ADMINISTRATIVE ORDER BY CONSENT

FINDINGS

1. On May 17, 2002, Colorado Oil & Gas Conservation Commission ("COGCC") staff conducted an onsite inspection of the Grass Mesa Ranch 27-2B1 Well located in the NW1/4 NE1/4 of Section 27, Township 6 South, Range 93 West, 6th P.M. While attempting to access the site, staff was involved in a road use conflict incident with an EnCana Oil & Gas (USA) Inc. ("EnCana") contractor that demonstrated that the Grass Mesa Road was not capable of supporting sa fe travel by both EnCana's contractors and residents of Grass Mesa. The flagman at the bottom of the hill made no effort to inform staff of the oncoming traffic and potential danger. The Grass Mesa Road is a steep, narrow and winding private residential road that constitutes the sole access to nearly 50 homesites. COGCC staff had received four complaints from residents of Grass Mesa concerning the unsafe road conditions and practices of EnCana and its con tractors utilizing the Grass Mesa Road. Shared residential and industrial use of the road, including access for and in support of drilling and production operations in its current condition is not a safe practice and constitutes a threat to the public health, safety and welfare.

2. On May 23, 2002 COGCC staff issued a Notice of Alleged Violation ("NOAV") to EnCana Oil & Gas (USA), Inc. ("EnCana") for the Grass Mesa Ranch 27-2B1 Well. The NOAV cited violation of Rule 602.b., which states that unsafe or potentially dangerous conditions... "shall be remedied as soon as practical" and "Where unsafe or potentially dangerous conditions exist, the owner or operator shall respond as directed by an agency with demonstrated authori ty to do so...". The NOAV required that EnCana provide COGCC staff with an access and transportation plan detailing how they will create safe access to their drilling and production operations on Grass Mesa in a manner that does not endanger the general public. The abatement date required the plan to be submitted to COGCC staff by June 17, 2002 and implemented by July 1, 2002.

3. Per return receipt, EnCana accepted the NOAV on May 28, 2002.

4. EnCana submitted an Access and Transportation Plan on June 12, 2002 and submitted a revised Access and Transportation Plan on July 1, 2002. EnCana implemented the interim measures of their plan on July 1, 2002. The interim measures specified the hours the Grass Mesa Road was to be used for EnCana's gas operations.

5. Staff responded to EnCana's Access and Transportation Plan by letter dated July 22, 2002. The response stated that EnCana's plan contained no specific deadline for when the Mesa Access Hill Road would be appropriately widened or alternate access developed and that the NOAV could not be abated with an open ended compliance deadline. The letter specified a deadline of September 15, 2002, for EnCana to either widen the Grass Mesa Road as highlighted on an aerial photo or to develop a safe alternate access route. The response stated that staff concurred with the other safety measures outlined in the revised plan and that failure to abate the NOAV by September 15, 2002 may result in additional enforcement action.

6. EnCana requested a second extension to the abatement deadline on September 13, 2002. The request described the unsuccessful efforts EnCana had made to obtain alternate access across private lands. The request indicated EnCana may be able to work out an alternate access route across federal land and asked for the abatement deadline to be extended to November 15, 2002.

7. On September 18, 2002 an EnCana contractor traveled with heavy equipment up Grass Mesa Road during hours when such traffic was prohibited by the approved Access and Transportation Plan. The contractor elected to travel during the restricted hours of operation despite EnCana's instructions to avoid traveling during those hours. The contractor's truck got stuck and blocked the road for several hours. The incident resulted in several complaint cal ls from homeowners who could not get down off the mesa to pick up their children at the school bus stop. The incident was also self-reported by EnCana.

8. EnCana should be found in violation of Rule 602.b. for failure to comply with the approved Access and Transportation Plan.

9. Rule 523. specifies a base fine of one thousand dollars ($1,000) for each violation of Rule 602.

10. A total monetary penalty of One Thousand dollars ($1,000) for violation of Rule 602.b. should be assessed against EnCana for this violation in accordance with Rule 523.a. A mitigating factor in determining the fine amount is the self-reporting of the violation by EnCana.

11. COGCC staff responded to EnCana's extension request by letter dated September 27, 2002. The response stated the previous interim plan had not been successful in eliminating hazardous situations and granted the extension request with additional conditions of approval.

12. EnCana should abide by the modified interim Access and Transportation Plan including the additional stipulations contained in the staff response letter dated September 27, 2002 extending the deadline to complete new access construction or existing access improvements by November 15, 2002.

13. If EnCana fails to follow the modified interim Access and Transportation Plan, COGCC staff should issue a Notice of Alleged Violation and an Administrative Order by Consent for any new incident, under the Commission's jurisdiction, along with a recommended fine.

14. If the new access road or improvements to the existing road are not completed by November 15, 2002, the COGCC Director should docket an Order Finding Violation hearing before the Colorado Oil and Gas Conservation Commission to order EnCana to obtain a new access road or make the required improvements to the existing access road prior to initiating any new gas well operations on Grass Mesa.

ORDER

NOW, THEREFORE IT IS ORDERED, that EnCana Oil & Gas (USA) Inc. shall be found in violation of Rule 602.b., for failure to comply with the approved Access and Transportation Plan for access to the Grass Mesa Ranch 27-2B1 Well located in the NW1/4 NE1/4 of Section 27, Township 6 South, Range 93 West, 6th P.M.

IT IS FURTHER ORDERED, that EnCana Oil & Gas (USA) Inc. shall be assessed a total fine of One Thousand dollars ($1,000) for the above-described rule violation, payable within thirty (30) days of the date the order is entered by the Commission.

IT IS FURTHER ORDERED, that EnCana Oil & Gas (USA) Inc. shall abide by the modified interim Access and Transportation Plan including the additional stipulations contained in the staff response letter dated September 27, 2002 extending the deadline to complete new access construction or existing access improvements by November 15, 2002.

IT IS FURTHER ORDERED, that if EnCana is responsible for an incident under the Commission's authority that is a violation of the modified interim Access and Transportation Plan, COGCC staff shall issue a Notice of Alleged Violation and an Administrative Order by Consent, along with a recommended fine.

IT IS FURTHER ORDERED, that if the new access road or improvements to the existing road are not completed by November 15, 2002, the COGCC Director shall docket an Order Finding Violation hearing before the Colorado Oil and Gas Conservation Commission to order EnCana to obtain a new access road or make the required improvements to the existing access road prior to initiating any new gas well operations on Grass Mesa.

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.

RECOMMENDED this day of October, 2002.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Morris Bell, Hearing Officer Dated at Suite 801 1120 Lincoln St. Denver, Colorado 80203 October 4, 2002

AGREED TO AND ACCEPTED THIS DAY OF OCTOBER, 2002.

ENCANA OIL & GAS (USA) INC.

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