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 RULISON FIELD, GARFIELD COUNTY, COLORADO	) ) ) )	CAUSE NO.   139 ORDER NO.   139-89

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 9:00 a.m. on March 31, 2008, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to vacate the 40-acre drilling and spacing units established in Order No. 139-73 and establish an approximate 440-acre drilling and spacing unit consisting of the S½, S½ NE¼, SE¼ NW¼ of Section 8, Township 7 South, Range 94 West, 6^th P.M., allowing one well per 10 acres for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

FINDINGS

                        The Commission finds as follows:

1.  Williams Production RMT Company, (“Williams”), 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 of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.

4.  On April 20, 1990, the Commission issued Order No. 139-16, which among other things, established 640-acre drilling and spacing units for certain lands including Section 8, Township 7 South, Range 94 West, 6^th P.M. for the production of gas and associated hydrocarbons from the Mesaverde Formation.

5.  On July 10, 2006, the Commission issued Order No. 139-64, which among other things, allowed one well per 10 acres for certain lands including Section 8, Township 7 South, Range 94 West, 6^th P.M. for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group.

6.  On May 10, 2007, the Commission issued Order No. 139-73, which among other things, established 40-acre drilling and spacing units for Section 8, Township 7 South, Range 94 West, 6^th P.M., and allowed one well per 10 acres for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations, with the permitted well to be located no closer than 100 feet from the unit boundary, and no closer than 200 feet from the unit boundaries where 10-acre density drilling has not been allowed, without exception being granted by the Director of the Oil and Gas Conservation Commission.  Said wells shall be drilled from the surface either vertically or directionally from no more than one pad located on a give quarter quarter section unless exception is granted by the Director of the Oil and Gas Conservation Commission.

7.  On February 8, 2008, Williams, by its attorney, filed with the Commission a verified application for an order to vacate the 40-acre drilling and spacing units established in Order No. 139-73 and establish an approximate 440-acre drilling and spacing unit consisting of the S½, S½ NE¼, SE¼ NW¼ of Section 8, Township 7 South, Range 94 West, 6^th P.M., continuing to allow one well per 10 acres for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

8.  On March 18, 2008, Williams, by its attorney, filed with the Commission a written request to approve the application based on the merits of the verified application and the supporting exhibits.  Sworn written testimony and exhibits were submitted in support of the application.

9.  Testimony and exhibits submitted in support of the application showed that due to the uncertainty as to what size spacing units currently are applicable to the application lands and the desire to have maximum flexibility in locating downhole 10-acre density wells, an approximate 440-acre drilling and spacing unit should be established for the application lands.   

10.  The above-referenced testimony and exhibits show that the proposed spacing and well density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

11.  Williams Production RMT Company agreed to be bound by oral order of the Commission. 

12.  Based on the facts stated in the verified application, having received no protests, and based on the Hearing Officer review of the application under Rule 511.b., the Commission should enter an order to vacate the 40-acre drilling and spacing units established in Order No. 139-73 and establish an approximate 440-acre drilling and spacing unit consisting of the S½, S½ NE¼, SE¼ NW¼ of Section 8, Township 7 South, Range 94 West, 6^th P.M., allowing one well per 10 acres for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

ORDER

NOW, THEREFORE IT IS ORDERED, that the 40-acre drilling and spacing units established in Order No. 139-73 are hereby vacated and an approximate 440-acre drilling and spacing unit is hereby established consisting of the S½, S½ NE¼, SE¼ NW¼ of Section 8, Township 7 South, Range 94 West, 6^th P.M., allowing one well per 10 acres for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

  IT IS FURTHER ORDERED, that all future Williams Fork Formation and Iles Formation wells to be drilled on the application lands shall be located downhole anywhere upon such lands but no closer than 100 feet from a lease line or the boundaries of the unit without exception being granted by the Director of the Oil and Gas Conservation Commission.  In cases where the unit abuts or corners lands in respect of which the Commission has not at the time of drilling permit application granted the right to drill 10-acre density wells, the well shall be located downhole no closer than 200 feet from the boundary or boundaries of the application lands so abutting or cornering such lands without exception being granted by the Director of the Oil and Gas Conservation Commission. 

IT IS FURTHER ORDERED, that all wells drilled to the Iles Formation shall be drilled only in connection with the drilling of Williams Fork Formation wells. 

IT IS FURTHER ORDERED, that all Williams Fork Formation and Iles Formation wells drilled upon the application lands shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter quarter section (or lots or parcels approximately equivalent thereto) unless exception is granted by the Director of the Colorado Oil and Gas Conservation Commission.

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.

                        IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this order to be final agency action for purposes of judicial review within thirty (30) days after the date this order is mailed by the Commission.

                        IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this order is not required prior to the filing for judicial review.

                        ENTERED this__________day of April, 2008, as of March 31, 2008.

                                                                        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

April 8, 2008