REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on May 21, 1984 at 9:00 A.M., in Room 110, State Centennial Building, Denver, Colorado, after giving Notice of Hearing as required by law, on the application of Resource Enterprises, Inc. which was amended, for an order approving a research and development project to develop technology for the production of methane gas from unminable coal scans in the Cameo Coal Section of the Mesaverde formation underlying certain lands in Mesa County, Colorado, and further to delete such lands from the provisions of orders in Cause No. 166, Order No. 371-1 and general Rule 318. The application was further amended at the hearing to delete the NW/4 of Section 33.

FINDINGS

The Commission finds as follows:

1. Resource Enterprises, Inc., 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. A research and development project is planned to develop technology for the production of methane gas from unminable coal seams in the Cameo Coal Section of the Mesaverde formation underlying the following described lands in Mesa County, Colorado, to-wit:

Township 9 South, Range 94 West, 6th P.M. Section 30: All Section 31: All Section 32: All 5. The Cameo Coal Section is defined as being those zones and formations encountered between the depths of 5300 feet and 5780 feet in Well No. 1 Deep Seam 32-2, located 1896 feet from the north line and 1628 feet from the west line Section 32, Township 9 South, Range 94 West, 6th P.M., or the stratigraphic equivalent thereof underlying the lands described in Finding 4 herein.

6. The Commission issued Order No. 166-15, on May 8, 1981, effective April 20, 1981, which extended the spaced area of the Plateau Field in which 160-acre drilling and spacing units for the production of gas from the Mesaverde formation (defined to include the Corcoran Sandstone as it's basal member) were established by previous orders in Cause No. 166. The additional lands included all of Section 31 and 32, Township 9 South, Range 94 West, 6th P.M., Mesa County, Colorado.

Order No. 371-1 was issued June 15, 1981, effective May 18, 1981, which established 160-acre drilling and spacing units for the production of gas and associated hydrocarbons from the Mesaverde formation underlying certain lands in the Buzzard Field. All of Section 30, Township 9 South, Range 94 West, 6th P.M. was included in the spaced area.

7. In order to conduct such a research and development program full discretion should be allowed for wells to be drilled in any pattern that is necessary to experiment with the spacing pattern for the drilling of wells for production of methane gas from the Cameo Coal Section underlying the lands described in Finding 4 herein. Therefore, said lands should be deleted from the Provisions of Order NO. 166-15 for the Plateau Field and Order No. 371-1 for the Buzzard Field and further exempt from Rule 318 of the rules and regulations of the Commission only as it pertains to the Cameo Coal Section.

8. Applicant should therefore be allowed to drill wells into the Cameo Coal Seam, as defined, at locations it finds necessary provided however, that no well should be located closer than 600 feet to the boundaries of the area described in Finding 4 herein except for wells drilled adjacent to the boundary of the W/2 Section 29, Township 9 South, Range 94 West, 6th P.M., where wells may be drilled as close as it deems necessary due to topographic conditions.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the research and development project as presented by the Applicant to develop the technology for the Production of methane gas from unminable coal seams in the Cameo Coal Section of the Mesaverde formation, as defined in Finding 5 herein, underlying the following described lands in Mesa County, Colorado is hereby approved: Township 9 South, Range 94 West, 6th P.M. Section 30: All Section 31: All Section 32: All

IT IF FURTHER ORDERED, that Section 30, Township 9 South, Range 94 West, is hereby deleted from the spaced area of the Buzzard Field as established by Order No. 371-1 and Sections 31 and 32 Township 9 South, Range 94 West are hereby deleted from the spaced area of the Plateau Field as established by Order No. 166-15 and said lands are hereby exempt from Rule 318 of the rules and regulations of the Commission only insofar as it pertains to the Cameo Coal Section of the Mesaverde formation, as defined.

IT IS FURTHER ORDERED, that the Applicant shall have full discretion to drill wells into said Cameo Coal Section in any pattern that it deems necessary provided, however, that no well be drilled closer than 600 feet to the boundaries of the area, herein described, except for wells drilled adjacent to the boundary of the W/2 Section 29, Township 9 South, Range 94 West, 6th P.M. were wells may be drilled as close to the boundary as it deems necessary due to topographic conditions.

IT IS FURTHER ORDERED, that the Commission shall be notified at the time the first well drilled is completed for production. A hearing shall be held six (6) months from that date, at which time additional data shall be submitted to the Commission concerning this matter. 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 19th day of June 1984, as of May 21, 1984.

THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary

(166-19/371-2)

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