26-57

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

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CAUSE NO. 26

ORDER NO. 26-57

REPORT OF THE COMMISSION

On July 21, 1966, the Sentinel Petroleum Corporation filed an application to drill its No. 1 State-Gray well at a location 660 feet from the north line and 1980 feet from the east line of Section 16, Township 1 North, Range 57 West, Morgan County, Colorado. lt was advised that said location was within the limits of the Adena Field area and subject to orders of the Commission which regulated spacing, the location of wells, and restricted production on a gas-in-place or oil-in-place factor. Sentinel Petroleum Corporation therefore amended its location to conform to the order of the Commission in that regard, and drilled and completed the well as a gas well.

Subsequently, on October 4, 1966, the Raymond Oil Company, Inc. filed an application requesting a hearing and an order resulting therefrom which would repeal and vacate Order No. 26-30 as to the E½ of Section 16, Township 1 North, Range 57 West, 6th P.M., Morgan County, Colorado, so as to exclude said lands therefrom. The Commission issued its notice setting hearing in this matter for October 18, 1966, and gave further notice that at the same time, on its own motion, it would consider a gas allowable for said E½ of Section 16.

Upon request of the applicant, the matters set for hearing on October 18, 1966, were continued to November 15, 1966, and the Commission gave further notice that, on its own motion and at the same hearing, it would consider revision of Rule 6 of said Order No. 26-30 in order to meet the needs of the current status of depletion of the "J" Sand reservoir of the Adena Field.

On November 15, 1966, hearing in Cause No. 26, Adena "J" Sand Field, was held at 10 a.m., in Room 132, State Services Building, Denver, Colorado, after publication of Notice of Hearing as required by law.

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 as a result of the drilling and completion of the Sentinel Petroleum Corporation No. 1 State Gray well located in the SE¼NW¼NE¼ of Section 16, Township 1 North, Range 57 West, 6th P.M. Morgan County, Colorado, it has been determined that the Adena "J" Sand reservoir is larger than was originally anticipated in the vicinity of the: E½ of said Section 16.

4. That: the manner of determining the allowable production of gas from the gas-cap portion of said "J" Sand reservoir, as set by Order No. 26-30, is still valid, but that such allowable should be increased by inclusion of the E½ of said Section 16; which is 3.19 percent (3.19%) of the gas reservoir,

5. That the NE¼ and the SE¼ of said Section 16 is a common lease with common ownership, and should be combined as a single producing tract, and that the gas allowable as determined herein for each of the two drilling units should be combined and produced by said Sentinel No. 1 State-Gray well.

6. That the Oil and Gas Conservation Commission recognizes the need to encourage development of the flanks of proven reservoirs and thereby protect correlative rights of owners of undeveloped tracts on the edge of such reservoirs; and that a temporary allowable of 400 MCFD should be set for said E½ of Section 16 for a period of thirty (30) months, at which time this allowable should revert to the allowable computed by the formula set out in said Order No, 26-30.

7. That the provisions of Rule 8 of said Order No. 26-30 should be continued, and that the Sentinel No. 1 State-Gray well, and the nearest two offsets in the Unit, should be considered as key wells in future surveys; and that build-up pressure for the entire shut-in time should be recorded, where possible.

8. That Rule 6 of said Order No. 26-30 should be amended to provide for six-month balancing periods beginning with January 1 and July 1, to allow for seasonable variations of market; provided, however, that deliveries on any one day should not exceed twice the daily allowable unless otherwise authorized by the Director,

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations shall apply hereafter to the Adena "J" Sand Field, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Rule 1. The maximum allowable production from the "J" Sand reservoir of the Adena Field shall not, during any one month, exceed a daily average of 22,000 stock tank barrels of oil, and 25,440,000 cubic feet of gas, unless and until otherwise ordered by the Commission.

Rule 2. Such oil and gas allowable shall be allocated among the producing properties in the Adena "J" Sand Field on a tract basis, by application of the formula set forth in Rule 3 of Order No. 26-30, except as temporarily otherwise provided by Order No. 26-45 and Rule 3 hereof.

Rule 3. The NE¼ and SE¼ of Section 16, Township 1 North, Range 57 West of the 6th P.M., Morgan County, Colorado, are hereby combined into one producing tract, and the volume of gas allowed to be produced therefrom shall be 400 MCFD for a period of thirty (30) months from the effective date of this order, at which time its allowable shall revert to 267 MCFD.

Rule 4. The provisions of Rule 8 of Order No. 26-30 are hereby continued, with the Sentinel No. 1 State Gray well, located in the NW¼NE¼ of said Section 16 the Braden & Hoover No. 1 Glen "B" well located in the NW¼SE¼ of Section 9; and the Pure No. 2 H. Glen "B" well located in the NW¼SW¼ of Section 9, all in Township 1 North, Range 57 West, 6th P.M., Morgan County, Colorado, to be considered as key wells in future surveys, with build-up pressures for the entire shut-in time recorded, where possible.

Rule 5. Rule 6 of said Order No. 26-30 is hereby amended to provide six-month balancing periods, such balancing periods to begin with January 1 and July 1 of each year. Overproduction of gas from a tract during a balancing period shall be subtracted from the tract's allowable for the next balancing period; and any underproduction of gas from any tract shall be made up during the next balancing period; provided, however, that no tract shall produce at any time more than twice its daily allowable, unless otherwise authorized by the Director.

IT IS FURTHER ORDERED, that the rules and regulations and orders set forth 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 any and/or all of the above orders, rules and regulations.

ORDERED this 6th day of December 1966.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By William R. Smith, Secretary