IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE GREELEY FIELD, PARKMAN FORMATION, WELD COUNTY, COLORADO Cause No. 464 Order No. 464-1

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on November 21,. 1988 at 8:30 a.m., in Room 101, State Education Building, 201 East Colfax, Denver, Colorado, after publication of Notice of Hearing as required by law, on the application of Bristol Production, Inc. for an order to be issued establishing 40-acre drilling and spacing units with one well per unit and the option to drill a second well on each unit for the production of oil and associated h ydrocarbons from the Parkman formation, or in the alternative permit the location of wells drilled for production from the Parkman formation to be not less than 300 feet from any lease line nor less than 600 feet from any wells producing from the same horizon.

FINDINGS

1. Bristol Production, Inc., as applicant herein, is an interested party in the subject matter of the above-referenced matter.

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

3. 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.

4. Evidence presented to the Deputy Director as Hearing officer indicates that the Parkman formation constitutes a common source of supply of oil and associated hydrocarbons underlying the following described lands in Weld County, Colorado, to-wit:

Township 6 North., Range 64 West, 6th P.M. Section 7: All Section 29: All Section 18: All Section 30: All Section 19: All Section 31: All Section 20: All Section 32: All

Township 6 North, Range 65 West,. 6th P.M. Section 12: All Section 22: All Section 13: All Section 23: All Section 14: All Section 24: All Section 15: All Section 25: All Section 21: All

5. That in order to prevent the waste of oil and gas, as defined by law; to protect the correlative rights of all concerned; to prevent the drilling of unnecessary wells, and to insure proper and efficient development and promote conservation of the oil and gas resources of the State, an order should be made establishing field rules for Parkman formation production in Greeley Field which would allow a well drilled to the Parkman formation to be located no less than 300 feet from any lease line and be located no closer than 600 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply.

6. That Application To Drill should be accompanied by sufficient geologic and reservoir evidence to show that no significant drainage across lease lines will occur, and that this evidence should include a structural exhibit map which will be used in conjunction with Exhibit D, a part of this Cause file, to demonstrate this fact.

7. That future wells drilled to formations below the Parkman formation are assumed to have encountered a productive interval and completion procedures should include protecting the Parkman interval with cement as required by Rule 317.f of the Rules and Regulations of the Commission. Upon application and showing that the Parkman formation is not productive this requirement could be waived on an individual basis.

8. That where Codell/Niobrara wells exist on a common 40-acre tract or are located within 1200 feet of a proposed Parkman well, or where a Parkman well exists and a Codell/Niobrara well or a well to any formation below the Parkman might be drilled within a common 40-acre tract or be located within 1200 feet of the existing well, the operators should collect, interpret, and maintain engineering data during completions, workovers, stimulations, and ongoing operations to demonstrate that no interference is being caused to existing or new wells within the field.

9. That the Commission established Order A-1-3 to protect the environment and prevent pollution, among other reasons, and that the following Rules from order A-1-3 should be made part of any order entered by the Commission for production from the Parkman Area of Greeley Field and should be modified as appropriate; Rule 1. Surface Casing; Rule 3. Production Casing; Rule 4. Completion Requirements and Monitoring; Rule 5. Requirements Before Fracing; Rule 6. Workover; Rule 7. Blowout Preventers; Rule 8. Timing of Operations.

10. That no protests or objections have been filed against the application and that other operators in the area are supportive of the application.

11. That at the time of administrative hearing, the following exhibits were to be relabeled prior to resubmission and made a part of the Cause file: Exhibit B, Geological and Engineering Report 11/17/88; Exhibit C, Cross Section A-A 12/17/88; Exhibit D, Structure Map 12/17/88; Exhibit E, Geologic Report 12/17/88.

12. That the Hearing Officer recommends approval of the application as amended at the administrative hearing, and that the area listed herein above should remain with the name Greeley Field, Parkman Formation.

O R D E R

NOW THEREFORE IT IS ORDERED, that the following rules and regulations shall apply hereafter to wells drilled, completed, or recompleted in the Parkman Sandstone formation underlying certain lands in the Greeley Field, Weld County, Colorado, herein described, in addition to any other applicable rules and regulations and orders of the Commission if any, heretofore adopted and not in conflict herewith:

Rule 1. The following rules shall be and the same are hereby established for the production of oil and associated hydrocarbons from the Parkman Sandstone formation underlying the following described lands in Weld County, Colorado to-wit:

Township 6 North., Range 64 West, 6th P.M. Section 7: All Section 29: All Section 18: All Section 30: All Section 19: All Section 31: All Section 20: All Section 32: All

Township 6 North, Range 65 West, 6th P.M. Section 12: All Section 22: All Section 13: All Section 23: All Section 14: All Section 24: All Section 15: All Section 25: All Section 21: All

Rule 2. A well shall be located no closer than 300 feet from the boundaries of a lease and no closer than 600 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply.

Rule 3. Application to Drill or Recomplete shall be accompanied by sufficient geologic and reservoir evidence to show that no significant drainage across lease lines shall occur, and that this evidence shall include a structural exhibit map which will be used in conjunction with Exhibit D, a part of this Cause file, to demonstrate this fact.

Rule 4. Wells drilled to formations below the Parkman formation shall be assumed to have encountered a productive interval and completion procedures shall include protecting the Parkman Sandstone interval with cement as required by Rule 317.f of the Rules and Regulations of the Commission. Upon application and a showing that the Parkman Sandstone, formation is not productive, this requirement may be waived on an individual well basis.

