REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 12, 1988 at 9:00 A.M. in Room 110, State Centennial Building, 1313 Sherman Street, Denver, Colorado, on the application of Bonneville Fuels Corporation for an order to allow the drilling of additional well on each 640-acre drilling and spacing units for the production of gas from the Wasatch and Mesaverde formations.

FINDINGS

The Commission finds as follows:

1. Bonneville Fuels Corporation 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. The Commission has issued on December 10, 1959 Order No. 139-1 and subsequent orders, to establish field rules for the operation and production of gas in Rulison Field. Order No. 139-1 established 640-acre drilling and spacing units, each consisting of a governmental section, for the production of gas and associated hydrocarbons from the Wasatch and Mesaverde formations underlying certain lands in Garfield County. The permitted well for the Wasatch formation is at a location no closer than 600 feet from the boundaries of the unit and for the Mesaverde formation, the permitted well is at a location in either the NW/4 or the SE/4 of the section and no closer than 990 feet from the boundaries of the quarter section. Order No. 139-3 extended the spaced area to the area requested in this application.

5. Based on the facts stated in the verified application and exhibits submitted, and having received no objections, and having been heard by the Director as Hearing Officer on February 10, 1988, the Commission should enter an order for an additional well or wells, not to exceed a total of four (4) wells, for the production of gas and associated hydrocarbons from the Wasatch formation with the permitted locations at a distance of at least 600 feet from the outer boundaries of the spacing unit and no closer than 1200 feet to any well or wells producing from the same formation and an additional well, not to exceed a total of two (2) wells for the production of gas and associated hydrocarbons from the Mesaverde formation with the permitted location at a distance of at lease 600 feet from the outer boundaries of the spacing unit and no closer than 1200 feet to any well or wells producing from the same formations, provided that, for both formations, no such additional well should be located in a quarter section where a previous well has been drilled and is producing or capable of production and Order No. 139-3 be amended to allow the drilling of the first well on any undrilled section to be located in accordance with the spacing pattern set forth above.

ORDER

NOW, THEREFORE IT IS ORDERED, that the provisions of Order No. 139-1, 2 and 3 pertaining to the number of wells for the production of gas from the Wasatch formation and the number of wells for the production of gas from the Mesaverde formation for the 640-acre units, the location of the first well drilled on any unit, and permitted locations are hereby amended and the following shall apply hereafter to wells drilled, completed or re-completed in said formations underlying the lands herein described in addition to other applicable rules and regulations and orders of the Commission, if any, heretofore adopted and not in conflict herewith:

Township 6 South, Range 93 West, 6th P.M. Section 29: All Section 31: All Section 30: All Section 32: All

Township 6 South, Range 94 West, 6th P.M. Section 25: All Section 35: All Section 26: All Section 36: All Section 34: All

Township 7 South, Range 94 West, 6th P.M. Section 1: All Section 6: All Section 2: All Section 7: All Section 3: All Section 8: All Section 4: All Section 9: All Section 5: All Section 17: All

Rule 1. A total of four (4) wells is hereby authorized to be drilled on each of the 640-acre drilling and spacing units for production of gas and associated hydrocarbons from the Wasatch formation underlying the lands described above with said additional wells to be at a location at least 600 feet from the boundaries of the units and no closer than 1200 feet from any well producing from the same formation.

Rule 2. A total of two (2) wells is hereby authorized to be drilled for each 640-acre drilling and spacing unit for production of gas and associated hydrocarbons from the Mesaverde formation underlying the lands described above with said additional wells to be at a location at least 600 feet from the boundaries of the unit and no closer than 1200 feet from any well producing from the same formation.

Rule 3. No additional well shall be located in a quarter section where there is an existing well capable of production and Order No. 139-2 and 139-3 shall be modified to allow the drilling of the first well in a unit to be located in accordance with Rule land Rule 2. herein above.

IT IS FURTHER ORDERED, that the other provisions of Orders No. 139-1, 139-2 and 139-3 shall remain in effect.

IT IS FURTHER ORDERED, that the rules and regulations contained herein 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, rules and regulations.

Entered this 23rd day of February, 1988, as of February 12, 1988.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dennis R. Bicknell, Secretary