BEFORE THE STATE OIL AND GAS BOARD OF MISSISSIPPI i RE: PETITION OF ALLEN OPERATING COMPANY nfccord TO AMEND THE SPECIAL FIELD RULES FOR THE THANKSGIVING FIELD, AMITE APR 0 1 1999 COUNTY, MISSISSIPPI STATE OIL AND GAS BOARD WALTER BOONE, SUPERVISOR DOCKET NO. 42-99-701 ORDER NO. 5V. <?*? ORDER THIS CAUSE came to be heard on the Petition of Allen Operating Company ("Petitioner") requesting the Board to amend the Special Field Rules for the Thanksgiving Field, Amite County, W Mississippi; and WHEREAS, the Boards finds that due, proper, and legal notice of the meeting of the Board for the purpose of considering and taking action with respect to such matter was given in the manner required by the rules and regulations of the Board; that due, legal, and sufficient proofs of publication and service are on file with the Board; and that the Board has full jurisdiction of the subject matter to hear and determine same; and WHEREAS, pursuant to said Notice, a public hearing was held by said Board in the Hearing Room, Suite E, 500 Greymont Avenue, Jackson, Mississippi, commencing on March 17,1999, at 9:30 o'clock a.m. at which hearing all persons present who desired to be heard on said matter were ^ heard and all testimony and the evidence were duly considered by those present at said meeting; and WHEREAS, the Board has folly considered said matter and the evidence and recommendations made in said hearing and finds as follows: 1. Petitioner is the current operator of a Frio Gas well located within the geographic boundary of the Thanksgiving Field. Special Field Rules for the Thanksgiving Field, Amite County, Mississippi were adopted, as last amended, by this Board by the entry of Order dated July 20,1994. Said Order adopted Special Field Rules for four separate and distinct Frio Gas Pools. 2. ^ The Frio Gas Formation under the area described as the Thanksgiving Field is contained in small individually contained structures of less than 160 surface acres. These reservoirs are not
geologically connected one to another. The log interpretations, production characteristics, and pressure data conclusively establish that these separate and distinct reservoirs exist within the Frio Formation and should be spaced on 160 acre, not 320 acre, units. 3. It is necessary to amend the Special Field Rules to change the Frio Gas Pool spacing. Attached hereto and made a part hereof are the Amended Special Field Rules for the Thanksgiving Field, Amite County, Mississippi. One Frio Unit, the Bailey No. 2, currently produces from the Frio Gas Pool in the Field. That Well and Unit is on 320 acre spacing and should be grandfathered on its current unit. 4. w The amendment of the existing Special Field Rules as set forth herein for the Frio Gas Pools in the Thanksgiving Field, Amite County, Mississippi will promote conservation, protect the co equal and correlative rights of all owners in interest, avoid the drilling of unnecessary wells and permit gas to be produced from said gas pools which would not otherwise be recoverable. IT IS, THEREFORE, ORDERED AND ADJUDGED by the State Oil and Gas Board of Mississippi that the Special Field Rules for the Thanksgiving Field should be amended as follows: AMENDED SPECIAL FIELD RULES THANKSGIVING FIELD. AMITE COUNTY. MISSISSIPPI A. The Thanksgiving Field, as used herein, is that area consisting of Sections 10,11,12, 13, 14, 15, 16, 17,18, 19, 20, 27, 28, 29, 30 and 31, the NEVi of Section 32, and beginning at the section corner common to Sections 17,19, 26,27, Township 2 North, Range 2 East, Amite County, Mississippi; run thence South 00 20110" West along the section line common to said Sections 26 and 27 for 710.00 feet; thence run West for 3895.81 feet; run North for 710.00 feet, more or less, to the North line of Section 26; thence run Easterly along the North line of said Section 26 3895.8 feet, more or less, to the Point of Beginning, Township 2 North, Range 2 East; and Section 20 and the WVi of Sections 19,21 and 36, Township 2 North, Range 3 East; all in Amite County, Mississippi, underlain by the Lower Tuscaloosa "A" Sand Oil Pool, the Lower Tuscaloosa "B" Sand Oil Pool, the Frio"Aff Sand Gas Pool, the Frio "B" Sand Oil Pool, the Frio "C" Sand Oil Pool and the Frio "D" Sand Oil Pool and including all productive extensions to such area.
