IN THE MATTER OF THE PROMULGATION AND         CAUSE NO. 315
ESTABLISHMENT OF FIELD RULES TO GOVERN
OPERATIONS IN THE VERNON FIELD,                          ORDER NO. 315-7
YUMA COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Hearing Officers at 10:00 a.m. on January 7, 2002 in Room 201, Greeley Recreation Center, 651 10th Avenue, Greeley, Colorado on the application of Williams Production RMT Company for an order to amend Order Nos. 315-3 and 315-5 to allow any well drilled as the initial well in a 160-acre drilling and spacing unit to be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing unit for certain lands in the Vernon Field.

FINDINGS

The Commission finds as follows:

1. Williams Production RMT Company 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 January 17, 1977, the Commission issued Order No. 315-1, which established 640-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Niobrara Formation with the permitted well to be located no closer than 990 feet from the unit boundary underlying certain lands in the Vernon Field. The spaced area was extended by Order No. 315-2 issued November 17, 1977. By Order No. 315-3, dated August 22, 1978 and upheld by Order No. 315-4 dated September 9, 1981, the size of the drilling and spacing units within the spaced area was reduced to 160-acres with the permitted well to be located no closer than 900 feet from the unit boundaries for the below-listed lands:

Township 1 South, Range 44 West, 6th P.M.
Sections 3 thru 10: All
Sections 16 thru 21: All
Sections 27 thru 34: All

Township 2 South, Range 44 West, 6th P.M.
Sections 3 thru 6: All

Township 1 North, Range 44 West, 6th P.M.
Sections 32 and 33: All

5. Subsequent Order No. 315-5 issued June 4, 1999 allowed an additional well to be drilled and completed on the 160-acre drilling and spacing units for the below-listed lands:

Township 1 South, Range 44 West, 6th P.M.
Section 3: NW¼
Sections 7 and 8: All
Section 17: E½
Section 29: W½

6. On November 19, 2001, Williams Production RMT Company (“Williams”), by its attorney filed with the Commission a verified Application for an order to amend Order Nos. 315-3 and 315-5 to allow any well drilled as the initial well in a 160-acre drilling and spacing unit to be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing unit for the below-listed lands, and to allow the Director authority to grant an exception location to the permitted well location without prior notice or hearing upon an adequate showing by the operator that topography makes it unreasonable to drill a well within a 560 feet setback, but no closer than 380 feet from the boundary of the drilling and spacing unit.

Township 1 South, Range 44 West, 6th P.M.
Section 3: NW¼
Sections 7 and 8: All
Section 17: E½
Section 29: W½

7. On December 12, 2001 a protest to the application was filed by Patricia J. Wood, Gary Neil Gillett, and L. Hollis Gillett, owners and operators dba Diamond G Farms LLP stating that the drilling of additional wells will become a financial hardship for its farming operation. The COGCC Hearings Manager contacted Ms. Wood and Mr. Gary Gillett on December 12, 2001 to advise them that the application was not requesting approval to drill additional wells and to explain the relief requested in the application. On December 17, 2001, a new protest to the application was filed by Diamond G Farms LLP stating its opposition to 560 foot setbacks.

8. On December 19, 2001, COGCC staff held a prehearing conference with Gary Gillett and Williams to discuss the protest and to describe the basis for the application requesting a revised setback. Mr. Gillett stated he would report to Ms. Wood and Mr. L. Hollis Gillett on the information he obtained during the prehearing conference and together they would decide whether or not to withdraw the protest. The Hearings Manager recommended that the protest not be considered valid based on the COGCC definition of a protestant and the lack of compliance with Rule 509. a.(3).

9. An administrative hearing was held in this matter and at the time of the administrative hearing Williams withdrew from the application the request to allow the Director authority to grant an exception location no closer than 380 feet from the boundary of the drilling and spacing unit without prior notice and hearing.

10. Testimony presented at the administrative hearing indicated that a change in well location setbacks is necessary to allow flexibility in locating wells and optimizing drainage.

11. At the time of the administrative hearing, Williams Production RMT Company agreed to be bound by oral order of the Commission.

12. The Commission should enter an order to allow any well drilled as the initial well in the 160-acre drilling and spacing units described above in Finding No. 5 to be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing unit.

13. On December 26, 2001, Gary Gillett contacted the COGCC and verbally withdrew the Diamond G Farms LLP protest; accordingly this matter was placed on the Commission’s consent agenda. On January 7, 2002 a written withdrawal of the protest was filed with the Commission.

ORDER

NOW, THEREFORE IT IS ORDERED, that Order Nos. 315-3 and 315-5 are hereby amended to allow any well drilled as the initial well in a 160-acre drilling and spacing unit to be located no closer than 560 feet from the outer boundaries of the 160-acre drilling and spacing unit for the below-listed lands:

Township 1 South, Range 44 West, 6th P.M.
Section 3: NW¼
Sections 7 and 8: All
Section 17: E½
Section 29: W½

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 11th day of January, 2002, as of January 7, 2002.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dated at Suite 801 Patricia C. Beaver, Secretary 1120 Lincoln Street Denver, Colorado 80203 January 11, 2002.

(315#7)