BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

REPORT OF COMMISSION

This cause was heard by the Commission on November 29, 2010, in Suite 801, at The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to establish an approximate 100-acre drilling and spacing unit for the S½ SE¼ NE¼, NE¼ SE¼, and SE¼ SE¼ of Section 24, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

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 pursuant to the Oil and Gas Conservation Act.

4.    Rule 318.a. of the Rules and Regulations of the Oil and Gas Conservation Commission requires that wells drilled in excess of 2,500 feet in depth be located not less than 600 feet from any lease line, and located not less than 1,200 feet from any other producible or drilling oil or gas well when drilling to the same common source of supply.  The E½ of Section 24, Township 6 South, Range 92 West, 6^th P.M. is presently subject to this Rule for the Williams Fork and Iles Formations.

5.    On February 22, 1994, the Commission issued Order No. 191-4, which among other things, established a 640-acre drilling and spacing unit for certain lands, including Section 24, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation.

6.    On January 10, 2005 (corrected June 8, 2005 and November 5, 2008) the Commission issued Order No. 191-8, which among other things, approved the equivalent of one well per 10 acres for certain lands, including the E½ of Section 24, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Williams Fork Formation.

7.    On April 25, 2005 the Commission issued Order No. 191-10, (corrected November 29, 2007 and November 5, 2008), which among other things, approved the equivalent of one well per 10 acres for certain lands, including the E½ of Section 24, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Iles Formation.

8.    On May 7, 2009, the Commission issued Order No. 191-64, which among other things, vacated the previously established 640-acre drilling and spacing unit for Section 24, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Mesaverde Formation. The Order further declared that the E½ of Section 24, Township 6 South, Range 92 West, 6^th P.M. is unspaced and subject to Rule 318.a.  Order No. 191-64 also continued authorization of one well per 10 acre equivalent well density, for the production of gas and associated hydrocarbons from the Williams Fork Formation and Iles Formation, restricting permitted wells to be located no closer than 100 feet to the boundaries of any lease line generally, and no closer than 200 feet from the boundary or boundaries of any lease line abutting or cornering lands not previously approved for 10-acre well density for the Williams Fork Formation.  Wells drilled under Order No. 191-64 are to be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter-quarter section (or lots or parcels approximately equivalent thereto).

9.    On October 8, 2010, BBC, by its attorney, filed with the Commission a verified application (“Application”) for an order to establish an approximate 100-acre drilling and spacing unit for the lands described as follows (“Application Lands”), for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:

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

            Garfield County, Colorado

BBC requested that all future Williams Fork Formation and Iles Formation wells drilled within the drilling and spacing unit have bottomhole locations no closer than 100 feet from the boundaries of the unit, unless an exception is granted by the Director of the Commission.  However, where the Application Lands abut or corner lands that the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation wells, wells should have bottomhole locations no closer than 200 feet from the boundary or boundaries of the drilling unit abutting or cornering such lands, unless an exception is granted by the Director of the Commission.

BBC requested that, except as otherwise authorized by order of the Commission, wells drilled under this application should be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter-quarter section (or lots or parcels approximately equivalent thereto), and that Iles Formation wells should be drilled and completed only in association with the drilling and completion of wells in the Williams Fork Formation, unless an exception is granted by the Commission.  

10.  On November 15, 2010, BBC, by its attorney, filed with the Commission a written request to approve the Application based on the merits of the verified Application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the Application.

11.  Testimony and exhibits submitted in support of the Application by David  Eckelberger, Land Negotiator for BBC, showed that by combining separate leaseholds into one spacing unit, the surface footprint for production facilities would be reduced, and BBC would be able to strategically and conveniently locate its drilling pads to directionally drill ten bottomhole locations that provide for optimum reservoir recovery and prevent waste.  Additional testimony showed that BBC is the sole leaseholder of the Application Lands.

12.  On November 16, 2010, the Colorado Department of Public Health and Environment submitted a written letter to the Commission which stated that granting the Application would protect public health, safety, welfare, and environment.

13.  The above-referenced testimony and exhibits show that granting the Application likely will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

14.  BBC agreed to be bound by oral order of the Commission. 

15.  Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order establishing an approximate 100-acre drilling and spacing unit for the S½ SE¼ NE¼, NE¼ SE¼, and SE¼ SE¼ of Section 24, Township 6 South, Range 92 West, 6^th P.M., for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations.

ORDER

NOW, THEREFORE IT IS ORDERED, that an approximate 100-acre drilling and spacing unit is hereby established for the below-described lands, for the production of gas and associated hydrocarbons from the Williams Fork and Iles Formations:

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

            Garfield County, Colorado

IT IS FURTHER ORDERED, that all future Williams Fork and Iles Formation wells to be drilled upon pursuant to this Order shall have bottomhole locations no closer than 100 feet from the boundaries of the unit,unless an exception is granted by the Director of the Commission.  However, where the Application Lands abut or corner lands that the Commission has not at the time of drilling permit application granted the right to drill 10-acre density Williams Fork Formation wells, wells shall have bottomhole locations no closer than 200 feet from the boundary or boundaries of the drilling unit abutting or cornering such lands, unless an exception is granted by the Director of the Commission.

IT IS FURTHER ORDERED, that, except as otherwise authorized by order of the Commission, wells drilled under this application shall be drilled from the surface either vertically or directionally from no more than one pad located on a given quarter-quarter section (or lots or parcels approximately equivalent thereto), and that Iles Formation wells shall be drilled and completed only in association with the drilling and completion of wells in the Williams Fork Formation, unless an exception is granted by the Commission.

IT IS FURTHER ORDERED, that the provisions contained in the above Order, shall become effective immediately.

                        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 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 ______ day of December 2010, as of November 29, 2010.

                                                            OIL AND GAS CONSERVATION COMMISSION

                                                              OF THE STATE OF COLORADO

                                                                                                                                                                        By__________________________         __

                                                                        Robert A. Willis, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

December 20, 2010