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.   112-117

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission on June 20, 1994 at 8:30 a.m., in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Meridian Oil, Inc. for an order allowing a well to be drilled at an exception location for the production of coalbed methane gas from the Fruitland coal seams.

FINDINGS

                        The Commission finds as follows:

                        1.  Meridian Oil, Inc., 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.

                        4.  On June 15, 1988, the Commission issued Order No. 112‑60 which established 320‑acre drilling and spacing units for the production of methane gas from the Fruitland coal seams underlying certain lands in the Ignacio‑Blanco Field, with the units to consist of the E1/2 and W1/2 or the N1/2 and S1/2 of a governmental section with the permitted well to be located in the NE1/4 and SW1/4 of each unit, including Section 14, Township 32 North, Range 7 West, N.M.P.M., South of the Ute Line.  On August 15, 1988, the Commission issued Order No. 112-61 which among other things, established additional reporting requirements to the rules established in Order No. 112-60.

                        5.  Testimony presented at the administrative hearing showed that drilling a well at the permitted location in the SW1/4 of Section 14 would be located on the flank of the Ignacio Anticline and may have only a thirty-eight (38%) probability of success in encountering production from the Fruitland coal seams.

                        6.  Based on the facts stated in the verified application, having received no protests, and having been heard by the Hearing Officers who recommend approval, the Commission should enter an order allowing a well to be drilled at an exception location 1055 feet FSL and 1485 feet FEL in the SW1/4 SE1/4 of Section 14, Township 32 North, Range 7 West, N.M.P.M., South of the Ute Line, for the production of coalbed methane gas from the Fruitland coal seams, for the 320-acre drilling and spacing unit consisting of the S1/2 of said Section 14.

O R D E R

                        NOW, THEREFORE IT IS ORDERED, that, a well is hereby approved to be drilled at an exception location 1055 feet FSL and 1485 feet FEL in the SW1/4 SE1/4 of Section 14, Township 32 North, Range 7 West, N.M.P.M., South of the Ute Line, for the production of coalbed methane gas from the Fruitland coal seams, for the 320-acre drilling and spacing unit consisting of the S1/2 of said Section 14.

                        IT IS FURTHER ORDERED, that should a commercial well be completed at the location set forth above, the Commission shall, upon application of any interested person, take such action as will offset any advantage which the person securing the exception may have over other procedures by reason of the drilling of the well as an exception location.

                        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 , 1994, as of June 20, 1994.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                               OF THE STATE OF COLORADO

                                                                        By

                                                                                    Patricia C. Beaver, Secretary

Dated at Suite 380

1580 Logan Street

Denver, Colorado  80203

July 8, 1994