RECORD OF PROCEEDINGS

April 23, 2001

The Oil and Gas Conservation Commission met on April 23, 2001 at 8:30 a.m. in Suite 801, the Chancery Building, 1120 Lincoln Street, Denver, Colorado, for a hearing in Cause No. 1 (3 matters), Cause No. 112 (1 matter), Cause No. 287 (1 matter), Cause Nos. 139 and 440 (1 matter) and Cause Nos. 139, 440, 479 and 510 (1 matter).

Those present were:

Stephen Sonnenberg       Chair

Brian Cree                         Vice Chair

Bruce Johnson                  Commissioner

Michael Klish                     Commissioner

Abe Phillips                       Commissioner

Carol Harmon                    Assistant Attorney General

Richard Griebling              Director

Brian Macke                      Deputy Director

Patricia Beaver                 Hearings Manager

The Commission unanimously approved the minutes from the March 2001 meeting.

Director’s Report: Director Griebling provided a written report and discussed the following: The number of drilling permits processed in March 2001 is higher than ever before. The next meeting of the Northwest Colorado Oil and Gas Forum will be on May 10, 2001 at the Rifle Fire District Headquarters in Rifle, Colorado. COGCC staff made a presentation to various Routt County officials and residents about COGCC regulation of oil and gas development. The TOP Operating/City of Longmont well location talks are moving forward; hopefully a hearing will not be needed to decide the matter. The next La Plata County Gas & Regulatory Team (GORT) meeting will be on May 11, 2001 at the La Plata County Fairgrounds. Sixty-five (65) gas seeps were detected in Phase I of the Raton Basin Project; Phase II is nearly 50% complete. Rulemaking is docketed for the May 31-June 1, 2001 hearing; drafts of proposed rules will be available May 1, 2001. Mesa Hydrocarbons and Prima Oil & Gas were granted Rule 502.b. variances for well locations.

AAG’s Report: AAG Harmon requested an executive session for later in the day and discussed the following: The bill placing closure of the Leyden facility under the COGCC’s purview will be heard on April 24, 2001. The bill concerning property owner notification is the only one of the Department of Natural Resources’ proposed bills concerning the COGCC to remain alive. COGA proposed an amendment to the Oil and Gas Act to require a 30-day notice similar to Rule 305.

Public Comments: Ken Wonstolen, Colorado Oil and Gas Association ("COGA"), discussed the following: A bill incorporating 30-day notice into the statute is currently on the Governor’s desk for his signature; the signing ceremony may be in Durango. COGA filed jointly with the Commission a Motion to Amend Judgment and Clarify the Order on Motions for Summary Judgment in the La Plata County decision. Las Animas County did not adopt its proposed ordinance last week that may result in $1000 to $1500 in additional fees per well, but they will consider adoption again on May 1, 2001.

Director Griebling announced the COGCC is drafting a letter to Las Animas County suggesting several alternatives to the adoption of an ordinance.

The hearing in Cause No. 1, Docket No. 0103-GA-02, request by Hirschfeld Family Partnership Ltd., Braly Family, LLC and Robin Nissen for an order revoking a drilling permit issued to HS Resources for the HSR-Hirschfeld 13-14A Well in the SW¼ SW¼ of Section 14, Township 2 North, Range 68 West, 6^th P.M., has been cancelled due to withdrawal of the application.

The hearing in Cause No. 1, Docket No. 0104-OV-03, request to approve an Order Finding Violation finding Sierra Production, Inc. in violation of Rule 302.a., failure to submit an accurate Registration for Oil and Gas Operations, Form 1, for the Jumbo #1 Well has been continued to the May-June, 2001 hearing.

The hearing in Cause No. 1, Docket No. 0104-OV-04, request to approve an Order Finding Violation finding Caprice Oil and Gas Company in violation of Rule 302.a., failure to submit an accurate Registration for Oil and Gas Operations, Form 1, for the Suzanne Jumbo #1 Well, has been continued to the May-June, 2001 hearing.

The Commission unanimously approved the consent agenda which includes the following:

Cause No. 287, Docket No. 0104-AW-05, request by Coastal Oil and Gas Corporation for an order allowing an additional well to be drilled in certain 160-acre drilling and spacing units in Townships 4 and 5 South, Range 102 West, 6^th P.M. for the production of gas and associated hydrocarbons from the Mancos "B" Formation.

Cause Nos. 139, 440, 479 and 510, Docket No. 0104-AW-04, request by Barrett Resources Corporation for an order allowing additional wells to be drilled on 20-acre density for certain lands in Township 6 South, Range 94 West and Townships 6 and 7 South, Ranges 95 and 96 West, 6^th P.M.

Cause Nos. 139 and 440, Docket No. 0104-UP-05, request by Tom Brown, Inc. for an order pooling non-consenting interests in the 640-acre drilling and spacing unit consisting of Section 36, Township 7 South, Range 96 West, 6^th P.M. for the development and operation of the Williams Fork Formation.

Cause No. 1, Docket No. 0104-OV-05, request to approve an Administrative Order by Consent finding Duncan Oil, Inc. in violation of Rule 301., failure to receive approval to change previously approved work plans for the Mertens 1-19 Well, and to assess a fine of one thousand dollars ($1,000).

Cause No. 1, Docket No. 0104-OV-06, request to approve an Administrative Order by Consent finding Duncan Oil, Inc. in violation of Rule 301., failure to receive approval to change previously approved work plans for the Maddy 1-31 Well, and to assess a fine of one thousand dollars ($1,000).