B. The Lower Tuscaloosa"A" Sand Oil Pool, or "Pool", shall be construed to mean those strata productive of oil and other hydrocarbons in the Lower Tuscaloosa Formation at the electric log interval of 12,003 feet -12,080 feet as found in the OXY USA INC. (Cities Service Oil & Gas Corporation) - Jackson "A" No. 1 Well, located in the SE!/4 of Section 17, Township 2 North, Range 2 East, Amite County, Mississippi, and those sands productive of oil and other hydrocarbons correlative to and in communication therewith. C. The Lower Tuscaloosa "B" Sand Oil Pool shall be construed to mean those strata productive of oil and other hydrocarbons in the Lower Tuscaloosa Formation at the electric log interval of 12,047 feet to 12,082 feet as found in the Arkla Exploration Company - Centreville Realty 1-10 Well, located in the SWA of Section 10, Township 2 North, Range 2 East, Amite County, Mississippi, 870 feet from the West line and 200 feet from the South line of the SWW of said section and all those sands productive of oil and other hydrocarbons correlative to and in communication therewith other than through the aquifer. D. The Frio "A" Sand Gas Pool in the Thanksgiving Field shall be construed to mean that strata of the Frio Formation productive of gas at an interval of 3039 feet to 3054 feet as indicated on the electric log of the OXY USA, INC. - Caston 1-12 No. 1 Well, and all sands correlative to and in communication therewith of that strata productive of gas, said Well being located 2,600 feet from the North line and 1,300 feet from the East line of Section 12, Township 2 North, Range 2 East, Amite County, Mississippi. E. The Frio "Bn Sand Gas Pool shall be construed to mean that strata of the Frio Formation productive of gas at the interval of 2990 feet through 3003 feet as indicated on the electric log of the Allen Operating Company - Paul Boudreaux No. 1 Well and all sands correlative to and in communication with this strata productive of gas, said Well being located 153 feet from the North line and 499 feet from the East line of Section 10, Township 2 North, Range 2 East, Amite County, Mississippi. F. The Frio "C" Sand Gas Pool in the Thanksgiving Field shall be construed to mean that -3-
strata of the Frio Formation productive of gas at an interval of 3297 feet through 3327 feet as indicated on the Allen Operating Company - Bailey No. 1 Well, and all sands correlative to and in communication with this strata productive of gas, said Well being located 1786 feet from the West line and 1317 feet from the North line of Section 12, Township 2 North, Range 2 East, Amite County, Mississippi. G. The Frio "D" Sand Gas Pool in the Thanksgiving Field shall be construed to mean that strata of the Frio Formation productive of gas at an interval of 3521 feet through 3528 feet as indicated on the Allen Operating Comapny - Sawyer No. 1 Well, and all sands correlative to and in communication with this strata productive of gas, said Well being located 1293 feet from the North line and 2230 feet from the West line of Section 15, Township 2 North, Range 2 East, Amite County, Mississippi. H. The Fieldwide Unit as used herein is that portion of the Lower Tuscaloosa "A" Sand within the Unit Area which consists of the following described land: Beginning at the Southwest corner of Section 17, Township 2 North, Range 2 East, Amite County, MS; run thence North 02 27' 39" West along the West line of said Section 17 for 901.97 feet to a point at the Southeast corner of the Drilling Unit now assigned to the OXY USA INC. - FICB A No. 1 Well; thence South 89 12* 57" West along the South line of said unit for 1992.17 feet; thence North 02 27' 39" West along the West line of said unit for 299.49 feet; thence South 89 12' 57" West along the South lines of the Drilling Units now assigned to the OXY USA INC. - Bell A No. 1 and the OXY USA INC. - McNeil A No. 1 Wells for 4357.86 feet; thence North 02 27' 39" West along the West line of said McNeil A No. 1 Unit for 2184.24 feet; thence South 89 12' 57" West along the South line of the Drilling Unit now assigned to the OXY USA INC. - Anderson C No. 1 Well for 1889.00 feet; thence North 00 42' 28" West along the West line of said unit for 2136.24 feet; thence North 00 17' 40" West along the West line of said unit for 1226.51 feet; thence North 89 12' 57" East along the North line of said unit for 1066.30 feet; -4-
