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 CODELL-NIOBRARA SPACED AREA, ADAMS COUNTY, COLORADO

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CAUSE NOS. 497 and 407

ORDER NOS. 497-1 and 407-70

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on August 20, 1991 at 8:30 a.m., in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Habersham Energy Company, for an order to allow five wells to produce from zones in the Codell and/or Sussex formations, and to allow the downhole commingling of production from the Sussex and the Codell formations, and further that the production rates and/or possible interference will be monitored and reported to the Commission.

FINDINGS

The Commission finds as follows:

1. Habersham Energy 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 jurisdiction to promulgate the hereinafter prescribed order.

4. On December 19, 1983, the Commission authorized Order No. 407-1 to be issued, which 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 Nos. 407-10 and 407-13, 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. The S1/2 of Section 29, Township 1 South, Range 67 West, 6th P.M., Adams County, Colorado lies within the area spaced by this order.

5. There are currently five existing wells in the SW1/4 of Section 29, producing from the Sussex, Codell and/or commingled Sussex-Codell formations, and no evidence of reservoir damage has occurred.

6. A total of five wells drilled to and completed in the Sussex, Codell and/or commingled Sussex-Codell formations should be allowed to produce in both the SE1/4 and the SW1/4 of said Section 29.

7. Habersham Energy Company should perform twenty-four (24) hour tests at fifteen (15) day intervals on all wells in the S1/2 of Section 29, prior to any recompletion for a period of one month. After recompletion, twenty-four (24) hour tests at fifteen (15) day intervals on all wells in the S1/2 of Section 29, should be performed for a period of six months.

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

ORDER

NOW, THEREFORE, IT IS ORDERED, that the application of Habersham Energy Company, for an order to allow five wells to produce from zones in the Codell and/or Sussex formations, and to allow the downhole commingling of production from the Sussex and the Codell formations, shall be allowed in the S1/2 of Section 29, Township 1 South, Range 67 West, 6th P.M, [sic] and further the production rates and/or possible interference shall be monitored, as described in Finding 7, and reported to the Commission.

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 23rd day of August, 1991, as of August 20, 1991.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Patricia C. Beaver, Secretary

Dated at Suite 380

1580 Logan Street

Denver, Colorado 80203

August 23, 1991