BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE MCCLAVE FIELD, BENT COUNTY, COLORADO	) ) ) )	CAUSE NO. 105 ORDER NO. 105-39

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on February 15, 2000, at the Holiday Inn, Trinidad, 3125 Toupal Drive, Trinidad, Colorado on the application of Ellora Energy, LLC for an order to allow an additional productive well to be drilled at a legal location in the 640-acre drilling and spacing unit consisting of Lots 1 through 10 in Section 3, Township 21 South, Range 48 West, 6^th P.M., for the production of oil, gas and associated hydrocarbons from the Morrow Formation.

FINDINGS

The Commission finds as follows:

1.      Ellora Energy, LLC ("Ellora") as applicant herein is an interested party in the subject matter of the above-referenced hearing.

2.      Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

3.      The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4.      On May 15, 1957, the Commission issued Order No. 105-1 which established 640-acre drilling and spacing units for the production of gas and associated hydrocarbons from the McClave Sand underlying certain lands in the McClave Field, with the units to consist of a governmental section including Lots 1 through 10 in Section 3, Township 21 South, Range 48 West, 6^th P.M.  Subsequent Order No. 105-2 required the permitted well to be located no closer than 990 feet from the center of the drilling and spacing unit upon which it is located, with the exceptions to be granted based on topographical reasons.

5.      On September 16, 1997 the Commission issued Order No. 105-35 which among other things allowed the Wollert #2-A Well located 3826' FNL and 1320' FEL in Section 3, Township 21 South, Range 48 West, 6th P.M., Bent County, Colorado to be drilled as an additional well for the 640-acre drilling and spacing unit for production of oil, gas and associated hydrocarbons from the Morrow Formation.  Testimony presented at the administrative hearing indicated that the Wollert #2-A Well was drilled as a dry hole and plugged on January 1, 1998.

6.      Testimony and exhibits presented at the administrative hearing indicated the McClave Sand channel is likely to be encountered and productive at a location west of the Wollert #2-A Well.  Additional testimony and exhibits presented indicated there are remaining recoverable reserves of 1.3 BCF gas estimated in the unit, and that recovery of these reserves is economic.

7.      Testimony and exhibits presented at the administrative hearing showed that to protect correlative rights, to prevent waste and to recover additional reserves, an additional productive well should be allowed at a legal location in accordance with Order No. 105-2.

8.      At the time of the administrative hearing, Ellora agreed to be bound by oral order of the Commission.

9.      At the time of the January 4, 2000 administrative hearing, the Hearing Officers requested certain modifications to the exhibits presented in support of the application.  The matter was continued to the February hearing to allow sufficient time for Ellora to modify these exhibits.  On February 7, 2000 Ellora submitted modified exhibits to the Hearing Officers.

10.      Based on the facts stated in the verified application, having received no protests to the application and having been hearing by Hearing Officers who recommended approval, the Commission should enter an order to allow an additional productive well to be drilled at a legal location in the 640-acre drilling and spacing unit consisting of Lots 1 though 10 in Section 3, Township 21 South, Range 48 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Morrow Formation.

ORDER

NOW, THEREFORE, IT IS ORDERED, that an additional productive well is hereby approved to be dilled [sic] at a legal location for the 640-acre drilling and spacing unit consisting of Lots 1 though 10 in Section 3, Township 21 South, Range 48 West, 6th P.M., for the production of oil, gas and associated hydrocarbons from the Morrow Formation.

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.

ENTERED this day of March, as of February 15, 2000.

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

March 13, 2000