66-3

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 "D" SAND OF THE CLIFF FIELD, LOGAN COUNTY, COLORADO

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CAUSE NO. 66

ORDER NO. 66-3

REPORT OF THE COMMISSION

This Cause originally came on for hearing at 10:00 a.m., August 24, 1955, in Room 704 State Capitol Annex, Denver, Colorado, on the Commission's own motion to consider measures to prevent the waste of oil and gas in the "D" and "J" sands of the Cliff Field in Logan County, Colorado; and to consider whether or not the correlative rights of any of the operators in this field were being violated. Initial testimony and evidence was taken in regard to this matter at this hearing, which revealed that production in the field is from the "D" sand only, and the hearing was continued by the Commission until September 8, 1955, in the hope that an agreement to protect correlative rights and prevent excessive flaring of gas could be reached by the operators, themselves.

At the September 8th hearing, the Commission was informed that no agreement could be reached by the operators, and it was decided that the various operators should again introduce all the evidence and exhibits before the Commission de novo.

The Commission now has before it all of the testimony and evidence relating to the production of oil and gas from the "D" sand of the Cliff Field, and is fully advised in all matters pertaining to the operations of the field to date, and it is now in a position to enter its order in this proceeding providing for measures to be taken by the operators in the development of the field to prevent the waste of oil and gas, and to protect the correlative rights in said field.

The Commission fully intends to re-examine the situation upon its own motion in the near future, with a view to hearing evidence on the disposition being made of the gas produced in the field, and to obtain additional information on reservoir performance and development of the field.

FINDINGS

The Commission finds as follows:

1. That due notice of the time, place and purpose of the hearing in this matter was 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 following described order.

3. That the "D" sand pool of the Dakota Series in the Cliff Field is what is commonly known as a solution-type reservoir with a gas cap, with no apparent evidence of an effective water drive at the present time; that the extent and driving mechanisms of this field have not been fully determined.

4. That this field is a new field, and the Commission realizes that a reasonable amount of time must be given to the operators to find outlets for their gas so as to prevent an excessive and unreasonable amount of flaring of gas; that some of the operators have stated that pipeline facilities which will take all or most of the gas produced in the Cliff Field will be available in the near future.

5. That there has been and now is waste by the escaping, blowing and releasing into the open air of gas from wells producing both oil and gas in an excessive and unreasonable amount; and that there is a disproportionate volume of oil produced from leases located in the Cliff Field.

6. That in order to prevent the blowing and releasing of gas in excessive and unreasonable amounts from wells producing both oil and gas, and to protect the correlative rights of the operators in the field by preventing an unreasonable amount of oil production from any one lease, the Commission, acting on the evidence, exhibits, representations and recommendations made to it at the September 8th hearing, finds that the total daily oil allowable for a lease should be the sum of the maximum amount of oil which can be produced by each well on the lease, not to exceed Two Hundred (200) barrels of oil for any one well. In calculating the lease oil allowable, no well should be granted an allowable greater than the maximum amount of oil it is capable of producing, as determined by the tests required in Rule 2 hereof. The lease oil allowable may be produced from any well or combination of wells located on said lease, as long as no more than a total of Three Hundred Thousand (300,000) cubic feet of gas per day per well is produced by the lease. The gas allowable for the lease should be calculated at the number of wells times Three Hundred Thousand (300,000) cubic feet of gas.

7. That operators and owners of wells producing from the "D" sand formation of the Cliff Field should make a gas-oil-ratio test of each of his producing wells during every quarter, beginning with the months of January, April, July and October; and that such tests should be taken during the first twenty (20) days of the last month of each quarter, the results of which such tests should be reported to the Commission on Form OGCC-4 on or before the twentieth (20th) day of the last month of every quarter; and that such tests should be the basis for calculation the volume of oil allowed to be produced, and should be the basis for determining the gas limits for each month of the following quarter; and that subject well should be produced at a stabilized rate for a period of forty-eight (48) consecutive hours; and that the gas-oil ratio should be computed on the basis of the measurement of oil and gas during the last twenty-four (24) hours of said period; and that a schedule should be submitted to the Commission and to offset operators prior to testing, showing the wells and respective dates of tests; and that the volume of gas measured should be reported in units of cubic feet at a base pressure of 15.025 psia, and a base temperature of 60° Fahrenheit.

