45-1

BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE INVESTIGATION TO TAKE MEASURES TO PREVENT WASTE OF OIL AND GAS IN THE BLANCO-MESAVERDE FIELD, LA PLATA COUNTY, COLORADO

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CAUSE NO. 45

ORDER NO. 45-1

APPEARANCES:

A.S. Grenier, Esq., for the Southern Union Gas Company.

A.J. Jersin, Deputy Director, for the Commission.

REPORT OF THE COMMISSION

This Cause came on for hearing before the Commission at 10:00 A.M., October 11, 1954, in the Colorado Room of the Shirley-Savoy Hotel, Denver, Colorado, after publication of Notice of Hearing as required by law, on the petition of the Southern Union Gas Company for the establishment of drilling and spacing units, and a casing program, in the Blanco Mesaverde Field, La Plata County, Colorado.

FINDINGS

The Commission finds as follows:

1. That due notice of the time, place, and purpose of the Hearing has been given in all respects as required by law.

2. That 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.

3. That the Mesaverde formation of the Blanco Mesaverde Field constitutes a common source of supply of gas underlying the following described lands:

Township 32 North, Range 10 West

Sections	6, 7, 8, 16, 17, 18, 19, 20, 21, 22

Township 32 North, Range 11 West

Sections	1, 2, 10, 11, 12, 13, 14, 15, 16, 20, 21, 22, 23, 24

All [sic] West of the New Mexico Principal Meridian, in La Plata County, Colorado.

4. That an Order should be made establishing a casing program for all wells drilled hereafter in the Blanco Mesaverde Field, all as set forth in Rules 1, 2, 3 and 4 hereof.

5. That all available geological and engineering data concerning the Mesaverde formation in said Blanco Mesaverde Field indicate that one well should efficiently and economically drain an area of approximately Three Hundred Twenty (320) acres, and said units are not smaller than the maximum area that can be efficiently drained by one gas well producing from the said Mesaverde formation.

6. That the casing program for all wells hereafter drilled in-the Blanco Mesaverde Field shall include at least two strings of casing, which shall be set in accordance with the standards set forth in Rule 4 hereof.

ORDER

IT IS THEREFORE ORDERED, that the following rules and regulations shall apply hereafter to a well drilled, completed, or recompleted in the Mesaverde formation of the Blanco Mesaverde Field, in La Plata County, Colorado, as hereinabove defined in the Findings, which, by reference, are made a part hereof, in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith.

Rule 1. The following drilling and spacing units shall be, and the same are hereby established for the production of gas from the Mesaverde formation of the Blanco Mesaverde Field, common source of supply underlying:

Sections Six (6), Seven (7), Eight (8), Sixteen (16), Seventeen (17), Eighteen (18), Nineteen (19), Twenty (20), Twenty-one (21), Twenty-two (22), Township Thirty-two (32) North, Range Ten (10) West of the New Mexico Principal Meridian; and

Sections One (1), Two (2), Ten (10), Eleven (11), Twelve (12), Thirteen (13), Fourteen (14), Fifteen (15), Sixteen (16), Twenty (20), Twenty-one (21), Twenty-two (22), Twenty-three (23) and Twenty-four (24), Township Thirty-two (32) North, Range Eleven (11) West of the New Mexico-Principal Meridian;

All [sic] in La Plata County, Colorado.

Rule 2. No well shall be drilled or completed in the Blanco-Mesaverde Field, and no notice of intention to drill shall be approved by the Commission, unless:

(a) Such well be located on a designated drilling unit of not less than 320 acres of land, more or less, according to legal subdivisions of the United States Land Surveys, in which unit all of the interests are consolidated by a pooling agreement or otherwise and on which no other well is completed or approved for completion in the same pool;

(b) Such drilling unit be in the shape of a rectangle except for normal variations in legal subdivisions of the United States Land Surveys, the N½, S½, E½ or W½ of each full section (i.e., a section containing 640 acres, more or less), and the entirety of each of the fractional sections lying immediately adjacent to the Colorado-New Mexico state boundary, to constitute the drilling unit;

(c) Such well to be drilled no closer than 990 feet to the boundaries of the quarter section upon which it is located; and

(d) Such well, if drilled within a full section, be located in either the NE¼ or SW¼, or such well, if drilled within a fractional section, be located in the E½ thereof.

