BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF A REQUEST TO ALLOW                                         )                             CAUSE NO. 191

LIMITED DRILLING WITHIN CERTAIN DESCRIBED                                )

LANDS IN THE MORATORIUM AREA ESTABLISHED                            )                             ORDER NO. 191-12

UNDER ORDER NO. 1V-276, MAM CREEK FIELD,                                )

GARFIELD COUNTY, COLORADO                                                             )                             CORRECTED

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission on July 11, 2005 in the New Indoor Arena Meeting Facility, Garfield County Fairgrounds, 1001 Railroad Avenue, Rifle, Colorado on the verified application of Bill Barrett Corporation requesting an order from the Commission allowing limited drilling of Williams Fork Formation wells upon certain lands within the moratorium area established under the Commission’s Order No. IV-276.

FINDINGS

                        The Commission finds as follows:

                        1. Bill Barrett Corporation ("BBC"), 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 September 16, 2004, the Commission entered Order No. IV-276 which among other things established a moratorium on drilling and completion operations within a two (2) mile radius of the seep at West Divide Creek until the COGCC staff evaluates (1) the effectiveness of the Notice to All Operators Drilling Wells to the Mesaverde Group or Deeper in the Mamm Creek Field, Garfield County, effective July 23, 2004, and (2) EnCana’s compliance with any applicable Site Investigation and Remediation Workplan, Form 27, as approved or amended by the COGCC staff related to the gas seep in the area of West Divide Creek. Although Order No. IV-276 applied only to EnCana, the Commission subsequently entered Order No.191-8 which provided that BBC shall not drill on its operated lands within the moratorium area established under the Commission’s Order No. 1V-276 so long as the order is in effect or until BBC has filed an application with the Commission and has been released from the order as it applies to the BBC operated lands within the moratorium area.

                        5. On June 1, 2005, BBC filed with the Commission a verified application for an order allowing limited drilling of Williams Fork Formation wells upon the below-described lands within the moratorium area established under the Commission’s Order No. IV-276:

Township 6 South, Range 91 West, 6th P.M.

Section 31: W½ NW¼

Township 6 South, Range 92 West, 6th P.M.

Section 25: All

Section 34: S½ SE¼

Section 36: NE¼, NE¼ NW¼

Township 7 South, Range 92 West, 6th P.M.

Section 3: That certain 96.93 acres in the N½ remaining uncommitted to the Hunter Mesa Unit

                        6. On June 23, 2005, the Board of County Commissioners of Garfield County filed with the Commission a Motion for Intervention to raise environmental, public health, safety and welfare concerns regarding the application.

                        7. On June 30, 2005 and July 1, 2005, a prehearing conference was held with the parties to discuss Garfield County’s concerns and the possibility of the County and BBC entering into a stipulation.

                        8. On July 7, 2005, the Commission received a letter from the Garfield County attorney conveying the Board of County Commissioners’ approval of the conditions of stipulation.

                        9. The Commission heard testimony from William Givan, Landman for BBC, regarding the acreage BBC has under lease in and around the moratorium area. Mr. Givan testified that BBC proposes to drill seventeen (17) wells from six (6) existing well pads and three (3) wells from one (1) new well pad. He further testified that BBC has executed a surface use agreement for the additional wells on existing well pads, and has a verbal agreement with the surface owner for the new well pad. Mr. Givan anticipated that a surface use agreement for the new well pad would be executed within the next two (2) weeks.

                        10. The Commission heard expert testimony from Stephen Cumella, Senior Geologist for BBC regarding the geologic setting of the Mesaverde Group in the Mam Creek Field. Mr. Cumella testified that the Mesaverde Group is comprised of the Iles Formation containing three (3) marine units, overlain by the Williams Fork Formation containing coal and sand units. He testified that below the top of continuous gas saturation in the Williams Fork Formation, the sands produce natural gas without producing water. In addition, Mr. Cumella testified that sands from wells drilled from the same well pad, and in close proximity to one another are discontinuous. He further testified that the natural fracturing, especially on structures in the area, allows the Mesaverde Group to be productive of gas, and that this natural fracturing is no different in the moratorium area than in any other area of the basin. Mr. Cumella stated that he is not concerned that the nature of the formations underlying BBC’s application lands is similar to those formations underlying West Divide Creek gas seep area.