8. That datum reservoir pressure of certain key wells in the field should be determined semi-annually during the first fifteen (15) days of January and July; and that the key wells should be selected by the operators with the approval of the Commission; and that the results of each such semi-annual test should be reported to the Commission on or before the twenty-fifth (25th) day of each test month; and that all pressure determinations should be made at a datum of Nine Hundred Fifty (950) feet below sea level; and that all wells in the field should be shut in twenty-four (24) hours prior to testing and should remain shut in until completion of the survey.

9. That operators and owners of wells producing from the "D" sand reservoir should file with the Commission a monthly report of production by wells, as required on Form OGCC-7b, covering the month next preceding the date of filing, on or before the twentieth (20th) day of each month.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the following rules and regulations be, and the same are hereby adopted for the "D" sand formation of the Cliff Field in Logan County, Colorado.

Rule 1. That in order to prevent the blowing and releasing of gas in excessive and unreasonable amounts from wells producing both oil and gas, and at the same time recognizing the early life of the field and the efforts of the operators in the field to find an outlet for their gas, and the reported imminent construction of pipeline facilities to handle the gas; and to protect the correlative rights of the operators in the field by preventing an unreasonable amount of oil production from any one lease, the total daily oil allowable for a lease shall be the sum of the maximum amount of oil which can be produced by each well on the lease not to exceed Two Hundred (200) barrels of oil for any one (1) well. In calculating the lease oil allowable, no well shall be granted an allowable greater than the maximum amount of oil it is capable of producing, as determined by the tests required in Rule 2 hereof. The lease oil allowable may be produced from any well or combination of wells located on said lease as long as no more than a total of Three Hundred Thousand (300,000) cubic feet of gas per day per well is produced by the lease. The gas allowable for the lease shall be calculated at the number of wells times Three Hundred Thousand (300,000) cubic feet of gas.

Rule 2a. That operators and owners of wells producing from the "D" sand formation of the Cliff Field shall make a gas-oil-ratio test of each of his producing wells during every quarter, beginning with the months of January, April, July and October; and that such tests shall be taken during the first twenty (20) days of the last month of each quarter, the results of which such tests shall be reported to the Commission on Form OGCC-4 on or before the twentieth (20th) day of the last month of every quarter; and that such tests shall be the basis for calculating the volume of oil allowed to be produced, and shall be the basis for determining the gas limits for each month of the following quarter; and that subject well shall be produced at a stabilized rate for a period of forty-eight (48) consecutive hours; and that the gas-oil ratio shall be computed on the basis of the measurement of oil and gas during the last twenty-four (24) hours of said period; and that a schedule shall be submitted to the Commission and to offset operators prior to testing, showing the wells and respective dates of tests; and that the volume of gas measured shall be reported in units of cubic feet at a base pressure of 15.025 psia, and a base temperature of 60° Fahrenheit.

Rule 2b. That Rule 2a herein shall be modified for the initial series of such tests to compensate for the effective date of this Order, so that the testing period for determining allowables for the last quarter of the year 1955 shall be the first twenty (20) days of the month of October, and that the results of such tests shall be reported to the Commission by the twentieth (20th) day of October, 1955.

Rule 2c. That any operator may apply for an amended or additional allowable upon submission of an authorized test or retest.

Rule 3. That datum reservoir pressure of certain key wells in the field shall be determined semi-annually during the first fifteen (15) days of January and July; and that the key wells shall be selected by the operators with the approval of the Commission; and that the results of each such semi-annual test shall be reported to the Commission on or before the twenty-fifth (25th) day of each test month; and that all pressure determinations shall be made at a datum of Nine Hundred and Fifty (950) feet below sea level; and that all wells in the field shall be shut in twenty-four (24) hours prior to testing and shall remain shut in until completion of the survey.

Rule 4. That operators and owners of wells producing from the "D" sand reservoir shall file with the Commission a monthly report of production by wells, as required on Form OGCC-7b, covering the month next preceding the date of filing, on or before the twentieth (20th) day of each month.

IT IS FURTHER ORDERED, that this order shall become effective October 1, 1955.

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, rules and regulations.

ORDERED this 27th day of September, 1955.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Annabel Hogsett, Secretary