thence North 00 17' 40" West and parallel to the West line of the Southeast quarter of Section 10, Township 2 North, Range 2 East, Amite County, MS, for 1363.56 feet; thence South 87 3 8' 29" East along the North line of the Southeast quarter of said Section 10 and its extension for 1619.16 feet; thence North 89 16' 48" East along the extension of the North line of the South half of Section 12, Township 2 North, Range 2 East, Amite County, MS, for 1014.93 feet; thence South 01 10' 14" East for 152.49 feet; thence North 89 12' 57" East along the North lines of the Drilling Units now assigned to the OXY USA INC. - Lundberg A No. 1 Well, the OXY USA INC. - Bell B No. 1 Well, the OXY USA INC. - FICB B No. 1 Well, for 4435.12 feet; thence South 00 15' 53" East along the East line of said Section 12 for 924.74 feet; thence North 89 03' 04" East along the North line of Section 18, Township 2 North, Range 2 East, Amite County, MS, for 952.30 feet; thence South 01 07' 46" West along the West line of Section 14, Township 2 North, Range 2 East, Amite County, MS, for 422.05 feet; thence North 89 12' 57" East and parallel to the South line of said Section 14 for 1293.60 feet; thence South 01 07' 46" West and parallel to the West line of said Section 14 for 400.00 feet; thence North 89 12' 57" East and parallel to the South line of said Section 14 for 500.00 feet; thence South 01 07' 46" West and parallel to the West line of said Section 14 for 500.00 feet; thence North 89 12' 57" East along the South line of said Section 14 and its extension for 2704.38 feet; thence South 00 33' 15" West along the East line of the Drilling Unit now assigned to the OXY USA INC. - Lewis B No. 1 Well and its extension for 720.79 feet; thence South 89 22' 32" East along the North line of the Drilling Unit now assigned to the OXY USA INC. - Board of Education B No. 1 for 2535.22 feet; Thence South 00 33' 15" West along the East line of said unit for 1460.00 feet; thence South 89 22' 32" East and parallel to the South line of Section 16, Township 2 North, Range 2 East, Amite County, MS, for 1406.28 feet; thence South 00 33' 15" West and parallel to the West line of said Section 16 for 1490.21 feet; thence South 89 22' 32" East and parallel to the South line of said Section 16 for 1300.00 feet; thence South 00 20' 57" West along the East line of said Section 16, for 950.00 feet; thence South 89 22' 32" East along the North line of the Drilling Unit now -5-
assigned to the OXY USA INC. - Board of Education C No. 1 Well, for 531.03 feet; thence South 00 37' 28" West along the East line of said unit for 2643.68 feet; thence North 89 22' 32" West along the South line of said unit for 713.34 feet; thence South 29 00' 00" West and parallel to the section line common to Sections 28 and 29, Township 2 North, Range 2 East, Amite County, MS, for 2420.94 feet; thence North 89 22' 32" West and parallel to the North line of said Section 28 for 2009.63 feet; thence North 63 00' 00" West along the section line common to said Sections 28 and 29 and its extension for 1175.57 feet; thence North 01 28' 43" West along the West line of said Section 28 for 488.63 feet; thence South 89 40' 53" West along the South line of the Southeast quarter of the Northeast quarter of Section 27, Township 2 North, Range 2 East, Amite County, MS, for 1307.46 feet; thence North 01 00' 40" West along the West line of the Southeast quarter of the Northeast quarter of said Section 27 for 752.92 feet; thence South 89 09' 44" West and parallel to the North line of said Section 27 for 2198.87 feet; thence North 01 28' 43" West and parallel to the East line of said Section 27 for 1241.44 feet; thence South 89 09' 44" West and parallel to the North line of said Section 27 for 952.36 feet; thence North for 750.00 feet; thence South 89 09' 44" West along the North line of said Section 27 for 706.56 feet to the point of beginning, being situated in Sections 10, 11,12,13,14,16,17,18,19,20,27,28 and 29, Township 2 North, Range 2 East, and Sections 19,20, and 21, Township 2 North, Range 3 East, Thanksgiving Field, Amite County, MS and containing 2990.06 acres, more or less. Said Fieldwide Unit being established by the Board in Order No. 509-89, Docket No. 354-89-701. RULE 1 - SPACING OF OTL WELLS IN INDIVIDUAL DRILLING UNITS: (a) Every oil well completed in that part of the Lower Tuscaloosa "A" Sand Oil Pool which is not included in the Fieldwide Unit and every well completed in the Lower Tuscaloosa "B" Sand Oil Pool shall be located on a drilling unit consisting of 160 acres, or 4 contiguous governmental quarter-quarter sections containing not less than 144 nor more than 176 acres upon -6-