                        11. The Commission heard expert testimony from Scot Donato, Environmental Health and Safety Manager for BBC regarding BBC’s Ground Water and Methane Monitoring Plan, including Commission staff recommendations for additional conditions, BBC’s Additional Subsurface Data Collection Plan for hydrogeologic data collection and distribution, and BBC’s Mamm Creek Field Operations Plan dated December 2004. He testified that compliance with these documents, along with the Commission’s existing rules, will protect the environment in the moratorium area.

                        12. The Commission heard expert testimony from Troy Schindler, Drilling Manager for BBC who testified that twenty-eight (28) wells have been drilled and cemented by BBC since the July 23, 2004 Notice to All Operators Drilling Wells to the Mesaverde Group or Deeper in the Mamm Creek Field, Garfield County, with four (4) of those wells having high bradenhead pressures. Mr. Schindler testified that EnCana Oil and Gas (USA) Inc. has drilled and cemented one hundred and fifty-two (152) wells since the July 23, 2004 Notice, with three (3) wells having failed bradenhead pressures. In addition, he testified as to the cementing program BBC uses to drill in the Mam Creek Field, and as to the detailed drilling prognosis prepared and provided for each well drilled by BBC.

                        13. On behalf of the Board of County Commissioners of Garfield County, the July 7, 2005 letter to BBC’s attorney conveying the Board’s unanimous approval to the conditions of stipulation was presented for inclusion in the Commission’s record.

                        14. Through cross-examination, the Garfield County attorney clarified that BBC is in agreement with incorporating the County’s requests in any order the Commission may enter on BBC’s application, and that BBC will have a full-time supervisor on each well drilled in the Mam Creek Field.

                        15. On behalf of the Board of County Commissioners of Garfield County, its attorney stated that if the Commission imposes the recommendations made by Commission staff and by Dr. Thyne for the County, the County would be in agreement to the application being approved to allow BBC the ability to drill in a limited portion of the moratorium area.

                        16. Pursuant to Rule 510., Bill Griffin, a resident in the moratorium area, expressed his concern that the same geologic conditions exist in BBC’s application area as those in the area of the West Divide Creek gas seep, and his belief that the hydrogeologic study currently underway should be completed prior to drilling in the moratorium area.

                        17. Pursuant to Rule 510., Nancy Jacobsen, a resident in the moratorium area, stated her agreement with Mr. Griffin’s comments, and expressed her concern about the multiple industrial incidents that have occurred in her neighborhood.

                        18. Pursuant to Rule 510., Pepi Langegger, a resident in the moratorium area, expressed his belief that that the Commission should err on the side of caution and not allow drilling to occur in the moratorium area until the hydrogeologic study is complete.

                        19. Pursuant to Rule 510., Herman Stauffer, a resident in the moratorium area, stated that the moratorium should be retained and his hope that BBC’s application will be denied.

                        20. Pursuant to Rule 510., Dan Randolph, San Juan Citizens Alliance, expressed his concern about how the Commission will respond if BBC’s application is approved and problems occur in the area.

                        21. Pursuant to Rule 510., Lisa Sumi, Oil and Gas Accountability Project, stated her belief that the residents living in the moratorium area accurately described their concerns, and her belief that BBC has not presented data to show that problems will not occur if the application is approved.

                        22. Jaime Adkins, Northwest Colorado Engineer for the Commission, discussed the Staff Assessment of the Effectiveness of the Mamm Creek Notice to Operators and Recommendation dated July 11, 2005, and described the two hundred and three (203) wells drilled under the Notice in the past eleven (11) months. Mr. Adkins stated that Commission staff believe that the Notice has been one hundred percent (100%) successful in preventing the conditions and circumstances that allowed the West Divide Creek gas seep to occur. In addition, he stated that based on the success of the Notice, the Commission staff’s proposed conditions, and BBC’s plan of operations under the current application, Commission staff believes that drilling can safely resume in the moratorium without impact to public health, safety, welfare and the environment. Brian Macke, Director for the Commission stated that Commission staff is in favor and support of BBC’s application to drill in a limited portion of the moratorium area.

                        23. Based on the facts stated in the verified application and the testimony and exhibits presented by the Applicant at the hearing, the Commission finds that limited drilling of Williams Fork Formation wells upon certain lands within the moratorium area established under the Commission’s Order No. IV-276 should be allowed. In addition, the Commission finds that the Notice to All Operators Drilling Wells to the Mesaverde Group or Deeper in the Mamm Creek Field, Garfield County - Well Cementing Procedure and Reporting Requirements, effective July 23, 2004 and the recommendations proposed by the Commission staff and Board of County Commissioners of Garfield County should be complied with for all wells drilled under this order. Further, the Commission finds that the first five (5) wells should be drilled using one (1) drilling rig so that the wells can be properly evaluated to ensure that there are no problems with the drilling of the wells including uncontrolled releases of gas or adverse impacts to public health, safety, welfare and the environment. If there are no problems with these first five (5) wells, upon approval by the Director, the remaining fifteen (15) wells may be drilled using two (2) drilling rigs. If approval is denied, a hearing before the Commission should be scheduled for the next available hearing.

