BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE APPLICATION OF )

BURLINGTON RESOURCES OIL )

& GAS COMPANY LP ) CAUSE NO. 112

IGNACIO-BLANCO FIELD, )

LA PLATA COUNTY, COLORADO ) DOCKET NO. 0210-AW-04

VERIFIED APPLICATION

COMES NOW, the Applicant, Burlington Resources Oil & Gas Company LP, by and through its attorneys, Poulson, Odell & Peterson, LLC, and makes application to the Oil and Gas Conservation Commission of the State of Colorado for an order to permit, at the option of the operator, two additional wells to be drilled in certain drilling and spacing units to the Mesaverde Formation in La Plata County, Colorado and to change the permitted location for wells to be drilled in certain drilling and spacing units to the Dakota-Morrison Formation. In support thereof, Burlington Resources Oil & Gas Company LP states as follows:

APPLICATION LANDS

Applicant is the owner of certain oil and gas leases and the operator of wells producing from the Mesaverde Formation and a well producing from the Dakota-Morrison Formation in the Ignacio-Blanco Field in the following described lands:

Township 32 North, Range 11 West, N.M.P.M.

Section 9: All

Section 10: All

Section 11: All

Section 12: All

Section 13: All

Section 14: All

Section 15: All

Section 16: All

Section 20: E/2

Section 21: All

Section 22: All

Section 23: All

Section 24: All

These lands are referred to as the Application Lands.

Sections 9, 10, 11, 12, 13, 14, 15, and 16 of the Application Lands are full sections. Sections 20, 21, 22, 23, and 24 of the Application Lands are fractional sections immediately north of the Colorado-New Mexico state line.

APPLICATION AS TO ADDITIONAL WELLS IN THE MESAVERDE FORMATION

By Cause No. 112, Order No. 112-1 dated October 15, 1957, Cause No. 112, Order No. 112-6 dated November 9, 1959, Cause No. 112, Order No. 112-21 issued February 19, 1963, Cause No. 112, Order No. 112-46 issued July 16, 1979, and by Addendum to Order in Cause No. 112, Order No. 112-6 dated December 31, 1990 as of December 17, 1990, the Oil and Gas Conservation Commission established drilling and spacing units for production from the Mesaverde Formation in the Ignacio-Blanco Field, including the Application Lands. As to the Application Lands which contain full sections, those orders establish drilling and spacing units of 320-acres for the production of gas from the Mesaverde Formation consisting of the N/2 and S/2 or the E/2 And W/2 of the section, with two permitted wells in each drilling and spacing unit. As to the Application Lands which contain fractional sections, these orders establish the following drilling and spacing units of approximately 360 acres, with two permitted wells in each such drilling and spacing unit:

Township 32 North, Range 11 West, N.M.P.M.

Section 20: E/2

Section 21: W/2W/2

Township 32 North, Range 11 West, N.M.P.M.

Section 21: E/2W/2, E/2

Township 32 North, Range 11 West, N.M.P.M.

Section 22: W/2, W/2E/2

Township 32 North, Range 11 West, N.M.P.M.

Section 22: E/2E/2

Section 23: W/2

Township 32 North, Range 11 West, N.M.P.M.

Section 23: E/2

Section 24: W/2W/2

Township 32 North, Range 11 West, N.M.P.M.

Section 24: E/2W/2, E/2

As to the drilling and spacing units in the Application Lands consisting of full sections, the permitted wells are to be located in the separate quarter sections which comprise the drilling and spacing unit, and no closer than 990 feet to the boundary of the quarter section upon which the well is located. As to the designated drilling and spacing units in the fractional sections of the Application Lands, the permitted wells are to be located no closer than 990 feet to the boundary of the unit and no closer than 990 feet from another well producing from the same formation. The Director is authorized, without additional notice and hearing, to grant exceptions to a well location because of topography and surface hazards.

Subsequent drilling and production operations in the Mesaverde Formation in the Ignacio-Blanco Field have provided geological and engineering evidence to the effect that in the Application Lands consisting of full sections two wells will not efficiently and economically drain an area of 320 acres, and in the Application Lands consisting of fractional sections two wells will not efficiently and economically drain the designated drilling and spacing units. Instead, Applicant asserts that up to four wells may be required in each such drilling and spacing unit to drain the Mesaverde Formation efficiently and economically. Applicant requests that two additional wells be permitted in each 320-acre drilling and spacing unit in the Application Lands consisting of full sections and in each designated drilling and spacing unit in the Application Lands consisting of fractional sections, with the result that up to four wells can be drilled to the Mesaverde Formation in each drilling and spacing unit. Applicant alleges that each such drilling and spacing unit is not smaller than the maximum area that can be efficiently and economically drained by four wells in the Mesaverde Formation, and that the correlative rights of all parties will be protected. Applicant further alleges that the additional wells may be drilled in a manner consistent with the protection of public health, safety and welfare, and that the additional wells are in the best interests of the Southern Ute Indian Tribe.

