BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES AND ) CAUSE NO. 1V

REGULATIONS OF THE COLORADO OIL AND GAS CONSERVATION )

COMMISSION BY ENCANA ENERGY RESOURCES INC., ) ORDER NO. IV-

WELD COUNTY, COLORADO )

ADMINISTRATIVE ORDER BY CONSENT

FINDINGS

1. On August 6, 2002, Colorado Oil and Gas Conservation Commission (“COGCC”) staff received an Application for Permit to Drill (“APD”) from EnCana Energy Resources Inc., (“EnCana”) for the Bangert #31-19 Well (the “Well”), located in the NE¼ NE¼ of Section 19, Township 2 North, Range 66 West, 6th P.M. The APD specified a surface hole location of 510’ from the North Line and 657’ from the East Line. The APD specified a bottom hole location of 600’ from the North Line and 2000’ from the East Line. The APD was approved on August 22, 2002.

2. On March 1, 2004 the COGCC received required forms, logs, and a directional survey from EnCana for the Bangert #31-19 Well. The logs and directional survey indicated that the surface hole location for the Well was 1117’ from the North Line and 1105’ from the East Line of Section 19, Township 2 North, Range 66 West, 6th P.M. The COGCC Drilling Completion Report, Form 5, indicated that the Well was spud on April 5, 2003 and was completed on April 17, 2003. The COGCC Certification of Clearance, Form 10, indicated that the date of first sales was June 3, 2003 for the Well.

3. On March 19, 2004 COGCC staff sent a Notice of Alleged Violation (“NOAV”) to EnCana for violation of Rule 301., failure to obtain Commission approval for change of surface hole location, Rule 308A., failure to submit COGCC Drilling Completion Report, Form 5, and logs within thirty (30) days of setting the production casing, Rule 308B., failure to submit COGCC Completed Interval Report, Form 5A, within thirty (30) days of completing a formation, and Rule 312., failure to submit COGCC Certificate of Clearance, Form 10, within thirty (30) days after initial sale of oil or gas. The NOAV had an abatement date of April 16, 2004.

4. Per the return receipt, the NOAV was received by EnCana. The return receipt did not have a date of delivery but was returned to the COGCC on March 23, 2004.

5. As of April 22, 2004 EnCana had not complied with the NOAV, nor had EnCana contacted COGCC staff concerning the matter. COGCC staff contacted EnCana by telephone on April 22, 2004 to discuss the NOAV. EnCana indicated that they would resurvey the Well and respond back to the COGCC during the week of April 26, 2004.

6. On April 29, 2004 EnCana contacted the COGCC and stated that the Well had been drilled at the correct surface location but that the directional drilling program was designed for an alternative surface location. The bottom hole location for the Well was actually in Section 18, Township 2 North, Range 66 West, 6th P.M. This bottom hole location is owned by another operator. EnCana indicated that the Well was non-productive and would be plugged and abandoned.

7. On April 29, 2004 the COGCC received revised information for the Well from EnCana. The revised location plat for the Well showed an actual surface hole location of 465’ from the North Line and 655’ from the East Line of Section 19, Township 2 North, Range 66 West, 6th P.M. which did not exactly match the original permitted surface location. The revised directional survey showed a bottom hole location of 97’ from the South Line and 1547’ from the East Line of Section 18, Township 2 North, Range 66 West, 6th P.M. which did not match the original permitted bottom hole location. EnCana also submitted another COGCC Form 10 and again indicated that the date of first sales was June 3, 2003 for the Well.

8. EnCana should be found in violation of Rule 301., failure to obtain Commission approval for change of surface hole location and failure to obtain Commission approval for change of bottom hole location for the Well.

9. EnCana should be found in violation of Rule 318A.a. for failure to locate the Well in accordance with the Greater Wattenberg Area well location setback rules and Rule 318.c. for failure to obtain a location exception for the Well.

109. Rule 523. specifies a base fine of One Thousand dollars ($1000) per day for violations of Rule 301., 318 and 318A.

11. No hydrocarbon production has occurred from the Well, and EnCana voluntarily agreed to plug and abandon the Well prior to the issuance of this Administrative Order by Consent.

12. A monetary penalty of Twenty Thousand dollars ($20,000.00) should be assessed against EnCana, in accordance with Rule 523.a. and Rule 523.d., for two (2) violations of Rule 301., and one violation for each of Rules 318. and 318A. Aggravating factors in determining the fine recommendation is that under Rule 523.d.(1), the violation was reckless and under Rule 523.d.(5) the violation threatened to result in significant loss to private property.

13. The Well is located in irrigated crop land. EnCana should properly plug and abandoned the Bangert #31-19 Well within thirty (30) days of the date the crops are harvested around this location.

ORDER

NOW, THEREFORE, IT IS ORDERED, that EnCana Energy Resources Inc. shall be found in violation of Rule 301., failure to obtain Commission approval for change of surface hole location and failure to obtain Commission approval for change of bottom hole location, Rule 318A., failure to locate the Well in accordance with the Greater Wattenberg Area Well setbacks rules and Rule 318.c., failure to obtain a location exception for the Bangert #31-19 Well, located in the NE¼ NE¼ of Section 19, Township 2 North, Range 66 West, 6th P.M.

IT IS FURTHER ORDERED, that EnCana Energy Resources Inc. shall be assessed a fine of Twenty Thousand dollars ($20,000.00) payable within thirty (30) days of the date the order is approved by the Commission for the above violations.

IT IS FURTHER ORDERED, that EnCana Energy Resources Inc. shall properly plug and abandon the Bangert #31-19 Well within thirty (30) days of the date the crops are harvested around this 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.

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.

Recommended this day of June, 2004.

OIL AND GAS CONSERVATION COMMISSION

By

Morris J. Bell, Hearing Officer

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

June 1, 2004

AGREED TO AND ACCEPTED THIS _________DAY OF __________, 2004.

ENCANA ENGERY RESOURCES INC.

By ____________________________________________

___________________________________________

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