BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
IN THE MATTER OF THE PROMULGATION AND AND ESTABLISHMENT OF FIELD RULES TO           GOVERN OPERATIONS IN THE IGNACIO-BLANCO FIELD, LA PLATA COUNTY, COLORADO	) ) ) )	CAUSE NO.   112 ORDER NO.   112-119

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission on January 18, 1996 at 8:30 a.m. in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law, on the application of Vastar Resources, Inc., for an order to allow the Southern Ute No. 14-2, 32-9 Well located 900 feet FNL and 900 feet FWL in the NW¼ NW¼ of Section 14, Township 32 North, Range 9 West, to be recompleted at an exception location as the second well for the drilling and spacing unit consisting of the W½ of Section 14 for production from the Mesaverde Formation.

FINDINGS

                        The Commission finds as follows:

                        1.  Vastar Resources, Inc., 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 November 9, 1959, the Commission issued Order No. 112-6 establishing 320-acre drilling and spacing units for production from the Mesaverde Formation underlying certain lands in the Ignacio-Blanco Field, including Section 14, Township 32 North, Range 9 West, N.M.P.M.  Order No. 112-6 provided for the drilling of one well for the production of gas and associated hydrocarbons from the Mesaverde Formation.  On July 16, 1979, the Commission issued Order No. 112-46 authorizing the drilling of one additional well in each 320-acre drilling and spacing unit.  The permitted well shall be located 990 feet from the boundaries of the unit.

                        5.  On June 15, 1988, the Commission issued Order No. 112‑60 which established 320‑acre drilling and spacing units for the production of gas and associated hydrocarbons from the Fruitland coal seams, underlying certain lands in the Ignacio‑Blanco Field including Section 14, Township 32 North, Range 9 West, N.M.P.M., with the units to consist of a governmental half section and the permitted well to be located in the NE¼ and the SW¼ of each section, no closer than 990 feet from the boundaries of the quarter section, nor closer than 130 feet to any interior quarter section line.  Order No. 112-61 was subsequently adopted amending Order No. 112-60 to establish additional field rules for the Fruitland Coal Formation.

                        6.  The Southern Ute No. 14-2, 32-9 Well is currently producing from the Mesaverde Formation.  The Mesaverde Formation would be temporarily abandoned for the recompletion of the Fruitland Coal Formation.

                        7.  Testimony presented at the administrative hearing indicated that due to the discontinuity of the coal seams an additional well is needed to intercept coal seams not in communication with the existing well and to adequately drain the reserves in the 320-acre drilling and spacing unit.

                        8.  Based on the facts stated in the application, having received no protests and having been heard by the Hearing Officer on January 11, 1996, and recommended for approval, the Commission should approve the application.

ORDER

                        NOW, THEREFORE, IT IS ORDERED that the Southern Ute No. 14-2, 32-9 Well located 900 feet FNL and 900 feet FWL in the NW¼ NW¼ of Section 14, Township 32 North, Range 9 West, is hereby approved to be recompleted at an exception location as the second well for the 320-acre drilling and spacing unit consisting of the W½ of Section 14 for production from the Fruitland Coal Formation.

                        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  day of , 1996, as of January 18, 1996.

                                                                        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

February 2, 1996