IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE WATTENBERG FIELD, WELD COUNTY, COLORADO Cause No. 407, 232 Order No. 232-46, 407-60

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on March 19, 1991, in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing, as required by law on the verified application of Basin Operating Company to amend Cause No. 232 to allow a well to be completed at an exception location in the NE/4 NW/4 of Section 4, Township 3 North, Range 66 West, 6th P.M., for the production of gas and associated hydrocarbons from the "J" Sand formation, and further, to allow downhole commingling of production from the "J" Sand formation with production from the Codell-Niobrara formations. The 320-acre drilling and spacing unit for production from the "J" Sand formation is to be the W/2 of said Section 4 and the 80-acre drilling and spacing unit for production from the Codell-Niobrara formation is to be the N/2 NW/4 of said Section 4.

FINDINGS

The Commission finds as follows:

1. Basin Operating Company, as applicant herein, is an interested party in the subject matter of the above-entitled 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. In Order No. 407-1, the Commission established 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Codell formation. Wells shall be located in the center of the 40-acre tract or quarter-quarter section with a tolerance of 200 feet in any direction. In Order No. 407-10, the Commission amended Order No. 407-1 to include production from the Niobrara formation in certain lands and to allow the downhole commingling of production from the Codell and Niobrara formations. All sections in Township 3 North, Range 66 West, 6th P.M. are included in Cause No. 407.

5. In Cause No. 232, the Commission established 320-acre drilling and spacing units for the production of gas from the "J" Sand in

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the Wattenberg Field with one well allowed for each to be located in the NE/4 and SW/4 and no closer than 990 feet to the boundaries of the quarter section. On August 21, 1979, the Commission issued Order No. 232-20 which allowed a second well to be drilled on each 320-acre unit. All sections in Township 3 North, Range 66 West, 6th P.M. are included in Cause No. 232.

6. No wells have been drilled in the NW/4 of said Section 4 to establish production from the "J" Sand formation.

7. Completion procedures as outlined on Exhibit D of the application should be approved to allow separate testing of Codell-Niobrara zone and of "J" Sand zone to ascertain reservoir characteristics which will determine if waste would occur and to calculate the proposed formula for proceeds. Report of production testing should be submitted to the Commission to the attention of David Smink at two week intervals.

8. The allocation method should be voluntary and the Commission should be advised that all interests have agreed to the formula presented; if consent is not obtained, an additional hearing should be scheduled to determine an equitable allocation formula, or should the Commission adopt a field-wide allocation formula at a subsequent hearing scheduled for April 1991, the applicant agrees to accept such a formula.

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9. At the time of the hearing the applicant advised the Commission that five interested parties were not given direct Notice of Hearing, however, no protests were received.

10. Based on the facts stated in the verified application and having been heard by the Hearing Officer who recommended approval of the application, and having received no protests, the Commission should approve the request and amend Order Nos. 232-1 and 232-20 to allow a well to be completed at an exception location for "J" Sand production, and subject to the approval of the Commission, to allow downhole commingling of "J" Sand with the Codell-Niobrara formations.

11. At the time of administrative hearing the parties agreed to be bound by the verbal order of the Commission in this matter.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that, an exception to the permitted well location, as provided for in Cause No. 232 for the Wattenberg Field is hereby granted for a well to be completed in the NE/4 NW/4 of Section 4, Township 3 North, Range 66 West, 6th P.M., for the production of gas and associated hydrocarbons from the "J" Sand formation, for the 320-acre drilling and spacing unit consisting of the W/2, and further, subject to the approval of the Commission, to allow downhole commingling of production from the "J" Sand formation with production from the Codell-Niobrara formations, with the 80-acre drilling and spacing unit consisting of the N/2 NW/4, both in said Section 4. The method for production allocation shall be determined as set forth in Findings 7 and 8.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective March 19, 1991, contingent upon written consents from the five interested parties who did not receive Notices of Hearing being submitted to the Commission prior to the next regular Commission hearing; should a protest be received, the matter will be docketed for the next regular Commission hearing.

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.

IT IS FURTHER ORDERED, that with the verbal consent of the interested parties at the time of hearing, this order shall become effective forthwith.

ENTERED this day of 1991, as of March 19, 1991.

OIL AND GAS CONSERVATION COMMISSION

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OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 380 1580 Logan Street Denver, Colorado 80203 March 29, 1991 1095I

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