RECORD OF PROCEEDINGS

                                                                                                                                                May 31-June 1, 2001

The Oil and Gas Conservation Commission met on May 31-June 1 at 8:30 a.m. in Suite 801, the Chancery Building, 1120 Lincoln Street, Denver, Colorado, for a hearing in Cause No. 133 (1 matter), Cause No. 1 (3 matters).

Those present were:

Stephen Sonnenberg              Chair

Brian Cree                                Vice Chair

Tom Ann Casey                       Commissioner

Bruce Johnson                         Commissioner

Michael Klish                            Commissioner

Abe Phillips                              Commissioner

Carol Harmon                          Assistant Attorney General

Brian Macke                            Deputy Director

Patricia Beaver                       Hearings Manager

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

Director’s Report: Deputy Director Macke provided a written report and discussed the following: Approximately 2500 permits are anticipated to be processed this year, exceeding the historical high for APDs issued. The Northwest Oil and Gas Forum will meet on August 16, 2001. Barrett has filed a 10-acre density pilot project for the July hearing and no Local Public Forum has been requested. Brian attended a meeting in Routt County regarding the county’s possible adoption of rules and regulations to govern oil and gas operations. A second prehearing conference was held in the TOP Operating/City of Longmont matter where the City proposed several options to TOP. No field work will take place on the 3M Project until late August or early September. Phase I of the Raton Basin Project is completed and Phase II is nearly 50% complete. Commissioner Casey asked about future 3M meetings and indcated their usefulness. The scanning and production/levy analyst positions at the OGCC have been filled. The requested but unfunded Permitting Coordinator position will also serve as a Public Information Officer. The nominations for Outstanding Operator Awards for the year 2000 should be submitted by June 15, 2001. Approximately 30,000 well logs have been scanned and are accessible on the Internet. More operators are reporting production and levy via email. The Commissioners approved docketing the Schramm Field matter for July, and agreed the Barrett pilot project should be heard administratively if unprotested.

AAG’s Report: HB 1088 which requires mineral owners and developers to notify one another prior to activity passed the legislature. The bill requiring COGCC oversight on the closure of the Leyden Gas Storage Facility was also approved by the legislature.

Public Comments: Ken Wonstolen, Colorado Oil and Gas Association ("COGA"), discussed the following: 2 of 3 DNR bills failed to pass. HB 1088 is the surviving bill and it alters the notice provision currently in the Oil and Gas Conservation Act. Some of effects on notice rules proposed in today’s rulemaking may need to be revised. Mr. Wonstolen suggested that although one of the growth bills before the legislature died, the idea of designating oil and gas corridors should be considered by the OGCC. Chair Sonnenberg asked OGCC staff to review the designation of oil and gas corridors and report back to the Commission on any ideas at the next hearing. The Town of Frederick vs. NARCO matter has been appealed by Frederick. Greg Schnacke, COGA, invited the Commissioners to the COGA Natural Gas Conference. He also expressed concerns about La Plata County’s use of funds to export its oil and gas rules to other counties and the usurping of OGCC’s authority. Josh Joswick, La Plata County Commissioner, indicated that the County responds to any county who asks for assistance with drafting oil and gas rules and that counties routinely assist one another on all types of issues.

Consent Agenda: Tricia Beaver proposed a new procedure for the Commission to consider for Orders Finding Violation ("OFVs") when there are no parties present to participate in the hearing. When this is the case, all OFVs would be placed on the consent agenda. At the time of hearing, the Chair will ask if anyone is present to participate and if not, the Commission could approve the OFVs from the consent agenda. The Commission was in favor of this procedure and unanimously approved the consent agenda which includes the following:

Cause No. 133, Docket No. 0104-AW-06, request by Texaco Exploration & Production Inc. for an order allowing up to 4 wells to be drilled on three (3) 320-acre drilling and spacing units on certain lands in Township 12 North, Range 100 West, 6^th P.M. for the production of gas and associated hydrocarbons from the Wasatch, Fort Union-Lance-Lewis and Mesaverde Formations.

Cause No. 1, Docket No. 0104-OV-03, request to issue 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, assessing a fine of Five Hundred dollars ($500), and authorizing COGCC staff to commence a claim on the Five Thousand dollar ($5000) plugging bond to plug, abandon, and reclaim the well.

Cause No. 1, Docket No. 0104-OV-04, request to issue 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 Operation, Form 1, assessing a fine of Five Hundred dollars ($500), and authorizing COGCC staff to commence a claim on the Five Thousand dollar ($5000) Certificate of Deposit to plug, abandon, and reclaim the well.

