IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE RIO BLANCO FIELD, RIO BLANCO COUNTY, COLORADO Cause No. 264 Order No. 264-1

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 20, 1973 at 10 A.M., in the Auditorium of the C.B.I. Building, 1370 Broadway, Denver, Colorado, on the application of CER Geonuclear Corporation for an order approving a certain Unit Agreement and Unit Operating Agreement for the development and operation of the Rio Blanco Unit Area, and further to approve the use of nuclear completion methods in the Rio Blanco Unit Well No. RB-E-01 by use of nuclear explosives as proposed on the Oil and Gas Conservation Commission Form No. 4. The Applicant, at the time of the hearing, withdrew that part of the application requesting approval of the Unit Agreement and the Unit Operating Agreement, and only requested the approval of the completion method as proposed on said Form 4. The hearing was further continued on March 20, 1973 and April 17, 1973.

FINDINGS

The Commission finds as follows:

1. That due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

2. That 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 under 100-6-15 (2c) CRS 1963, as amended.

3. That the plan submitted by the Applicant proposes to employ muclear completion methods in the Rio Blanco Unit Well No. RB-E-01 located in the NW/4 NW/4 of Section 14, Township 3 South, Range 98 West, 6th P.M., Rio Blanco County, Colorado, as described on the Oil and Gas Conservation Commission Form 4.

4. That the Applicant submitted to the Oil and Gas Conservation Commis-sion copies of its execution contract with the Atomic Energy Commission and the insurance policies it had obtained in connection with the nuclear experiment. In addition to examin-ing the execution contract and insurance policies, the Oil and Gas Conservation Commis-sion received written communication from the Atomic Energy Commission, which is of record, assuring the Oil and Gas Conservation Commission that in addition to CER Geo-nuclear Corporation's indemnification obligations under the execution contract and the private insurance coverage, losses which are excluded under the private insurance policies that are proximately caused by the nuclear experiment will be indemnified by the Atomic Energy Commission from the initial dollar loss to a maximum of 500, 000, 000.00.

5. That the evidence indicated there were several methods of re-entry and that the method to be used would not be determined until after detonation. Therefore, the Oil and Gas Conservation Commission specifically withholds approval of any re-entry method proposed by the Applicant and will continue this matter for further hearing re-garding re-entry and testing procedures.

(over)

6. That in view of the increasing shortage of natural gas, approval of CER Geonuclear Corporation's request to implant and detonate the nuclear stimulation device as described on the Oil and Gas Conservation Commission Form 4 is in the public interest in that it complies with the purpose of the Oil and Gas Conservation Act in foster-ing, encouraging and promoting the development, production and utilization of gas in the State of Colorado as provided in 100-6-22 CRS 1963, as amended.

7. That the approval of CER Geonuclear Corporation's request to im-plant and detonate said nuclear stimulation device will not create waste as that term is defined in 100-6-3 CRS 1963, as amended.

8. That the approval of the nuclear experiment as limited herein will protect the public and private interests against waste in the production and utilization of gas by prohibiting waste as defined in 100-6-3 and 100-6-22 CRS 1963, as amended.

9. That no further nuclear experiments in the proposed Rio Blanco Unit Area should be permitted until the results of this experiment have been obtained and reviewed and further hearings have been held to consider any further experiments.

ORDER

NOW, THEREFORE, IT IS ORDERED, that CER Geonuclear Corporation

IT IS FURTHER ORDERED, that no less than 60-days prior to the date on which CER Geonuclear Corporation intends to re-enter and test said Well No. RB-E-01, it shall notify the Oil and Gas Conservation Commission of such intention, furnishing the Commission with its proposed plan of re-entry and testing and such other information as it may have from its monitoring of the detonation. The Commission, at that time, will hold an additional hearing or hearings for consideration of the proposed plan of re-entry and testing.

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.

ORDERED this 25th day of April, 1973.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

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