BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE WATTENBERG GAS SPACED AREA AND THE CODELL-NIOBRARA SPACED AREA, ADAMS COUNTY, COLORADO |
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CAUSE NO. 232 AND 407
TYPE: Pooling
ORDER NO. 232-99 and 407-135
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REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 8:30 a.m. on May 17, 1993 in the 2nd Floor Auditorium, Colorado Department of Transportation, 4201 East Arkansas Avenue, Denver, Colorado, after giving Notice of Hearing, as required by law on the verified supplemental application of Basin Operating Company, to amend Commission Order Nos. 232-91 and 407-127 to include additional interested parties to the involuntary pooling of all interests in the 320-acre drilling and spacing unit consisting of the S1/2 of Section 3, Township 1 South, Range 67 West, 6th P.M., Adams County, Colorado for production from the "J" Sand Formation underlying said 320-acre unit, and that the allocation method approved by the Commission in the above orders should be the approved method for the commingled production obtained from the Seltzer No. 23-3 Well located in the NE1/4SW1/4 of said Section 3 and the Weigandt No. 43-3 Well located in the NE1/4 SW1/4 of said Section 3.
FINDINGS
The Commission finds as follows:
1. Basin Operating 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 said Notice, and of the parties interested therein, and jurisdicition to promulgate the hereinafter prescribed order.
4. On November 16, 1992, the Commission entered Order Nos. 232-91 and 407-127 which, among other things, segregated the 80-acre drilling and spacing units consisting of the N1/2 SE1/4 and the N1/2 SW1/4 of said Section 3 into 40-acre drilling and spacing units consisting of the NW1/4 SE1/4 and NE1/4 SE1/4 and the NW1/4 SW1/4 and NE1/4 SW1/4, all in Section 3, Township 1 South, Range 67 West, 6th P.M. for production from the Codell and Niobrara Formations.
5. Order Nos. 232-91 and 407-127 further granted an exception to the spacing pattern established by Order No. 407-1 for a well to be recompleted 1495 feel FSL and 1530 feet FWL in the NE1/4 SW1/4 and for a well to be recompleted 1640 feet FSL and 990 feet FEL in the NE1/4 SE1/4 all in Section 3, Township 1 South, Range 67 West, 6th P.M. for production from the Codell and Niobrara Formations. Multiple zone completions and downhole commingling of oil, gas and associated hydrocarbons from the "J" Sand, Codell and Niobrara Formations was approved.
6. Order Nos. 232-91 and 407-127 further approved an allocation method for the 320-acre drilling and spacing unit consisting of the S1/2 of Section 3, Township 1 South, Range 67 West, 6th P.M. for production from the "J" Sand Formation and for the 40-acre drilling and spacing units consisting of the NE1/4 SW1/4 and the NE1/4 SE1/4 of Section 3 for the commingled production from the Codell and Niobrara Formations.
7. Order Nos. 232-91 and 407-127 further pooled all interests in the drilling and spacing unit consisting of the S1/2 of Section 3, Township 1 South, Range 67 West, 6th P.M., Adams County, Colorado for the development of gas and associated hydrocarbons from the "J" Sand Formation underlying said unit, pursuant to the provisions of 34-60-116, C.R.S., as amended.
8. On November 16, 1992, the Commission entered Order No. 250-36 which established certain requirements for development of the Sussex and Shannon Formations in the SW1/4 of said Section 3.
9. Additional efforts have been made to obtain the voluntary pooling of all interests in the S1/2 of Section 3, Township 1 South, Range 67 West, 6th P.M. for production from the "J" Sand Formation following the discovery of additional leasehold interests and consent has not been given.
10. An order of the Commission pooling all interests in said drilling units is necessary in order to afford each owner of interest in each said drilling unit the opportunity to recover and receive his just and equitable share of the oil and/or gas from the common source of supply underlying said drilling unit.
11. Production obtained from said drilling unit should be allocated to each tract therein on the basis of the proportion that the number of acres in each tract bears to the total number of acres within said drilling unit.
12. Based on the facts stated in the supplemental application, receiving no protests, having been heard by the Hearing Officer, and recommended for approval, the Commission should enter an order pooling all interests in the 320-acre drilling and spacing unit herein described in order to insure proper and efficient development of the oil and gas from the "J" Sand Formation underlying said unit, approve the allocation method for the commingled production obtained from the "J" Sand Formation with that of the Codell and Niobrara Formations for the drilling and spacing units described herein above, and reaffirm all other orders and requirements contained within Order Nos. 232-91 and 407-127 and Order No. 250-36.
O R D E R
NOW, THEREFORE, IT IS ORDERED that,
1. Pursuant to the provisions of 34-60-116, C.R.S., as amended, of the Oil and Gas Conservation Act of the State of Colorado, all interests in the drilling and spacing unit consisting of the S1/2 of Section 3, Township 1 South, Range 67 West, 6th P.M., Adams County, Colorado, are hereby pooled for the development of gas and associated hydrocarbons from the "J" Sand Formation underlying said unit.
2. The production obtained from said drilling unit shall be allocated to each owner in the unit on the basis of the proportion that the number of acres in such tract bears to the total number of mineral acres within said drilling unit; each owner of an interest in said drilling unit shall be entitled to receive his share of the production of the wells located on said drilling unit applicable to his interest in said drilling unit.
3. The owner of the unleased tract should be afforded the opportunity to elect whether to participate in the drilling and operation of said wells, and pay a proportionate share of the actual costs thereof, which proportionate share shall be determined by dividing the number of acres in each unleased tract to the total number of acres within said drilling unit.
4. Within thirty (30) days from the date of receipt of said AFE by the owner of said tract, such owner shall indicate whether he consents to the cost of the drilling of the well and agrees to participate in such costs. Such election shall be made in writing either by executing the AFE or similar document. In the event a written election to participate is not made by said owner within such time period, said owner shall be deemed to have elected not to participate and shall therefor be deemed to be non-consenting as to the well and be subject to the penalties as provided for by C.R.S. 34-60-116 (7), as amended.
5. Any non-consenting unleased mineral owner within the spacing unit shall be treated as the owner of the landowner's royalty to the extent of 12.5% of his or her record title interest may be, until such time as the consenting owner recovers, only out of the non-consenting owner's proportionate 87.5% share of production, the costs specified in C.R.S. 34-60-116 (7) (b), as amended. After recovery of such costs, the non-consenting mineral owner shall then own his proportionate 8/8ths share of the well, surface facilities and production, and then be liable for his proportionate share of further costs incurred in connection with the well as if he had originally agreed to the drilling.
6. The operator of any well drilled on the above described unit shall furnish all non-consenting owners with a monthly statement of all costs incurred, together with the quantity of oil and gas produced, and the amount of proceeds realized from the sale of production during the preceding month.
7. The allocation method for the 320-acre drilling and spacing unit consisting of the S1/2 of Section 3, Township 1 South, Range 67 West, 6th P.M. for production from the "J" Sand Formation and for the 40-acre drilling and spacing units consisting of the NE1/4 SW1/4 and the NE1/4 SE1/4 of said Section 3 for production from the Codell and Niobrara Formations is hereby approved.
IT IS FURTHER ORDERED that all other provisions of Order Nos. 232-91 and 407-127 entered by the Commission on November 16, 1992 are hereby reaffirmed and that all provisions of Order No. 250-36 entered on November 16, 1992 remain as ordered.
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 ____________ day of __________, 1993 as of May 17, 1993.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By ________________________________________
Patricia C. Beaver, Secretary
Dated at Suite 380
1580 Logan Street
Denver, Colorado 80203
May 26, 1993