139-29

BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND AND [sic] ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE RULISON FIELD, GARFIELD COUNTY, COLORADO

)

CAUSE NO. 139

ORDER NO. 139-29

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on November 19, 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 Barrett Resources Corporation, for an order to amend Order No. 139-28 to allow the optional drilling of four (4) additional wells to the Williams Fork Formation of the Mesaverde Group for certain lands, with each such well to have a bottomhole location no closer than 400 feet from the bottomhole location of any other Williams Fork Formation well and located no closer than 200 feet to the boundary of the unit. Further, the Applicant requests the Director be empowered to grant exceptions administratively for the surface locations of these additional four (4) Williams Fork Formation wells upon adequate showing by the Applicant operator that for topographical or other reasons, the well in question should be drilled directionally.

FINDINGS

The Commission finds as follows:

1. Barrett Resources 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. On February 22, 1994, the Commission issued Order Nos. 440-14, 479-3, and 139-26 which allowed an increase in the number of wells that could be optionally drilled into and produced from the Williams Fork Formation of the Mesaverde Group. For the 320-acre drilling and spacing units established, including the E½ of Section 20, Township 6 South, Range 94 West, 6th P.M., four (4) wells shall be allowed to be optionally drilled into and produced from the Williams Fork Formation, with the permitted well to be located no closer than 400 feet from the lease line nor 800 feet from any other producible or drilling oil and gas well in the Williams Fork Formation.

5. Barrett Resources Corporation presented letters in support the twenty (20) acre pilot project from the U.S. Department of Energy, William F. Clough, Tom Brown, Inc., Snyder Oil Company. [sic] and Unocal Corporation. Testimony was given that the Garfield County Board of Commissioners enthusiastically supports the application.

6. That evidence presented at the administrative hearing indicated that the number of wells previously approved for the 320 drilling and spacing units in Rulison Field could not adequately drain those units, for production from the Williams Fork Formation of the Mesaverde Group for the E½ of Section 20, Township 6 South, Range 94 West, 6th P.M., Garfield County.

7. That based upon exhibits and testimony at the administrative hearing, the proposed spacing rules will allow more efficient drainage, will prevent waste, will not violate correlative rights, and will assure a greater ultimate recovery of gas and associated hydrocarbons.

8. That based upon extensive field, engineering studies and the intensive geological, geophysical and reservoir modeling work done for a twenty (20) acre pilot project in the application land, the sands within the Williams Fork Formation of the Mesaverde Group are tight and contain extensive natural fractures; such fractures however, being vertically and laterally limited in extent and, for the most part, do not extend beyond lithologic boundaries. Evidence presented at the administrative hearing indicated that there was no pressure communication evident between wells.

9. Based on the facts stated in the application and testimony presented at the administrative hearing, having received no protests, and having been heard by the Hearing Officer on November 15, 1996 who recommends approval, the Commission should approve the application to increase the number of wells allowed in the 320-acre drilling and spacing units in the E½ of Section 20, Township 6 South, Range 94 West, 6th P.M. In addition, the Applicant should provide pressure data and cost information collected during the pilot project to the Commission staff.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order No. 139-28 is hereby amended to approve the optional drilling of four (4) additional wells to the Williams Fork Formation of the Mesaverde Group in the 320-acre drilling and spacing units in the E½ of Section 20, Township 6 South, Range 94 West, 6th P.M., with each such well to have a bottomhole location no closer than 400 feet from the bottomhole location of any other Williams Fork Formation well and located no closer than 200 feet to the boundary of the unit.

IT IS FURTHER ORDERED, the Director shall be empowered to grant exceptions administratively for the surface locations of these additional four (4) Williams Fork Formation wells upon adequate showing by the Applicant operator that for topographical or other reasons, the well in question should be drilled directionally.

IT IS FURTHER ORDERED, that the Applicant shall provide to the Commission, by January 1, 2000, pressure data obtained from the pilot project that would show the extent of drainage from existing wells, and the total cost of drilling and completing the project wells.

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 18th day of December, 1996, as of November 19, 1996.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

December 18, 1996