BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE ADOPTION OF A STATEWIDE                                 )                     CAUSE NO. 1

POLICY TO CONDUCT ONSITE INSPECTIONS WHERE                                   )

THE SURFACE OWNER IS NOT A PARTY TO A LEASE                                  )                    DOCKET NO. 0501-GA-01

OR TO A SURFACE USE AGREEMENT                                                          )

TO ALL INTERESTED PARTIES AND TO WHOM IT MAY CONCERN:

        The Commission will consider adopting the following policy for conducting onsite inspections on lands where the surface owner is not a party to a lease or to a surface use agreement:

The Director will conduct an onsite inspection in advance of issuing an approved Application for Permit-to-Drill ("APD") at the request of the surface owner of the lands on which the well is proposed, when:

1.    The surface owner is not a party to a lease, surface use or other relevant agreement for the proposed well;

2.    The surface owner believes that technical or operational conditions of approval should be attached to the APD in order to minimize damage to the surface, address potential health, safety and welfare or significant adverse environmental impacts or otherwise ensure compliance with the COGCC’s rules relating to advance notice and good faith consultation with respect to timing of operations and location of facilities; and

3.    The request for the onsite inspection is made by the surface owner within twenty (20) days of receiving from the operator the advance notice of drilling operations.

The purpose of the onsite inspection shall be to:

1.    Minimize damage to the surface;

2.    Address potential health, safety and welfare or significant adverse environmental impacts within COGCC jurisdiction regarding the proposed surface location that may not be adequately addressed by COGCC rules or orders, or

3.    Otherwise ensure compliance with the COGCC’s rules relating to advance notice and good faith consultation with respect to timing of operations and location of facilities.

The onsite inspection shall not address matters of surface owner compensation, property value diminution, future use of the property or any private party contractual issues between the operator and the surface owner.

The advance notice of drilling operations that is provided to the surface owner by the operator shall include information for the surface owner about the opportunity described herein for an onsite inspection when a surface owner is not a party to a lease, surface use or other relevant agreement for the proposed well. The information included in the notice shall include the following:

1.    A postage prepaid postcard upon which surface owners may request their preference to the Director with respect to an onsite inspection. The postcard shall have a space for the surface owner to indicate two (2) dates on which the surface owner is available to meet on location, such dates to be within thirty (30) days of requesting such onsite inspection.

2.    Instructions that the surface owner is required to respond to the Director, either through regular mail or e-mail within twenty (20) days of receiving the advance notice of drilling operations. The instructions shall include the general e-mail delivery address for the COGCC and a statement that regular mail must be postmarked within twenty (20) days of receiving the advance notice of drilling operations. The instruction shall also include that the surface owner must provide two (2) dates on which the surface owner is available to meet on location, such dates to be within thirty (30) days of requesting such onsite inspection.

3.    An explicit statement of the following: "The purpose of the onsite inspection shall be to minimize surface damage and to identify any potential health, safety and welfare or significant adverse environmental impacts within COGCC jurisdiction regarding the proposed surface location that may not be adequately addressed by COGCC rules or orders, or otherwise ensure compliance with the COGCC’s rules relating to advance notice and good faith consultation with respect to timing of operations and location of facilities. The onsite inspection shall not address matters of surface owner compensation, property value diminution, future use of the property or any private party contractual issues between the operator and the surface owner."

When the Director conducts an onsite inspection as described herein, the Director shall invite the representatives of the surface owner, the operator and local governmental designee ("LGD") to attend. The Director shall attempt to select an acceptable time for the representatives to attend the onsite inspection, which shall be, to the extent practicable, on one of the two (2) dates that the surface owner requested in their response to the Director. If requested by the operator, the Director may delay the onsite inspection to allow for negotiation between the operator and surface owner or other parties.

Following the onsite inspection, the Director shall apply appropriate site specific drilling permit conditions, if necessary, to minimize damage to the surface and prevent or mitigate health, safety and welfare or significant adverse environmental impacts taking into consideration cost-effectiveness and technical feasibility and relevant geologic and petroleum engineering conditions as well as prevention of waste, protection of correlative rights, and promotion of development.

Examples of the types of impacts and conditions that might be applied if determined necessary by the Director at the onsite inspection include (this list is not prescriptive or all inclusive):

1. visual or aesthetic impacts - moving the proposed surface well site location or access road to take advantage of natural features for screening; installing low profile artificial lift methods; constructing artificial features for screening

2. #9; surface impacts - moving or reducing the size, shape, or orientation of the surface well site location or access road to avoid disturbance of natural features or to enhance the success of future reclamation activities; utilizing an existing surface well site location or access road to avoid the impacts of new construction; utilizing a closed drilling fluid system instead of reserve pits to avoid impacts to sensitive areas [Note: Directional drilling from common surface locations may not be a cost-effective or technically feasible option to mitigate surface impacts in some areas depending on target top depths, wellbore displacements, or complications for artificial lift.]

3. #9; noise impacts - installing electric motors where practicable; locating or orienting motors or compressors to reduce noise; installing sound barriers to achieve compliance with COGCC rules

4. #9; dust impacts - watering roads as necessary to control dust during drilling and completion operations

5. #9; ground water impacts - collecting and analyzing water and gas samples from existing water wells or springs; installing monitoring wells, collecting samples, and reporting water, gas and pressure data

6. #9; safety impacts - soil gas sampling and analysis; residential crawl space gas sampling and analysis; installing security fencing around wellheads and production equipment

7. #9; wildlife impacts - limiting drilling and completion operations during certain seasonal time periods when specific site conditions warrant

If the operator objects to any of the conditions of approval applied under 1. through 7. above, the Director shall stay the issuance of the drilling permit and properly notice and set the matter for the next regularly scheduled Commission hearing at which time the Commission may determine conditions of drilling permit approval.

NOTICE IS HEREBY GIVEN, that the Oil and Gas Conservation Commission of the State of Colorado, pursuant to the above, has scheduled the above-entitled matter for hearing on:

                    Date: Monday, January 10, 2005

                    1120 Lincoln Street

                    Denver, CO 80203

        In accordance with the Americans with Disabilities Act, if any party requires special accommodations as a result of a disability for this hearing, please contact Angie Gipson at (303) 894-2100 ext. 113, prior to the hearing and arrangements will be made.

        Copies of the current Rules and Regulations are available on the Commission Internet homepage or at the office of the Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado 80203, for $7.50 or by mail upon the receipt of a check or money order for $10.50, at the same address.

        Written comments on the proposed policy to be considered are requested to be submitted by December 27, 2004 for more complete consideration by the Commission. Opportunity for testimony from any interested party will be provided at the hearing, however the time in which to present testimony may be limited and parties sharing similar viewpoints are requested to appoint a spokesperson to present their testimony at the hearing.

        Pursuant to said hearing, in the above-entitled matter at the time and place aforesaid, or at any adjourned meeting, the Commission will enter its order adopting such policies and guidelines as in its judgment the facts may justify.

IN THE NAME OF THE STATE OF COLORADO

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

By

Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

December 8, 2004