IN THE MATTER Of THE PROMULGATION AND ESTABLISHMENT Of FIELD RULES TO GOVERN OPERATIONS IN THE SORRENTO FIELD, CHEYENNE COUNTY, COLORADO Cause No. 349 Order No. 349-4

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on August 15, 1983 at 9:00 A.M., in Room 110, State Centennial Building, Denver, Colorado, as the result of Order No. 349-3 which limited the maximum daily production from wells producing oil from the Morrow formation in the spaced area of the Sorrento Field, and further ordered a hearing to be held August 15, 1983 for additional evidence and recommendations which the operators in the field may desire to present to the Commission concerning discontinuance of the wasteful production in the field.

FINDINGS

The Commission finds as follows:

1. 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.

2. In order to prevent further waste from occurring in the reservoir, the Commission, on July 18, 1983, issued Order No. 349-3 which limited the production of oil from the Morrow formation from each well located in the spaced area of the Sorrento Field to a maximum daily production of ten (10) barrels.

3. While there are differing geological interpretations as to whether or not the producing formation consists of a single reservoir or separate reservoirs, the best method to determine whether there is, communication throughout the producing zone is to conduct bottom hole pressure and interference test throughout the field. This information is essential to design a production plan which would eliminate the waste in the field.

4. Evidence presented at the hearing indicates that an interim order which limits production on the basis of a solution gas-oil and ratio would permit more efficient and less wasteful production of oil and gas than the present restriction now in effect. However, even a restriction based on a solution gas-oil ratio is not the most efficient manner of production and will not eliminate waste from occurring in the field.

5. In view of past productive practices in the field and the need to provide a reasonable period for the necessary tests to be completed so that a plan of operation to eliminate waste from occurring may be presented to the Commission, an order restricting production from the Morrow formation based on a solution gas-oil ratio is a reasonable interim order for this field.

6. The provision of Order No. 349-3 should be terminated and the following described lands should not be included In the provisions of this order.

Township 13 South, Range 48 West, 6th P.M. Section 31: All Township 13 South, Range 49 West, 6th P.M. Section 19 thru 21, 28 thru 31, 35 & 36 Township 13 South, Range 50 West, 6th P.M. Sections 24, 25 and 36 Township 14 South, Range 48 West, 6th P.M. Section 6: All Section 7: All Section 18: All Township 14 South, Range 49 West, 6th. P.M Section 1,2,5, thru 8, 11, thru 15 Township 14 South, Range 50 West, 6th. P.M Section 1 and 12 and the remaining lands subject to this order are described as follows:

Township 13 South, Range 49 West, 6th. P.M Section 32, 33 and 34 Township 14 South, Range 49 West, 6th. P.M Section 3, 4, 9 and 10

7. In order to avoid any unforseen problems or effects on the remaining area subject to the provisions of this order and described in Finding 6 herein, well completions in the Morrow formation in the deleted area, described in Finding 6 herein, should be reported to the Commission, which will determine whether or not said wells should be made subject to the provisions of this order.

8. Commencing August 22, 1983, the maximum daily allowable from any well producing from the Morrow formation located in the remaining area described in Finding 6 herein should be determined by dividing the original reservoir solution gas-oil ratio of 255 by the producing gas-oil ratio as determined by the individual well tests required by the Commission, multiplied by the daily oil production as determined by production tests.

9. In order to accommodate low allowables that may result for some wells, a plan of production may be submitted to the Director for approval. However, any over and/or under production should be made up in 30-days. 10. The hearing should be continued until the December 19, 1983 hearing date, at which time operators in the field should complete the required tests and present a plan of production to eliminate waste in the field. At such hearing, the Commission reserves the right to shut-in the field, or take such other action as may be necessary if an acceptable plan is not presented.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order No. 349-3 is hereby terminated and the following rules and regulations shall apply to wells producing from the Morrow formation underlying the following described lands in the Sorrento Field, Cheyenne County, Colorado.

2 " (349-4)

Township 13 South, Range 49 West, 6th. P.M. Sections 32, 33, and 34 Township 14 South, Range 49 West, 6th. P.M. Sections 3,4,9, and 10

Rule 1. Commencing August 22, 1983, the maximum daily allowable from any well producing from the Morrow formation and located in the area described above shall be based on the following formula:

Daily Allowable = 255 X Test BO/D Test GOR

Rule 2. A plan of production may be submitted to the Director for approval to accommodate low allowables. However, any over and/or under production shall be made up in 30-days.

IT IS FURTHER ORDERED, that the hearing shall be continued until the December 19, 1983 hearing date, at which time operators in the field shall complete the required tests and present a plan of production to eliminate waste in the field. At such hearing, the Commission reserves the right to shut-in the field or take such other action as may be necessary if an acceptable plan is not presented.

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 orders.

ENTERED THIS 31st day of August 1983 as of August 15, 1983.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

Corrected January 14, 1987 -- 3 (349-4)