IN THE MATTER OF GENERAL RULES AND REGULATIONS WITH RESPECT TO THE CONSERVATION OF OIL AND GAS IN THE STATE OF COLORADO, AND RULES OF PRACTICE AND PROCEDURE PERTAINING THERETO AND IN PARTICULAR WITH REFERENCE TO RULE 323

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 HAMBERT FIELD AND CODEL [sic]/NIOBRARA SPACED AREA, WELD COUNTY, COLORADO

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CAUSE NO. 304, 407

ORDER NO. 304-6

407-28

(Corrected)

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on April 20, 1987 at 9:00 a.m. in Room 110, State Centennial Building, 1313 Sherman Street [sic] Denver, Colorado, after giving Notice of Hearing, as required by law, on the verified application of Machii - Ross Petroleum Company for an order to amend Order No. 304-5 and allow an additional well to be drilled, at the discretion of the operator, on each 160 acre unit in Section 24, Township 4 North, Range 66 West 6th PM [sic], for the production of gas from the Sussex formation underlying said units. The location of said additional wells, with the existing permitted well location should be in the NE1/4 and SW1/4 of each quarter section with a tolerance of 200 feet in any direction. In addition, it is further requested that commingling in the wellbore of production from the Sussex, Niobrara and Codell formations be allowed in such cases where there is no difference in ownership between said formations.

FINDINGS

The Commission finds as follows:

1. Machii - Ross Petroleum 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 the notice of the aforesaid hearing, and of the parties interested therein, as well as jurisdiction to promulgate the hereinafter prescribed order.

4. On August 15, 1977, the Commission by Order No. 304-4 amended Order No. 304-1 and established 160-acre drilling and spacing units for production of gas from the Sussex formation in Section 24, Township 4 North, Range 66 West, 6th P.M. By Order No. 304-5, issued February 17, 1978, the Commission further amended Order No. 304-1 and established 160-acre drilling and spacing units for the production of gas from the Sussex formation underlying the entire spaced area of the Hambert Field. The permitted well for the unit is at a location no closer than 600 feet from the boundaries of the unit.

On December 20, 1983, the Commission issued Order No. 407-1, by which 80-acre drilling and spacing units were established for the production of oil and gas from the Codell formation underlying lands in Adams, Boulder, Jefferson, Larimer and Weld Counties. The Niobrara formation was included by subsequent orders and commingling of production from the Codell and Niobrara formations.

5. Based upon the facts stated in the verified application and exhibits submitted and receiving no objections and having been heard and recommended by the Director as Hearing Officer on April 16, 1987, the Commission should enter an order allowing the drilling of the additional well in each 160 acre unit in said Section 24 for the production of gas from the Sussex formation and allow the commingling of production in the wellbore from the Sussex, Niobrara and Codell formations.

6. Bottom hole pressure tests should be taken on the first two additional wells drilled in the section and in addition, initial potential test should be taken for each of the Sussex and Codel/Niobrara formations.

7. The Commission should, at the request of any interested person, after notice of hearing, take such action as will offset any advantage which the person securing the additional wells may have over other producers by reason of the drilling of the additional wells in said Section 24.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order No. 304-5 is hereby amended and an additional well is hereby allowed to be drilled on each 160 acre drilling and spacing unit in Section 24, Township 4 North, Range 66 West 6th P.M.,Hambert [sic] Field, Weld County, Colorado, for production of gas from the Sussex formation underlying said Section.

IT IS FURTHER ORDERED that the following shall apply:

1.	The location of the additional well, with the existing permitted location on each 160 acre unit should be in the center of the NE1/4 and the SW1/4 of each quarter section with a tolerance of 200 feet in any direction. Any existing well producing gas from the Sussex formation shall be considered the permitted well.

2.	Bottom hole pressure tests shall be taken on the first two wells drilled as additional wells in the section and results submitted to the Director.

3.	Initial potential tests shall be taken for each of the Sussex and Codell/Niobrara formation producing zones and reported to the Director.

4.	Commingling in the wellbore of the Sussex, Codell and Niobrara formations shall be allowed in such cases where there is no difference in ownership between said formations.

IT IS FURTHER ORDERED that the Commission shall, at the request of any interested person, after notice of hearing, take such action as will offset any advantage which the person securing the additional wells may have over the other producers by reason of the drilling of the additional wells in said Section 24.

IT IS FURTHER ORDERED that the provisions contained in the above orders 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.

ENTERED this 11th day of May, 1987, as of April 20, 1987.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Frank J. Piro, Secretary