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 ORCHARD FIELD EAST UNIT, MORGAN COUNTY, COLORADO

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CAUSE NO. 90

 

ORDER NO. 90-7

 

REPORT OF THE COMMISSION

 

This cause came on for hearing on September 21, 1965, at 10 a.m., in Room 330, State Office Building, Denver, Colorado, after publication of Notice of Hearing as required by law, and mailing of copies of the application pursuant to regulations of the Commission, on the application of Diversified Industrial Corporation requesting the Oil and Gas Conservation Commission of the State of Colorado to (a) enter an order approving a Unit Agreement and Unit Operating Agreement attached to said application as Exhibit "B" and Exhibit "C", respectively; (b) order that such agreements constitute the Commission's plan for involuntary unit operations of such lands; and (c) approve a waterflood project on said lands for secondary recovery purposes.

 

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, the voluntary participants to that certain Unit Agreement presented by the applicant, and owners of tracts as indicated in the Agreement submitted as Exhibit "B" to the application, who were not voluntary participants and who were served, as provided for in the Rules of Practice and Procedure of the Commission.

 

3.      That the "D" Sand reservoir encountered in the Government No. 1 well located in the SE¼ NE¼ of Section 3, Township 4 North, Range 60 West, 6th P.M., at a depth of 6156 to 6178 feet, has been defined and determined by drilling as underlying the following described lands in Morgan County, Colorado, to-wit:

 

Township 4 North, Range 60 West, 6th P.M.

 

 

Section 2:

SW¼NW¼, W½SW¼, NE¼SW¼

Section 3:

SE¼NE¼, SE¼

 

and that said reservoir constitutes a common source of supply productive of oil and gas and contains 360 acres, more or less; and that such lands should hereafter be referred to as the East Unit Area of the Orchard Field.

 

4.      That Applicant, Diversified Industrial Corporation, made diligent but unsuccessful attempts to create a voluntary unit operation.

 

5.      That the Unit Agreement and Unit Operating Agreement as presented by Applicant as Exhibits "B" and "C", respectively, are necessary to increase the ultimate recovery of oil and gas from said reservoir, and that the terms provided therein are just and reasonable to all interests contained within the East Unit Area.

 

6.      That the proposed waterflood operation for secondary recovery is necessary to increase the ultimate recovery of oil and gas, and that such operation, pursuant to said Unit Agreement and Unit Operating Agreement, will result in an estimated additional recovery of oil and gas with a value in excess of the estimated additional cost incident to conducting such operation.

 

7.      That testimony presented at the hearing stated that said Unit Agreement and Unit Operating Agreement have been approved in writing by those persons who, under the agreement, will be required to pay at least eighty percent (80%) of the costs of the unit operation, and also by the owners of at least eighty percent (80%) of the production or proceeds attributable to royalty, overriding royalty, and production payments.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED,

 

1.      The Unit Agreement and Unit Operating Agreement covering lands in the East Unit Area of the Orchard Field, which agreements are attached to and a part of the original order of this Commission on file in the office of the Commission, are approved as being in the public interest for conservation.

 

2.      The "D" Sand reservoir, common source of supply, underlies the following described lands in Morgan County, Colorado, to-wit:

 

Township 4 North, Range 60 West, 6th P.M.

 

 

Section 2:

SW¼NW¼, W½SW¼, NE¼SW¼

Section 3:

SE¼NE¼, SE¼

 

and such area shall hereafter be known as the East Unit Area of the Orchard Field.

 

3.      The provisions contained in said Unit Agreement and Unit Operating Agreement as they pertain to:

 

a.

The description of the pool to be so operated;

 

 

b.

The nature of said operation;

 

 

c.

The allocation to the separately owned tracts in the East Unit Area of all the oil and gas that is produced from said East Unit Area and is saved;

 

 

d.

The provision for the credits and charges to be made in the adjustment among the owners in the East Unit Area for their respective investments in wells, tanks, pumps, machinery, materials, and equipment contributed to the Unit operations;

 

 

e.

The provision providing how the costs of Unit operations, including capital investments, shall be determined and charged to the separately owned tracts, and how said costs shall be paid, including the provision providing when, how, and by whom the Unit production allocated to an owner who does not pay the share of the cost of Unit operations charged to such owner, or the interest of such owners, may be sold and the proceeds applied to the payment of such costs;

 

 

f.

The provision for financing persons who elect to be carried or otherwise financed, and the reasonable interest charge for such service payable out of such person's share of the production;

 

 

g.

The provision for the supervision and conduct of the Unit operations, in respect to which each person shall have a vote with a value corresponding to the percentage of the costs of Unit operations chargeable against the interest of such person; and

 

 

h.

The time when the Unit operations shall commence, and the manner in which, and the circumstances under which the Unit operations shall terminate,

 

are just and reasonable, and are incorporated herein as the Commission’s plan of involuntary unit operations for such lands.

 

4.      The waterflood project for the "D" Sand reservoir of the East Unit Area presented by the applicant is approved as being necessary to increase the ultimate recovery from said reservoir.

 

IT IS FURTHER ORDERED, that the rules and regulations contained herein shall become effective forthwith.

 

ORDERED this 21st day of September 1965.

 

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By  William R. Smith, Secretary