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 ALKALI GULCH FIELD [sic] LA PLATA COUNTY, COLORADO	) ) ) )	CAUSE NO. 106 ORDER NO. 106-6

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on November 21, 1995, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of Meridian Oil, Inc. for an order allowing the Cherry Creek Ute No. 1 Well located 2,020 feet FNL and 640 feet FEL in the NE¼ NE¼ of Section 25, Township 34 North, Range 13 West, N.M.P.M. to be re-entered and completed at an exception location for production from the Paradox member of the Hermosa Formation.

FINDINGS

The Commission finds as follows:

1.      Meridian Oil, Inc., as applicant herein, is an interested party in the subject matter of the above-referenced matter.

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 August 20, 1957, the Commission issued Order No. 106-1 which established 640-acre drilling and spacing units for the production of gas from the Paradox member of the Hermosa Formation, underlying certain lands in the Alkali Gulch Field including Section 25, Township 34 North, Range 13 West, N.M.P.M., with the permitted well no closer than 1,320 feet from any section line, and no closer than 330 feet from the quarter lines of each said section.

5.      The Cherry Creek Ute No. 1 was originally drilled to the Barker Creek Formation and abandoned in 1985 by Davis Oil.  The well is located on Southern Ute Tribal mineral and surface lands and Meridian has obtained their approval to re-enter the well and complete at an exception location for production from the Paradox member of the Hermosa Formation.

6.      A protest to the application was filed by Robert and Dorothy Neal.  At the time of the administrative hearing, the attorney representing the Neals withdrew the protest based on the following stipulations agreed to with Meridian Oil, Inc.: a) An original bottom-hole pressure would be obtained, b) The well would produce for eight (8) months.  At the end of the eight (8) month production period, another bottom-hole pressure would be obtained, c) The two bottom-hole pressures, production history, and any additional information required to properly identify the drainage area of the subject well would be provided to the Neals and COGCC staff within thirty (30) days after the eight (8) month production period is completed.

7.      Based on the facts presented at the administrative hearing, the Hearing Officer recommends approval of the application.  An order of the Commission should be entered authorizing the Cherry Creek Ute No. 1 Well located 2,020 feet FNL and 640 feet FEL in the SE¼ NE¼ of Section 25, Township 34 North, Range 13 West, N.M.P.M. to be re-entered and completed at an exception location for production from the Paradox member of the Hermosa Formation.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order No. 106-1 is hereby amended to allow the Cherry Creek Ute No. 1 Well to be re-entered and completed at an exception location 2,020 feet FNL and 640 feet FEL in the SE¼ NE¼ of Section 25, Township 34 North, Range 13 West, N.M.P.M., for production from the Paradox member of the Hermosa Formation.

IT IS FURTHER ORDERED that in order to review the drainage radius calculations, Meridian Oil, Inc. shall abide by the following the stipulations:  a) Obtain original bottom-hole pressure; b) Produce the well for eight (8) months and at the end of the eight (8) month production period, obtain another bottom-hole pressure; c) Provide the two (2) bottom-hole pressures, production history, and any additional information required to properly identify the drainage area of the subject well to Robert and Dorothy Neal and the COGCC staff within thirty (30) days after the eight (8) month production period is completed.

IT IS FURTHER ORDERED, that should a commercial well be completed at the location set forth above, the Commission shall, upon application of any interested person, take such action as will offset any advantage which the person securing the exception may have over other procedures by reason of the drilling of the well as an exception location.

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 19^th day of December, 1995, as of November 21, 1995.

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 19, 1995