A hearing was held in Cause No. 1, Docket No. 0105-RM-02, a Statewide action to make changes to the rules and regulations within the 100, 200, 300, 600, 900, 1000 and 1100 Series rules. Language changes were adopted by the Commission for certain rules and consideration of proposed changes to Rules 333, 605 and the 500 Series were continued to the July, 2001 hearing.

After an overview of proposed changes presented by OGCC staff, comments were made by Ken Wonstolen and Rick Brady (City of Greeley/Colorado Municipal League) on the definition of reclamation. The Commission voted to not include this definition as one exists in the 1000 Series rules. The Commission voted to move certain stratigraphic well language into a new section.

After an overview of proposed changes presented by OGCC staff, comments were made by Rick Brady, Adam Keller (La Plata County), and Ken Read (J-W Operating), the Commission unanimously approved proposed changes to the 200 Series.

After an overview of proposed changes presented by OGCC staff, comments were made by Rick Brady, Josh Joswick, Jeff Robbins (La Plata County) and Ken Wonstolen on Rule 303.a. The Commission voted to change "inconsistent" to "conflicting" and approved the proposed language as a rule rather than keeping the language as a policy. Comments were provided by Ken Wonstolen on Rule 303.c.4. and the proposed changes were adopted by the Commission. After comments were presented by Ken Wonstolen and Adam Keller on Rules 305. and 306., the Commission voted to make no changes to these rules.

The meeting adjourned at 4:45 p.m. and resumed at 8:35 a.m. on Friday, June 1^st with all Commissioners present except Commissioner Casey.

Comments were made by Ken Wonstolen and Rick Brady on Rule 303.k. and the Commission adopted revised language for this rule along with the proposed changes to Rules 303.l., 310A. and 310B. After comments on Rules 318.a. and 318.b. were made on behalf of J-W Operating by Bill Odell and Ken Read, on behalf of Samedan Oil Corporation and Fidelity Exploration and Production by Carleton Ekberg, and by Ken Wonstolen in support of keeping the rules in place as they are, the Commission revised and adopted new language. Additional comments were made by Bill Keefe (Gorsuch Kirgis) on Rule 318.b. The Commission voted to make no changes to Rule 319. After comments were made by Ken Wonstolen on Rules 324B. and 325., the Commission adopted language as modified.

After an overview of proposed changes presented by OGCC staff, comments were made by Ken Wonstolen and Rick Brady on Rule 603. The Commission unanimously voted to approve the proposed changes as modified.

After an overview of proposed changes presented by OGCC staff, comments were made by Ken Wonstolen and the Commission voted to make no changes to Rule 903. but approved changes to Rules 906., 907., and 911.

After an overview of proposed changes presented by OGCC staff, comments were made by Ken Wonstolen and the Commission approved proposed changes to Rule 1004.a. and modified the proposed language and approved changes to Rule 1103.

After an overview of proposed changes presented by OGCC staff, comments were made by Ken Wonstolen and the Commission modified the proposed language and approved changes to Rule 1103.

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The Secretary was therefore authorized to issue the following orders:

Order No. 1V-211 Sierra Production Inc., La Plata County: Finds Sierra Production Inc. in violation of Rule 302.a., failure to submit an accurate Registration for Oil and Gas Operations, Form 1, assesses a total fine of Five Hundred dollars ($500), and authorizes COGCC staff to commence a claim on the Five Thousand dollar ($5000) plugging bond posted by Sierra Production Inc. in order to plug, abandon, and reclaim the well.

Order No. 1V-212, La Plata County: Finds Caprice Oil and Gas Company in violation of Rule 302.a., failure to submit an accurate Registration for Oil and Gas Operation, Form 1, assesses a total fine of Five Hundred dollars ($500), and authorizes COGCC staff to commence a claim on the Five Thousand dollar ($5000) Certificate of Deposit posted by Caprice Oil and Gas Company in order to plug, abandon, and reclaim the well.

Order No. 133-18, Moffat County: Approves the request to drill up to four (4) wells for production of gas and associated hydrocarbons from the Wasatch, Fort Union-Lance-Lewis and Mesaverde Formations for certain lands in the SE¼ of Section 18 and the NE¼ of Section 19, the S½ of Section 19, and the NW¼ Section of 29 and the SW¼ of Section 20, all in Township 12 North, Range 100 West, 6^th P.M.

Signed:

Patricia C. Beaver, Secretary

Approved:

Stephen Sonnenberg, Chair