REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on September 19, 1972, at 9 A.M., in Room 132, State Services Building, Denver, Colorado, as the result of Order, No. 251-4 which requested operators in the Irondale Field to present a report concerning the completion, of a gas processing plant, and in the event said plant is not completed to present such information as may be necessary in order for the Commission to determine what measures to take to prevent any excessive flaring of casinghead gas.

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, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

3. That on July 7, 1972, the Commission by its Order No. 251-4 took no action at that time concerning the flaring of casinghead gas from the "D" and "J" Sand reservoirs of the Irondale Field since the operators in the field represented to the Commission at the June 20, 1972 hearing that material and equipment had been ordered and that a gas processing plant was to be constructed and would be completed and capa-ble of taking gas within 90 days.

4. That information available to the Commission indicates that there has been an increase in gas-oil ratios since the June 1972 hearing and that construction of the gas plant has not yet commenced, but that completion can be expected within 90 days, and until that time, flaring of casinghead gas will continue.

5. That in view of the delayed construction of the gas plant, and increase in gas-oil ratios, prevention of the waste of gas during the interim period is required. For this to be accomplished, the Commission finds that the daily allowable for each well pro-ducing from the "D" and/or "J" Sands of the Irondale Field should not exceed ten (10) barrels of oil or twenty-five (25) Mcf of gas, whichever is first produced.

6. That such limitation of production will prevent waste as that term is defined in the Oil and Gas Conservation Act, and will not abuse the correlative rights of any owner in the field.

7. That the gas-oil ratios submitted at the time of hearing should be the basis for calculating the daily allowables for wells in the field.

8. That in order for operators to produce any one lease in the most efficient manner possible, transfer of allowables within a given lease should be permitted.

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9. That the operator of the plant should report to the Commission by December 1, 1972 as to the progress of the plant construction, and that a hearing should be held at the next scheduled hearing date following the completion of the plant.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regula-tions shall be, and the same are hereby adopted for the "D" and "J" Sands common source of supply of oil and gas in the Irondale Field, Adams County, Colorado, underlying the following described lands: Township 2 South, Range 61 West, 6th P.M. Section 18: SW/4 Section 30: W/2 Section 19: W/2 Section 31: NW/4 Township 2 South, Range 62 West, 6th P.M. Section 13: S/2 Section 25: All Section 14: SE/4 Section 26: E/2 Section 23: E/2 Section 35: NE/4 Section 24: All Section 36: N/2

Rule 1. Production Limitation

a. The daily allowable, calculated on a monthly basis, for any one (1) well capable of producing both oil and gas from the "D" and/or "J" Sands underlying said Irondale Field shall be Ten (10) barrels of oil or Twenty-five (25) Mcf of gas, whichever is first produced. However, wells which have a gas-oil ratio in excess of 2,500 cubic feet per barrel of oil shall be granted an allowable as determined by the following formula:

10 barrels x 2,500 cubic feet per barrel Daily Oil Allowable = ----------------------------------------Gas-oil ratio of well

This limitation shall be in effect until the gas processing plant is completed and capable of receiving gas from said field, or as otherwise determined by the Commission after proper notice and hearing.

b. In order that the operators may produce their leases in the most efficient manner possible, the allowable of any one (1) well or combination of wells on any given lease, may be transferred and produced from any other well or combination of wells on that lease within said section, provided the transfer is to a well or wells with lower gas-oil ratios.

c. The allowable production for any one (1) month may not be exceeded by more than ten percent (10%) of the total monthly allowable; any overproduction shall be made up during the month immediately following and any underproduction may be made up only during the month immediately following.

d. The daily allowables will be determined from the gas-oil ratio tests submitted at the hearing.

e. A fifteen (15) day test period is permitted, without limitation, for new wells completed in the "D" and/or "J" Sands in said field. Upon completion of the test period, the production from the well will be limited in accordance with the provisions of this order. In order to determine the daily allowable, a gas-oil ratio test shall be taken during the test period. Adjustment of overproduction obtained during the test period shall be determined at the hearing to be held following completion of the gas plant.

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Rule 2. Production Reports

a. Operators and owners of wells producing from the "D" and/or "J" Sands of the Irondale Field shall file with the Commission a monthly report of produc-tion by wells as required on OGCC Form 7, on or before the twenty-fifth (25th) day of each month succeeding the month in which the production occurs, unless otherwise authorized by the Director.

IT IS FURTHER ORDERED, that the plant operator shall report to the Commission by December 1, 1972 on the progress of the plant construction and that when the plant is completed and capable of receiving gas and upon proper notice, a hearing shall be held at the next scheduled hearing date.

IT IS FURTHER ORDERED, that this Order shall become effective October 1, 1972.

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, rules and regulations.

ORDERED this 25th day of September 1972.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

(#251-5)