                        24. Bill Barrett Corporation agreed to be bound by oral order of the Commission.

ORDER

                        NOW, THEREFORE, IT IS ORDERED, that limited drilling of Williams Fork Formation wells upon the below-described lands within the moratorium area established under the Commission’s Order No. IV-276 is hereby approved:

Township 6 South, Range 91 West, 6th P.M.

Section 31: W½ NW¼

Township 6 South, Range 92 West, 6th P.M.

Section 25: All

Section 34: S½ SE¼

Section 36: NE¼, NE¼ NW¼

Township 7 South, Range 92 West, 6th P.M.

Section 3: That certain 96.93 acres in the N½ remaining uncommitted to the Hunter Mesa Unit

                        IT IS FURTHER ORDERED, that all wells shall be drilled in compliance with the Commission’s Notice to All Operators Drilling Wells to the Mesaverde Group or Deeper in the Mamm Creek Field, Garfield County - Well Cementing Procedure and Reporting Requirements, July 23, 2004.

                        IT IS FURTHER ORDERED, that all wells shall be drilled in compliance with the Commission’s Bradenhead Testing and Reporting Requirements for the Mam Creek Field Area dated August 23, 2004.

                        IT IS FURTHER ORDERED, that all conditions of BBC’s Ground Water and Methane Monitoring Plan shall be complied with when drilling on the lands described above. Analytical results shall be provided to the COGCC and the landowner within two (2) months of the date of sample collection. A walking survey of the surface water features within one-half (½) mile of a drill site shall be made, which shall document the occurrence, if any, of springs and methane seepage. Surface water samples shall be collected before commencing drilling and tested again within two (2) months of the well’s completion. All surface water features within one-half (½) mile of a drill site shall be monitored monthly for the duration of the drilling and completion operations using the current testing protocol. Samples from water wells and surface water shall be tested for the following parameters:

Major Cations (Ca, Na, Mg, K, Fe, Mn, Se)

Major Anions (Cl, SO4, HCO3, CO3)

Nitrate/nitrite

Total Dissolved Solids (TDS)

Methane

Benzene, ethylbenzene, toluene, xylenes

Field measurements and observations (conductivity, pH, hydrogen sulfide, temperature, color, odor, presence of bubbles)

If methane is detected at a concentration of 2 milligrams per liter (mg/l) or more, then a sample shall be collected for gas compositional analysis and stable isotope analysis of delta C13 and D of methane, ethane, and propane.

                        IT IS FURTHER ORDERED, that all conditions of BBC’s Additional Subsurface Data Collection Plan shall be complied with, including, if practicable, taking Wasatch Formation gas samples from one well on each of the drill pads while drilling the surface hole when drilling on the lands described above. The samples from the Wasatch Formation shall be tested for gas compositional analysis and stable isotope analysis of delta C13 and D of methane, ethane, and propane.

                        IT IS FURTHER ORDERED, that all conditions of BBC’s Mamm Creek Field Operations Plan dated December 2004 shall be complied with when drilling on the lands described above.

                        IT IS FURTHER ORDERED, that all concerns and conditions expressed in the July 4, 2005 correspondence from Dr. Geoffrey Thyne shall be complied with when drilling on the lands described above.

                        IT IS FURTHER ORDERED, that the first five (5) wells shall be drilled using one (1) drilling rig. If there are no problems with these first five (5) wells, upon approval by the Director, the remaining fifteen (15) wells may be drilled using two (2) drilling rigs. If approval is denied, a hearing before the Commission shall be scheduled for the next available hearing.

                        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.

                        IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this order to be final agency action for purposes of judicial review within thirty (30) days after the date this order is mailed by the Commission.

                        IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this order is not required prior to the filing for judicial review.

    ENTERED this 29th day of July, 2005, as of July 11, 2005.

                        CORRECTED this _______ day of February, 2006, as of July 11, 2005.

                                                                            OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

                By __________________________________

                            #9; Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

February 28, 2006