Rule 3. The Commission may, by order entered after due notice and hearing, and to prevent waste or confiscation of property, or to prevent inclusion of unproductive land in a drilling unit, grant exceptions to the provisions of Rule 2 above, and the Commission may, without additional notice and hearing, grant exceptions to Rule 2(c) above, when, because of topographical reasons, it is necessary to locate such well closer than 990 feet to the boundaries of the quarter section in which the well is drilled.

Rule 4. The casing program of all wells hereafter drilled in the Blanco-Mesaverde Field shall include at least two strings of casing which shall be set in accordance with the following standards:

(a) The surface pipe shall be set to a minimum depth of 200 feet, and where shallow potable water-bearing beds are present, the surface pipe shall be set to such shallow potable water-bearing beds and a sufficient amount of cement shall be used to circulate the cement behind the pipe to the bottom of the cellar. This surface casing shall stand cemented for at least 24 hours before drilling plug or initiating tests. The surface casing shall be tested after drilling plug by bailing the hole dry. The hole shall remain dry for one hour to constitute satisfactory proof of a water shut-off. In lieu of the foregoing test the cement job may be tested by building up a pressure of 500 p.s.i., closing the valves and allowing to stand thirty minutes. If the pressure does not drop more than 100 pounds during that period, the test shall be considered satisfactory. This test shall be made both before and after drilling the plug. In this regard all fresh waters and waters of present or probable future value for domestic, commercial or stock purposes shall be confined to their respective strata and shall be adequately protected by methods approved by the Commission. Special precaution shall be taken in drilling and abandoning wells to guard against any loss of artesian potable water from the strata in which it occurs and the contamination of artesian potable water by objectionable water, oil or gas. The Commission shall be notified at least 24 hours prior to the conducting of any test.

(b) The production string shall be set using a minimum of 100 sacks of cement and shall stand cemented not less than 36 hours before testing of the casing. This test shall be made by building up a pressure of 1000 p.s.i., closing the valves and allowing to stand thirty minutes. If the pressure does not drop more than 100 pounds during that period, the test shall be considered satisfactory.

(c) All cementing shall be done by the pump and plug method. Bailing tests may be used on all casing and cement tests, and drill stem tests may be used on cement tests in lieu of pressure tests. In making bailing tests, the well shall be bailed dry and remain approximately dry for thirty minutes. If any string of casing fails while being tested by pressure or by bailing tests herein required, it shall be re-cemented and re-tested or an additional string of casing should be run and cemented. If an additional string is used, the same test shall be made as outlined for the original string.

(d) Any completed well which produces any oil shall be tubed. This tubing shall be set as near the bottom of the hole as practicable, but in no case shall tubing perforations be more than 250 feet from the bottom. The bottom of the tubing shall be restricted to an opening of less than one inch or bullplugged in order to prevent loss of pressure bombs or other measuring devices.

(e) Wellhead equipment for all wells shall be installed and maintained in first-class condition, so that static bottom-hole pressures and surface pressures may be obtained at any time by a duly authorized agent of the Commission. Valves shall be installed so that pressures may be readily obtained on the casing and also on the tubing, wherever tubing is installed. All connections subject to well pressure and all wellhead fittings shall be of first-class material, rated at 2000 p.s.i. working pressure and maintained in gas-tight condition. Bradenheads rated at 2000 p.s.i. shall be installed on all production strings and Bradenhead connections maintained in gas-tight condition.

There shall be at least one valve on each Bradenhead. Operators shall be responsible for maintaining all equipment in first-class condition and shall repair or replace equipment where gas leakage occurs.

Rule 5. IT IS FURTHER PROVIDED, that in the event a 320-acre unit according to the spacing pattern herein established, contains patented lands and Indian lands, and if the Department of the Interior fails to approve such unit, then the patented lands therein shall not be affected by the terms and requirements of this Order, other than Rule 4 above.

IT IS FURTHER ORDERED, that the rules and regulations contained herein shall become effective forthwith, and henceforth the commencement of the drilling of any well or wells in the Mesaverde formation of the Blanco-Mesaverde Field, as defined herein, for the purpose of producing gas therefrom, at a location other than authorized by this Order, is hereby prohibited.

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 rules and regulations.

ORDERED this 10th day of November, 1954 by the Oil and Gas Conservation Commission of the State of Colorado.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Annabel Hogsett, Secretary