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 IGNACIO BLANCO FIELD, LA PLATA AND ARCHULETA COUNTIES, COLORADO	) ) ) )	CAUSE NO. 112 ORDER NO. 112-68

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on June 16, 1989 at 8:30 a.m. in Room 101, State Education Building, 201 East Colfax Avenue, Denver, Colorado on the verified application of Union Texas Petroleum Corporation for an option well to be drilled in the NW1/4 Section 15, Township 32 North, Range 11 West, N.M.P.M., La Plata County, Colorado for the unit consisting if [sic] the W1/2 Section 15 for production from the Fruitland Coal Seams.

FINDINGS

The Commission finds as follows:

1.      Union Texas Petroleum Corporation as applicant herein, is an interested party in the subject matter of the above-entitled 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 recognizes the interests of the Southern Ute Tribe in this matter, and 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 21, 1989, Order No. 112-62 was issued by the Commission which amended Orders Nos. 112-60 and 61, which established 320-acre drilling and spacing units for the production of methane gas from the Fruitland Coal Seams underlying certain lands in La Plata and Archuleta Counties, Colorado.  The units consist of the N1/2 and S1/2 or the E1/2 and W1/2 of a full section with the permitted well for lands located south of the north line of Township 32 North to be located in the NE1/4 and SW1/4 of the section.  The Director may grant approval for an option well upon notice being given to contiguous and offset operators or mineral interest owners and no protest being received by the Commission within twenty days of notice being given.

5.      On April 28, 1989, Union Texas Petroleum Corporation, filed by its attorney, a verified application for an option well to be drilled in the NW1/4 Section 15, Township 32 North, Range 11 West, N.M.P.M., La Plata County, Colorado for the unit consisting if the W1/2 Section 15, which location is in the area established by Order No. 112-62.

6.      On June 2, 1989, McKenzie Methane Corporation filed a protest to the granting of the application.

7.      Testimony was given at the time of hearing that there are currently three wells completed in the Fruitland coal seams in the SW1/4 Section 10, SE1/4 Section 9, and NE1/4 Section 16.  There are no wells completed in the Fruitland Coal Seams in Section 15.  The well located in the SE1/4 Section 9 is not at the designated location required by Order No. 112-60.

8.      Additional testimony was given that a well drilled at the requested location should encounter sufficient coal seams with positive characteristics to allow the completion of an economic well; however, there was insufficient testimony to indicate a well drilled at the designated location would not be an economic well.

9.      At the current stages of field development in this area, there is insufficient reason to allow the option well rather than the well at the designated location and that a recommendation be made to the Southern Ute Indian Tribe that the application be denied.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the Commission recommend to the Southern Ute Indian Tribe that the application of Union Texas Petroleum Corporation for an option well to be drilled in the NW1/4 of Section 15, Township 32 North, Range 11 West, N.M.P.M., La Plata County, Colorado for the unit consisting of the W1/2 of said Section 15 be denied.

IT IS FURTHER ORDERED, that the Commission expressly reserves its rights, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

ENTERED this 26th day of June, 1989, as of June 16, 1989.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
	By	Dennis R. Bicknell, Secretary