A hearing was held in Cause No. 112, Docket No. 0104-EX-01, request by Thunderhead Investments, Inc. ("Thunderhead") that an exception location be granted for the Neva Dove Gas Unit A #2 in Township 34 North, Range 7 West, N.M.P.M. Present were: Bob Miller, attorney for Applicant Thunderhead and Tom Dugan and Brad McKim, attorneys for Protestant Amoco Production Co. ("Amoco").

Statements were made by Mr. Dugan and Mr. Miller in support of their clients’ positions. Director Griebling stated staff’s opposition to Thunderhead’s proposed southerly location because of correlative rights violation concerns and an inability to drill directionally. A Rule 510. statement was made by Ken Wonstolen, COGA, as to concerns over Thunderhead’s interpretation of COGCC rules regarding onsite inspections and the Commission’s jurisdictional ability to handle surface owner compensation issues.

After AAG Harmon’s comments on the parties’ positions and Commission deliberation, the Commission voted unanimously finding Thunderhead is not an owner as defined by the Oil and Gas Conservation Act and Commission Rules and therefore does not have the standing to file applications for exception locations. The Commission found it does not have jurisdiction over the claim of irreparable harm to surface property rights; Thunderhead’s application is a request to resolve a surface owner dispute over which the Commission has no jurisdiction. The Commission found that Thunderhead is not a party that could be adversely affected and aggrieved in a manner that is within the Commission’s jurisdiction to resolve. The Commission found that Rule 502.b. is more general than Rule 318.c. and that although Thunderhead’s application requests both an exception location and a variance, it is actually an exception location application. The Commission found that the Director’s approval of the APD is final and not conditioned on the Commission’s approval. The Commission found that onsite inspections are not adjudicatory proceedings conducted by Hearing Officers. The Commission took administrative notice of all the provisions in its Order No. 112-156 including, specifically, the findings pertaining to directional drilling.

A hearing was held in Cause No. 1, 0104-GA-03, request by Thunderhead to stay the permit-to-drill issued to Amoco for the Neva Dove Gas Unit A #2 Well. Present were: Bob Miller, attorney for Applicant Thunderhead and Tom Dugan and Brad McKim, attorneys for Protestant Amoco.

In response to Mr. Miller’s questioning of Amoco’s ability to participate in the hearing, Chair Sonnenberg replied that Amoco is a proper protestant due to having filed a protest three days before the hearing and having filed a protest in the related matter, Cause No. 112, Docket No. 0104-EX-01 prior to the protest deadline.

Amoco has agreed not to drill the well until federal court makes a decision on its motion for preliminary injunction.

The Commission found that no emergency exists and that the drilling of the well does not constitute a threat to public health, safety, welfare and the environment and voted unanimously to deny the motion to stay. The Commission found that no evidence had been presented to indicate that the Rule 508.j.(3)b. conditions placed on the APD for the Well do not meet those conditions contained in Order No. 112-156. The Commission found that it does not have jurisdiction over the claim of irreparable harm to surface property rights. The Commission found that Thunderhead’s application is a request to resolve a surface owner dispute over which the Commission has no jurisdiction. The Commission found that Thunderhead is not a party that could be adversely affected and aggrieved in a manner that is within the Commission’s jurisdiction to resolve. The Commission voted unanimously to deny the application.

A motion was made and approved unanimously to adopt as policy the language proposed by COGA for inclusion on APDs. The Commission requested the language to be included in the May-June 2001 rulemaking draft for adoption as a rule.

The meeting adjourned at 12:55 p.m.

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The Secretary was therefore authorized to issue the following orders:

Order No. 1V-209, Weld County: Approves the Administrative Order by Consent finding Duncan Oil, Inc. in violation of Rule 301., failure to receive approval to change previously approved work plans for the Mertens 1-19 Well, and assesses a total fine of One Thousand Dollars ($1,000).

Order No. 1V-210, Weld County: Approves the Administrative Order by Consent finding Duncan Oil, Inc. in violation of Rule 301., failure to receive approval to change previously approved work plans for the Maddy 1-31 Well, and assesses a total fine of One Thousand Dollars ($1,000).

Order No. 112-160, Ignacio-Blanco Field, La Plata County: Dismisses the application requesting an order granting an exception location for the Neva Dove Gas Unit A #2 in Township 34 North, Range 7 West, N.M.P.M.

Order Nos. 139-35, 440-20, 479-8 and 510-5, Rulison, Parachute and Grand Valley Fields, Garfield County: Approves the request to drill additional wells on 20-acre density for certain lands in Township 6 South, Range 94 West and Townships 6 and 7 South, Ranges 95 and 96 West, 6^th P.M.

Order Nos. 139-36 and 440-21, Rulison and Parachute Fields, Garfield County: Approves the request to pool non-consenting interests in the 640-acre drilling and spacing unit consisting of Section 36, Township 7 South, Range 96 West, 6^th P.M. for the development and operation of the Williams Fork Formation.

Order No. 287-5, Foundation Creek Field, Rio Blanco and Garfield Counties: Approves the request to allow an additional well to be drilled in certain 160-acre drilling and spacing units on Townships 4 and 5 South, Range 102 West, 6^th P.M. for the production of gas and associated hydrocarbons from the Mancos "B" Formation.

Patricia C. Beaver, Secretary

Approved:

Stephen Sonnenberg, Chair