that drilling units of the size and shape hereinabove described are not smaller than the maximum area that can be efficiently drained by one well pro-ducing from said Shannon formation. (over)

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regu-lations shall apply hereafter to wells drilled, completed, or recompleted in the Shannon formation underlying that portion of the Spindle Field herein described, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Rule 1. One hundred-sixty (160) acre drilling and spacing units shall be and the same are hereby established for the production of gas and associated hydrocarbons from the Shannon formation underlying the following described lands in that portion of the Spindle Field, Weld and Boulder Counties, Colorado, to-wit: Weld County Township 2 North, Range 68 West, 6th P.M. Section 19: All Section 30: All Boulder County Township 2 North, Range 69 West, 6th P.M. Section 24: All Section 25: All

Rule 2. Said drilling units shall consist of one hundred-sixty (160) acres, and each such drilling unit shall consist of a quarter section of land, according to the governmental survey thereof, and the permitted well for each such drilling unit shall be located in the center of the SE/4 of each quarter section with a tolerance of 200 feet in any direction for topography and surface hazards; however, Well No. 2 A.C.N.O. located in the NE/4 SW/4 Section 30 and Well No. 1 Lamar located in the NE/4 NE/4 Section 30, Town-ship 2 North, Range 68 West, 6th P.M. shall be considered exceptions and be the permit-ted wells for the units upon which each is located.

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

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

ORDERED this 16th day of February, 1979.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

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Entered 4/3/79 (#250-22)