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 IGNACIO-BLANCO FIELD, LA PLATA COUNTY, COLORADO	) ) ) )	CAUSE NO.   112 ORDER NO.   112-166

REPORT OF THE COMMISSION

            This cause came on for hearing before the Commission on July 15, 2002 at 10:00 a.m. in Suite 801, 1120 Lincoln Street, Denver, Colorado, for an order to allow the drilling of the Eagles #1-2 Well at an exception location 1,465 feet from the south line and 690 feet from the west line in the SW¼ of Section 1, Township 34 North, Range 9 West, N.M.P.M. for the production of gas from the Fruitland coal seams. 

FINDINGS

            The Commission finds as follows:

1.   44 Canyon, LLC, as applicant herein, is an interested party in the subject matter of the above-referenced hearing.

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

            3.  The Commission has jurisdiction over the subject matter embraced in said notice and the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4. On June 15, 1988, the Commission issued Order No. 112-60 which established 320-acre drilling and spacing units for the production of gas from the Fruitland coal seams, underlying certain lands in the Ignacio-Blanco Field, with the units to consist of a governmental half section and the permitted well when north of the north line of Township 32 North to be located in the NW¼ and the SE¼ of each section and when south of the north line of Township 32 North to be located in the NE¼ and SW¼ of each section, no closer than 990 feet from the boundaries of the quarter section, nor closer than 130 feet to any interior quarter section line. Order Nos. 112-61 and 112-85 were subsequently adopted amending Order No. 112-60 to establish additional field rules for the Fruitland coal seams.  On July 28, 2000, the Commission entered Order No. 112-156 allowing an optional additional well to be drilled for production of gas from the Fruitland Coal seams for certain 320-acre drilling and spacing units in the Ignacio-Blanco Field.  Section 1, Township 34 North, Range 9 West, N.M.P.M. was included in these orders.

5.  On May 24, 2002, 44 Canyon, LLC, by its attorney, filed with the Commission a verified Application for an order to allow the drilling of the Eagles #1-2 Well at an exception location 1,465 feet from the south line and 690 from the west line in the SW¼ of Section 1, Township 34 North, Range 9 West, N.M.P.M. for the 320-acre drilling and spacing unit consisting of the S½ of the section.  In order to accommodate surface owner preferences, locate the well within a 13-acre surface tract and to insure adequate access, an exception location 300 feet west of the established window is required.  

6.  Testimony and exhibits presented at the administrative hearing showed the location of the proposed well is adjacent to Mariposa Road, a private road located on an abandoned railroad right-of-way and just outside of a platted subdivision. 

7.  Testimony and exhibits presented at the administrative hearing showed a sample of the letter sent to the mineral owners in the E½ of Section 2, Township 34 North, Range 9 West, N.M.P.M., the adjacent spacing unit that would be encroached up, requesting their consent to the exception location.  Testimony also indicated that of the twenty-one (21) letters sent out to the mineral owners, eight (8) were returned with approvals.  No protests to the application have been received.

8.  At the time of the administrative hearing, 44 Canyon, LLC agreed to be bound by oral order of the Commission.

9.  Based on the facts stated in the verified application, having received no protests and having been heard by the Hearing Officer who recommended approval, the Commission should enter an order to allow the drilling of the Eagles #1-2 Well at an exception location of 1,465 feet from the south line and 690 feet from the west line in the SW¼ of Section 1, Township 34 North, Range 9 West, N.M.P.M. for the production of gas from the Fruitland coal seams. 

ORDER

            NOW, THEREFORE, IT IS ORDERED, that the drilling of the Eagles #1-2 Well at an exception location 1,465 feet from the south line and 690 from the west line in the SW¼ of Section 1, Township 34 North, Range 9 West, N.M.P.M. for the production of gas from the Fruitland coal seams is hereby approved.

            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  day of July 2002, as of July 15, 2002.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                           OF THE STATE OF COLORADO

                                                                        By

                                                                                   Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

July 19, 2002