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 OF THE ADENA FIELD, MORGAN COUNTY, COLORADO	) ) ) )	CAUSE NO. 26 ORDER NO. 26-40

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on May 27, 1958, at 10;00 a.m., in the Senate Chambers of the State Capitol, Denver, Colorado, after publication of Notice of Hearing as required by law, on the application of The Pure Oil Company, as Unit Operator of the Adena "J" Sand Unit Area, for consideration of the reallocation of the total field oil and gas allowables established for the "J" sand of the Adena Field, by Rule 2 of Order No. 26-30, and allocated under Rule 3 of said Order No. 26-30, as amended by Order No. 26-31, and temporarily modified by Orders No. 26-33, 26-35., and 26-36.

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, for convenience, attached hereto is a plat showing wells and well data for Tract 81-B and surrounding area, and showing that portion of the area on the plat which is contained in the Adena "J" Sand Unit, and also showing that portion of the area on the plat which is contained within the Adena Field.

4.      That under Rule 1 of Order No. 26-33, the volume of oil allowed to be produced by Petroleum, Inc.'s Delaney No. 1 well was temporarily increased from nine (9) to forty (40) barrels of oil per day until February 1, 1958; and that this increased temporary allowable of forty barrels of oil per day was extended by Order No. 26-36 until further order of the Commission. That, in addition, under Rule 2 of Order No. 26-33, any well drilled and completed as a commercial oil well after January 23, 1957, and within the limits of Tract 81-B, be allowed to produce up to but not more than forty (40) barrels of oil per day until such well pays out its respective expenses over and above operating costs. That as of May 27, 1958, and subsequent to the issuance of Order No. 26-33, two wells were drilled within the limits of Tract 81-B; namely, the Delaney No. 2 and Delaney No. 3 wells.

5.      That testimony submitted by Petroleum, Inc. shows that its Delaney No. 3 well has been temporarily abandoned, and that as of May 27, 1958, this well has produced a total of only 473 barrels of oil; hence, it appears that this well cannot be completed as a commercial oil well in the "J" sand reservoir of the Adena Field.

6.      That Tract 81-B (see attached plat) is an area which consists of approximately 320 contiguous surface acres located in the extreme southwest portion of the limits of the Adena Field, as defined by Order No. 26-29; and that said tract is a non-unitized portion of the Adena Field; and that of the eight drilling and spacing (oil) units contained in this tract, two units have been developed with commercial oil wells; one unit has been developed with a well which apparently cannot be completed as a commercial oil well; and one unit has been developed with a dry hole, leaving four contiguous, undeveloped units.

7.      That this area of undeveloped drilling and spacing units lies on the edge of the known productive Adena "J"' sand reservoir, as shown by the existing dry holes on the attached plat. That determination of the oil-in-place underlying the undeveloped area is made substantially more difficult by lack of development. That controversial and conflicting testimony was given as to the volume of oil-in-place contained in the "J" sand reservoir underlying Tract. 81-B.  According to testimony submitted by Petroleum, Inc., the area of undeveloped units has "good prospect" for additional development of the "J" sand reservoir; and that the Commission, by virtue of Rule 2 of its Order No. 26-33, has granted reasonable encouragement for the further development of Tract 81-B.

8.      That after the effective date of this order, income derived from production obtained from the Delaney No. 1 and No. 2 wells should be combined to pay-out the Delaney No. 2 well; and that the Commission should hold a hearing at the approximate time of such pay-out to accept and review additional pertinent information for determination of an allocation for Tract 81-B.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Rule 2 and Rule 3 of Order No. 26-30, as amended by Orders No, 26-31, 26-33 26-35, and 26-36, be further amended as follows:

Rule 1.    Any well drilled and completed as commercial oil well within the limits of Tract 81-B shall be allowed to produce up to but not more than forty (40) barrels of oil per day until such well has paid out its respective expenses over and above operating costs, provided that such oil allowable is produced without waste; and a tabulation of expenses incurred drilling, completing, equipping, and operating such a commercial well shall be submitted to the office of the Commission by the owners of such-well, or wells, as soon as practicable, so that the Commission can reasonably determine the proper costs thereof.

Rule 2.    The volume of oil allowed to be produced by the Delaney No. 1 well, located in the Center of the Southeast Quarter of the Southeast Quarter of the Northeast Quarter (C SE¼ SE¼ NE¼ ) of Section Twenty-six (26), Township One (1) North, Range Fifty-eight (58) West, Morgan County Colorado, shall be forty (40) barrels per day until further ordered.  The income derived from this allowable production shall be combined with the income derived from the allowable production of the Delaney No. 2 well, located in the Center of the Southeast Quarter of the Northeast Quarter of the Southeast Quarter (SE¼ NE¼ SE¼) of' Section Twenty-six (26) Township One (1) North, Range Fifty-eight (58) West, Morgan County, Colorado, to pay-out the Delaney No. 2 well.

Rule 3.    The owners and/or operators of wells affected by Rule 1 and Rule 2 hereof, shall submit appropriate reports to satisfy the provisions of this order.

IT IS FURTHER ORDERED, that the above rules and regulations shall apply hereafter to the "J" sand reservoir underlying the Adena Field, in addition to other applicable rules and regulations and orders of the Commission heretofore adopted and not in conflict herewith.

IT IS FURTHER ORDERED, that this order shall become effective July 1, 1958.

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 rules and regulations.

ORDERED this 19th day of June, 1958.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
	By  Annabel Hogsett, Secretary