III

Because of the location tolerance permitted by the orders referred to above applying to the Mesaverde Formation in the Ignacio-Blanco Field and the location of wells previously drilled, in the event the Commission grants this application to allow up to two additional wells to be drilled on each 320-acre drilling and spacing unit in the full sections of Application Lands and the designated drilling and spacing units in the fractional sections of Application Lands, it is necessary to grant an additional location tolerance as to permitted locations. Applicant requests that the permitted location for any well drilled subsequent to the entry of the order in a 320-acre drilling and spacing unit in the Application Lands consisting of a full section should be located no closer than 660 feet to any outer boundary of said 320-acre drilling and spacing units, and no closer than 660 feet to another well producing from the same formation. The permitted location for any well drilled subsequent to the entry of the order in a designated drilling and spacing unit in the Application Lands consisting of fractional sections should be located no closer than 660 feet to any outer boundary of said designated drilling and spacing unit, and no closer than 660 feet to another well producing from the same formation.

The Application Lands contain numerous archeological sites. Applicant may be required to modify a well location to avoid interference with an archeological site. Therefore, Applicant requests the commission grant to the Director the authority to grant an exception to the well location setbacks specified in Section III above up to and including 100 feet, but not beyond, to avoid archaeological sites without notice and hearing and without the necessity to obtain consent from the lease owner or the mineral interest owners of the lands toward whom the well location is proposed to be moved.

The orders in Cause No. 112 pertaining to the Mesaverde Formation in the Ignacio-Blanco Field do not define the Mesaverde Formation by reference to footages in a specified well. To provide a more precise definition of the Mesaverde Formation, Applicant requests that as to the Application Lands the Mesaverde Formation be defined as the interval between the stratigraphic equivalent of the point 150 feet above the top of the Huerfanito Bentonite and the stratigraphic equivalent of the point 400 feet below the top of the Point Lookout Formation found in the Dual Induction Log for the BR #2B Ute Well located in the SE/4 of Section 14, Township 32 North, Range 11 West, N.M.P.M. (API 050670794200).

Attached as Exhibit A to this Application is the proposed plan of Applicant to protect the environment, public health, safety and welfare and a description of the current surface occupancy/use. The proposed plan includes the rules and regulations of the commission affecting the environment, public health, safety and welfare; states that the Applicant will conduct its operations in accordance with the Environmental Impact Statement for Oil and Gas Development on the Southern Ute Indian Reservation; and states that Applicant will conduct its operations in accordance with the terms and conditions imposed in a permit to drill approved by the Bureau of Land Management with respect to operations conducted upon the Application Lands.

VII

To prevent waste, to protect correlative rights, to ensure the proper and efficient development of the Mesaverde Formation in the Application Lands, and to assure the greatest ultimate recovery of gas and associated hydrocarbon substances from the Mesaverde Formation in the Application Lands, Applicant requests (1) that after notice and hearing as provided by law, the Commission issue its order providing that, at the option of the operator, four wells may be drilled or completed on each 320-acre drilling and spacing unit in the full sections of the Application Lands and each designated drilling and spacing unit in the fractional sections of the Application Lands; (2) the permitted location for any well drilled to the Mesaverde Formation subsequent to the entry of such order in a 320-acre drilling and spacing unit in the Application Lands consisting of full sections should be located no closer than 660 feet to any outer boundary of said 320-acre drilling and spacing unit and no closer than 660 feet to another well producing from the same formation; (3) the permitted location for any well drilled to the Mesaverde Formation subsequent to the entry of such order in a designated drilling spacing unit in the Application Lands consisting of fractional sections should be located no closer than 660 feet to any outer boundary of said designated drilling and spacing unit, and no closer than 660 feet to another well producing from the same formation; (4) that the Mesaverde Formation in the Application Lands be defined as the interval between the stratigraphic equivalent of a point 150 feet above the top of the Huerfanito Bentonite and the stratigraphic equivalent of a point 400 feet below the top of the Point Lookout Formation as found in the Dual Induction Log for the BR #2B Ute Well located in the SE/4 of Section 14, Township 32 North, Range 11 West, N.M.P.M.; and (5) that the Director be authorized, without additional notice and hearing or consent, to grant an exception to the well location setbacks up to and including 100 feet, but not beyond, to avoid archaeological sites.

