IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE DOUGLAS CREEK-SOUTH (MORAPOS-CASTLEGATE FIELD, RIO BLANCO COUNTY, COLORADO Cause No. 311 Order No. 311-5

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on August 17, 1981 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 Teton Energy Co., Inc., for an order establishing 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Morapos-Castlegate formation underlying certain lands in Rio Blanco County, Colorado.

FINDINGS

The Commission finds as follows:

1. Teton Energy Co., 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. The Morapos-Castlegate formation constitutes a common source of supply of gas and associated hydrocarbons underlying the following described lands in Rio Blanco County, Colorado, to-wit:

Township 4 South, Range 101 West, 6th P.M. Section 5: All Section 7- All Section 6: All Section 8. NW/4

Township 4 South, Range 102 West, 6th P.M. Section 1: All Section 11: All Section 2: SE/4 Section 12: All

5. In order to prevent waste of oil and 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 oil and gas resources, an order should be made establishing 160-acre drilling and spac-ing units for the production of gas and associated hydrocarbons from the Morapos-Castlegate formation, a common source of supply underlying the lands defined herein; that said units should be 160-acres and consist of a quarter section, according to the governmental survey thereof, and the permitted well for each unit should be located no closer than 900 feet from the boundaries of the quarter section upon which it is located, and the existing wells should be considered the permitted wells for the units upon which they are located.

6. All geological and engineering data concerning the Morapos-Castlegate formation indicate that one well will efficiently and economically drain an area of appro-iximately 160-acres, and that the drilling unit of the size and shape hereinabove described is not smaller than the maximum area that can be efficiently drained by one well producing from said Morapos-Castlegate formation.

(over)

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regu-lations shall apply hereafter to a well drilled, comp1eted, or recompleted in the Morapo Castlegate formation underlying that portion of the Douglas Creek-South Field, herein described, in addition to other applicable rules and regulations and orders of the Com-mission, if any, heretofore adopted anti 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 hydro-carbons from the Morapos-Castlegate formation underlying the following described lands in the Douglas Creek-South Field, Rio Blanco County, Colorado, to-wit:

Township 4 South, Range 101 West, 6th P.M. Section 5: All Section 7: All Section 6: All Section 8: NW/4 Township 4 South, Range 102 West, 6th P.M. Section 1: All Section 11: All' Section 2: SE/4 Section 12: All

Rule 2. Said drilling units shall consist of one hundred sixty (160) acres, and each such drilling unit shall be a quarter section according to the governmental survey thereof, with the permitted well located no closer than 900 feet to the boundaries of the quarter section upon which it is located, and the existing wells shall be considered the permitted wells for the units upon which they are located.

IT IS FURTHER ORDERED, that the provisions contained in the above order 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 order, rules and regulations.

ENTERED this 16th day of September 1981, as of August 17, 1981.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

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(#311-5)