which no other well drilling to or producing from said Pool is located. (b) All drilling units must be completely encompassed by the perimeter of a rectangle 2,640 feet x 3,500 feet; provided, however, no unit shall be permitted which will create island acreage. (c) Each well shall be located at least 1,000 feet from every drilling or producible well from the same pool and not less than 500 feet from every exterior boundary of the drilling unit. RULE 2 - SPACING OF WELLS IN THE FIELDWIDE UNIT (a) The location of injection and production wells in the Fieldwide Unit shall be selected by the operator and shall be governed by the standards of geology and petroleum engineering designed to promote the greatest ultimate recovery of hydrocarbons contained in the Pool. However, no well may be drilled, injected into, or produced from said Pool nearer than 500 feet from any exterior boundary of the Fieldwide Unit, except upon permit issued by the Board, after notice and hearing. RULE 3 - PRESSURE MAINTENANCE AND SECONDARY RECOVERY PROGRAM AUTHORIZED (a) OXY USA INC., as operator of the Fieldwide Unit, is hereby authorized to conduct secondary recovery and/or pressure maintenance operations in the Fieldwide Unit by the injection of gas, carbon dioxide, water, or other substances into the Pool. Operator may use for injection i purposes existing wells located in said Fieldwide Unit which may be converted to injection wells or wells may be drilled on said Fieldwide Unit for such purposes provided, however, that before any additional well or wells may be used for injection purposes, said operator must first file with the Mississippi State Oil and Gas Board all evidence and information required under Statewide Rule 63 and obtain the Board's approval thereof, after notice and hearing. (b) The conversion of producing wells to injection wells will not effect the Fieldwide Unit allowable as determined by Rule 4, below. RULE 4 ALLOCATION OF PRODUCTION W (a) The allowable for the Lower Tuscaloosa "A" Sand Oil Pool shall be the sum of the -7-
number of wells in the field, including secondary recovery injection wells in the Fieldwide Unit, times the then effective allowable based on depth under Statewide Rule 35. Said allowable may be altered to a MER, if different, after notice and hearing. (b) Allocation and apportionment of allowable production from the Lower Tuscaloosa "A" Sand Oil Pool in Thanksgiving Field, among and between any individual drilling units and the Fieldwide Unit shall be made on the basis of and in proportion to the surface acreage content of each of the units. RULE 5 - SURFACE STORAGE, MEASUREMENT AND TRANSFER SYSTEMS (a) The operator of the Fieldwide Unit may maintain such separators, stock tanks, metering devices, connections, and storage facilities as it deems necessary to accurately measure the total production from the Fieldwide Unit. Separate measurement or storage for the wells and leases within the Fieldwide Unit shall not be necessary. (b) Automatic custody transfer systems which automatically test, sample, measure, and transfer the production from the operator to the purchaser are hereby authorized for Thanksgiving Field. Such systems will be equipped with a sampling device which will take a representative sample of the total production passing through the system in order that the specific gravity and basic sediment and water content can be determined. Each custody transfer system will be equipped with a volume displacement type metering device which registers the volume of oil passed through it in barrels or multiples thereof. RULE 6 SPACING OF GAS WELLS Every Frio Well drilled as a gas well: (a) shall be located on a drilling unit consisting of 160 contiguous surface acres with a tolerance of 5%, more or less, or a governmental quarter section containing not less than 144 acres or more than 176 acres or four (4) contiguous governmental quarter-quarter sections, the total acreage of which is not less than 144 or more than 176 acres, upon which no other drilling or producible well in the same gas pool is located; W (b) any gas drilling unit formed under Rule 6(a) must be completely encompassed by the perimeter of a rectangle 2,640 feet by 3,500 feet. Provided, however, no unit shall be permitted -8-
which will create island acreage; (c) each well shall be located at least 1,500 feet from every other drilling or producible well in the same gas pool located in conformity with this rule; and (d) the well shall be located at least 750 feet from every exterior boundary of the drilling unit. (e) all units which are currently established on 320 acre units as of the date of the filing of this Petition shall remain on such 320 acre units. RULE 7 - APPLICABILITY OF STATEWIDE RULES All rules and regulations contained in the Statewide Order No. 201-51 and amendments thereto not specifically covered in the foregoing rules are hereby adopted and shall apply to Thanksgiving Field. ***END OF SPECIAL FIELD RULES*** IT IS FURTHER ORDERED AND ADJUDGED that this Order shall be in force and effect from and after March 17, 1999. IT IS FURTHER ORDERED AND ADJUDGED that Petitioner shall acquire any other permits, if any, required by any other permitting authority. ORDERED AND ADJUDGED this /7 - day of March, 1999. STATE QffD AND GAS BOARD OF MISSISSIPPI Prepared By: William F. Blair Blair & Bondurant, P.A. 3900 Lakeland Drive, Suite 400 (Zip -- 39208) Post Office Drawer 5399 Jackson, Mississippi 39296 Telephone: (601) 936-9080 Telecopier: (601) 936-6159 -9-