Rule 5. Where Codell/Niobrara wells exist on a common 40-acre tract or are located within 1200 feet of a proposed Parkman Sandstone formation well, or where a Parkman Sandstone formation well exists and a Codell/Niobrara well or a well to any formation below the Parkman formation shall be drilled within a common 40-acre tract or be located within 1200 feet of the existing well, the operators shall collect, interpret, and maintain engineering data during c ompletions, workovers, stimulations and ongoing operations to demonstrate that no interference is being caused to existing or new wells within the field. Any evidence or indications to the contrary shall be promptly reported to the Commission.

IT IS FURTHER ORDERED, that the following rules from Commission Order No. A-1-3 shall be a part of this order:

Rule 6. Surface Casing. A minimum of two hundred (200) feet of surface casing shall be run. In those areas where the base of the Fox Hills aquifer, which shall -Include the transition zone, is five hundred (500) feet deep or, less, surface casing shall be set at least fifty feet below the base of the aquifer. In those areas where the base of the Fox Hills aquifer is at a depth in excess of five hundred (500) feet, the operator may select between the op tions provided in Rule 317 (h), (k) and (i),. the general rules and regulations of the Commission; however, such operation shall result in cement from fifty (50) feet below the base of the Fox Hills aquifer across all aquifers above it. Cement shall be circulated to the surface or one hundred (100) feet into the surface casing if stage cementing is selected and allowed to set a minimum of eight (8) hours prior to commencing drilling operations (Note: Log s of wells in the vicinity or Hydrologic Atlas No. 650 of the U.S. Geologic Survey may be reviewed for estimating the depth to the base of the Fox Hills aquifer).

Rule 7. Production Casing. After thorough circulation of a hole, cement of good quality shall be pumped behind the production casing as provided for in Rule 317 (h), to a height in the annulus sufficient to result in a good bond extending at least 300 feet above the top of the Parkman formation.

Rule 8. Completion Requirements and Monitoring. Upon completion of any well for production and on wells presently completed, the operator shall equip the bradenhead access to the annulus between the production and surface casing with a needle valve and fittings to allow for a pressure reading. Following release of any pressure developed during completion operations and least 24 hours thereafter, pressure readings shall be taken for a period of 96 hours and the date, time and pressure shall be recorded. In the event that the pressure exceeds a value equal to the setting depth of the surface casing x 0.7 or 250 psi, whichever is less, the operator shall contact the Director within 8 hours for a well located in a residential area and within 24 hours in other areas. A residential area shall be an area that has a platted density of two (2) acres per dwelling or within five hundred (500) feet of a residence or a building of public assembly. In the case of the platted area, the Director shall determine that development is to take place within 3 years. A remedial plan shall be prepared by the operator to determine the source of the gas subject to the approval of the Director. If the gas is found to be coming from a shallow sand or aquifer,, then such gas shall be utilized by the operator to prevent waste, and to remove the gas from that shallow zone which will help eliminate potentially hazardous situations.

If no pressure in excess of the setting depth of the surface casing x 0.7 or in excess of 250 psi is noticed following the initial bleeding of this annulus after completion and for a period of 96 hours, the operator shall observe the pressure every month, and maintain such records in their office for a period of three years. These records shall be submitted to the Commission upon request.

Rule 9. Requirements Before Fracing. Before any operator fracs a well for production in an area as defined in above, he must submit a Form 4, Sundry Notice, indicating his intention to frac, setting forth the interval to be fraced, the method of fracing, a detailed account of the work performed, and the name of the contractor doing the work. The Commission shall be advised of the height of cement properly bonded above the zone to be fraced. Approval of procedures must be obtained prior to undertaking such work, but the Commission shall endeavor to respond within 24 hours of receipt of such notice of intention to frac. Cement placed behind the production casing in accord with Rule 2 shall be allowed to set a minimum of forty-eight (48) hours prior to the undertaking of any frac operation. Verbal approval may be given, but must be confirmed in writing.

Rule 10. Workover. Prior to undertaking any workover which involves the pulling of tubing from a well located in a residential area as defined in 3 above, the operator or contractor shall contact the Commission by submitting a Sundry Notice, Form 4, and shall indicate thereon the name of the operator and contractor, the location of the well with a detailed description of the work to be done and the date on which the work is to commence. Verbal approval may be given, but must be confirmed in writing.

Rule 11. Blow-out Preventors. Blow-out preventors and kill line or lines shall be installed prior to commencement of any operation to remove tubing from any well completed in the Parkman Sandstone, Niobrara, Codell or "J" Sand formations unless waived by the Director upon a showing that no danger from blow-out exists. All blow-out equipment must be in good working order and operated once each 24 hours. Sufficient fluid equipment shall be on location t o kill the well immediately in the event of an operational accident

Rule 12. Timing of operations. The cooperation of the various operators is solicited in timing work events to allow maximum opportunity for observance in timing work events to allow maximum opportunity for observe of work procedures by Commission personnel. The operator and/or contractor shall notify the Commission of fracing, cementing and workovers in the defined area. The Commission and the County Officer of Emergency Management shall be notified im mediately of any leaking or other incidents that may affect the safety of the citizens and property in the area.

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 19th day of December, 1988, as of November 21, 1988.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dennis R. Bicknell, Secretary