APPLICATION AS TO CHANGES IN WELL LOCATIONS FOR WELL DRILLED TO THE DAKOTA-MORRISON FORMATION

VIII

By Cause No. 112, Order No. 112-6 dated November 9, 1959, Cause No. 112, Order No. 112-46 issued July 16, 1979, and by Addendum to Order in Cause No. 112, Order No. 112-6 dated December 31, 1990 as of December 17, 1990, the Oil and Gas Conservation Commission established drilling and spacing units for production from the Dakota-Morrison Formation in the Ignacio-Blanco Field, including the Application Lands. As to the Application Lands consisting of full sections, those orders establish drilling and spacing units of 640-acres for the production of gas from the Dakota-Morrison Formation, with four permitted wells in each drilling and spacing unit. As to the Application Lands consisting of fractional sections, these orders establish drilling and spacing units consisting of each fractional section, with two permitted wells in each such drilling and spacing unit.

If the application of Applicant to permit two additional wells to be drilled to the Mesaverde Formation in each drilling and spacing unit in the Application Lands is granted, Applicant intends to drill one or more of those wells to the Dakota-Morrison Formation, to complete the well for production in both the Mesaverde Formation and the Dakota-Morrison Formation, and to commingle the production pursuant to Rule 322 of the Oil and Gas Conservation Commission. To permit this to occur, the permitted well location for wells drilled to the Dakota-Morrison Formation must coincide with the permitted well location for wells drilled to the Mesaverde Formation. Accordingly, Applicant requests that the permitted location for any well drilled subsequent to the entry of such order in a 640-acre drilling and spacing unit in the Application Lands consisting of a full section should be located no closer than 660 feet to any outer boundary of said 640-acre drilling and spacing unit, and no closer than 660 feet to another well producing from the same formation. The permitted location for any well drilled subsequent to the entry of such order in a designated drilling and spacing unit in the Application Lands consisting of a fractional section should be located no closer than 660 feet to any outer boundary of said designated drilling and spacing unit, and no closer than 660 feet to another well producing from the same formation.

The Application Lands contain numerous archeological sites. Applicant may be required to modify a well location to avoid interference with an archeological site. Therefore, Applicant requests that the commission grant to the Director the authority to grant an exception to the well location setbacks specified in Section IX above up to and including 100 feet, but not beyond, to avoid archaeological sites without notice and hearing and without the necessity to obtain consent from the lease owner or the mineral interest owners of the lands toward whom the well location is proposed to be moved.

To prevent waste, to protect correlative rights, to ensure the proper and efficient development of the Dakota-Morrison Formation in the Application Lands, and to assure the greatest ultimate recovery of gas and associated hydrocarbon substances from the Dakota-Morrison Formation in the Application Lands, Applicant requests (1) that after notice and hearing as provided by law, the Commission issue its order providing that the permitted location for any well drilled to the Dakota-Morrison Formation subsequent to the entry of the order in a 640-acre drilling and spacing unit in the Application Lands consisting of full sections should be located no closer than 660 feet to any outer boundary of said 640-acre drilling and spacing unit and no closer than 660 feet to another well producing from the same formation; (2) the permitted location for any well drilled to the Dakota-Morrison Formation subsequent to the entry of the order in a designated drilling spacing unit in the Application Lands consisting of a fractional section should be located no closer than 660 feet to any outer boundary of said designated drilling and spacing unit, and no closer than 660 feet to another well producing from the same formation; and (3) that the Director be authorized, without additional notice and hearing or consent, to grant an exception up to and including 100 feet, but not beyond, to avoid archaeological sites.

GENERAL PROVISIONS

XII

Applicant states that to the best of its information and belief Exhibit B attached hereto is the list of the names of owners required to be notified in accordance with Commission Rule 507 covering the Application Lands.

XIII

This application is submitted to this Commission in accordance with the terms of the Memorandum of Understanding dated August 22, 1991 between the Bureau of Land Management and this Commission and a separate Memorandum of Understanding dated August 22, 1991 between the Bureau of Indian Affairs, the Bureau of Land Management, and the Southern Ute Indian Tribe. The Southern Ute Indian Tribe owns substantially all of the surface and mineral interest underlying the Application Lands.

XIV

WHEREFORE, Applicant respectfully requests that this matter be set for hearing by the Commission; that notice hereof be given as required by law; and that upon hearing this Commission issue its order granting this Application as requested. Applicant further requests that the Commission in its order grant such other provisions as the Commission may find to be necessary or desirable in the cause.

DATED this 9th day of September, 2002.

Respectfully submitted,

BURLINGTON RESOURCES OIL

& GAS COMPANY, LP

Carleton L. Ekberg, Esq.

Poulson, Odell & Peterson, LLC

1775 Sherman Street, Suite 1400

Denver, Colorado 80203

(303) 861-4400

Applicant's Address:

Burlington Resources Oil & Gas Company, LP

3535 East 30th Street

Farmington, New Mexico 87401

J:\Ekberg\Burlington\Verified App Cause 112