before the oil and gas conservation commission
of the state of
COLORADO

IN THE MATTER OF PROMULGATION AND                                             )                     CAUSE NOS. 139, 440, 479 and 510

ESTABLISHMENT OF FIELD RULES TO GOVERN                                 )

OPERATIONS IN THE MAMM CREEK FIELD,                                           )                     ORDER NOS. 139-69, 440 -40,

GARFIELD COUNTY, COLORADO                                                                                                              479-18 and 510-30

report of the commission

                        This cause came on for hearing before the Commission at 9:00 a.m. on January 8, 2007, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to allow the equivalent of one well per 10 acres, for production from the Williams Fork Formation, for certain lands in Townships 6 South, Ranges 95 through 96 West, 6th P.M.

FINDINGS

                        The Commission finds as follows:

                        1. Williams Production RMT Company ("Williams"), 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 Commission requires that wells drilled in excess of two thousand five hundred (2,500) feet in depth be located not less than six hundred (600) feet from any lease line, and located not less than one thousand two hundred (1,200) feet from any other producible or drilling oil or gas well when drilling to the same common source of supply. Certain lands in Township 6 South, Ranges 95 and 96 West, 6th P.M., are subject to this Rule.

                        5. On April 21, 2003, the Commission issued Order Nos. 139-38, 440-23, 479-11, 495-3 and 510-8, (amended October 11, 2006), which among other things, allowed the equivalent of one (1) well per 10 acres to be drilled for the production of gas and associated hydrocarbons from the Williams Fork Formation of the Mesaverde Group, including certain lands in Township 6 South, Ranges 95 and 96 West, 6th P.M.

                        6. On November 20, 2006, Williams Production RMT Company, by its attorney, filed with the Commission a verified application for an order to allow the equivalent of one (1) well per 10 acres to be drilled in the below-described lands for production from the Williams Fork Formation:

Township 6 South, Range 95 West, 6th P.M.

Section 7:

Portions of the S½, E½ E½ as the same is embraced and bounded by the Sheridan Placer Nos. 1-4 placer mining claims.

Section 8:

All as the same is embraced and bounded by the Sheridan Placer Nos. 4-8 placer mining claims and Lots 1-4.

Section 9:

All as the same is embraced and bounded by the Sheridan Placer Nos. 8-12 placer mining claims and Lots 1-4.

Section 10:

Those portions of the W½, W½ NE¼, SE¼ as the same is embraced and bounded by the Sheridan Placer Nos. 12-16 placer mining claims.

Section 15:

Those portions of the W½ NW¼ and W½ E½ NW¼ as the same is embraced and bounded by the Sheridan Placer Nos. 12 and 13 and La Paz No. 5 placer mining claims.

Section 16:

Lots 4, 5, S½ SW¼, and those portions of the N½, N½ S½ as the same is embraced and bounded by the Sheridan Placer Nos. 8-12 and La Paz Nos. 5, 7, and 8 placer mining claims.

Section 17:

Lot 3, SE¼ SE¼, and those portions of the N½, SW¼ and SE¼ as the same is embraced and bounded by the Sheridan Placer Nos. 4-8 and La Paz Nos. 1, and 8-11 placer mining claims.

Section 18:

All as the same is embraced and bounded by the Sheridan Placer Nos. 1-4, 21 and La Paz Nos. 1, 11, and 13 placer mining claims.

Section 19:

All less Lots 1-7, as the same is embraced and bounded by the Sheridan Placer No. 21 and La Paz Nos. 10-13, and 14 placer mining claims.

Township 6 South, Range 96 West, 6th P.M.

Section 13:

N½ S½, S½

Section 24:

NE¼

Note: All references to the individual Sheridan placer mining claims mentioned above are as described and platted in Survey No. 19942. All references to the individual La Paz placer mining claims mentioned above are as described and platted in Survey No. 19837

All future Williams Fork Formation wells on the application lands should be located downhole anywhere upon such lands but no closer than 100 feet from the outside boundary of the drilling and spacing unit unless such unit abuts or corners lands in respect of which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density downhole drilling for the Williams Fork Formation in which event the Williams Fork Formation wells to be drilled upon the application lands should be drilled downhole no closer than 200 feet from the portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for the Williams Fork Formation wells has not been ordered by the Commission.

That all wells to be drilled under the verified application will be drilled from the surface, either vertically or directionally, from no more than one pad located on a given quarter quarter section unless exception is granted by the Colorado Oil and Gas Conservation Commission pursuant to application made for such exception.

                        7. On December 22, 2006, Williams, 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.

                        8. Testimony and exhibits submitted in support of the application showed the following:

(a) The geologic model of the Williams Fork Formation in the major producing areas of the Piceance Basin is well understood and consists of extensive log, completion and reservoir engineering data from wells inside current 10-acre density areas and the extremely useful and representative nearby outcrops of producing rocks. Based upon outcrop studies, the majority of the discontinuous sand bodies within the Williams Fork Formation are smaller than the distance between wells drilled on a 10-acre density basis. Therefore, 10-acre density drilling is necessary to develop the Williams Fork Formation underlying the application lands.

(b) Pressure measurements taken within Williams’ two pilot areas confirm the geologic model.

(c) Production data taken from wells in the area during different time frames also confirm the geologic model.

(d) Gas in place calculations indicate that 10-acre density drilling is necessary to maximize production of the resource.

                        9. Testimony and exhibits presented in support of the application show that the proposed increased density will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of gas, and will not violate correlative rights.

                        10. No protests to the application have been filed with the Commission or the applicant.

                        11. Williams Production RMT Company agreed to be bound by oral order of the Commission.

                        12. 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.b., the Commission should enter an order to allow the equivalent of one well per 10 acres, with the permitted well to be located no closer than 100 feet from the outside boundary of the application lands, for production from the Williams Fork Formation.

ORDER

                        NOW, THEREFORE IT IS ORDERED, that optional 10-acre downhole well density is hereby approved for wells to be drilled on the below-listed lands, for production of gas and associated hydrocarbons from the Williams Fork Formation.

Township 6 South, Range 95 West, 6th P.M.

Section 7:

Portions of the S½, E½ E½ as the same is embraced and bounded by the Sheridan Placer Nos. 1-4 placer mining claims.

Section 8:

All as the same is embraced and bounded by the Sheridan Placer Nos. 4-8 placer mining claims and Lots 1-4.

Section 9:

All as the same is embraced and bounded by the Sheridan Placer Nos. 8-12 placer mining claims and Lots 1-4.

Section 10:

Those portions of the W½, W½ NE¼, SE¼ as the same is embraced and bounded by the Sheridan Placer Nos. 12-16 placer mining claims.

Section 15:

Those portions of the W½ NW¼ and W½ E½ NW¼ as the same is embraced and bounded by the Sheridan Placer Nos. 12 and 13 and La Paz No. 5 placer mining claims.

Section 16:

Lots 4, 5, S½ SW¼, and those portions of the N½, N½ S½ as the same is embraced and bounded by the Sheridan Placer Nos. 8-12 and La Paz Nos. 5, 7, and 8 placer mining claims.

Section 17:

Lot 3, SE¼ SE¼, and those portions of the N½, SW¼ and SE¼ as the same is embraced and bounded by the Sheridan Placer Nos. 4-8 and La Paz Nos. 1, and 8-11 placer mining claims.

Section 18:

All as the same is embraced and bounded by the Sheridan Placer Nos. 1-4, 21 and La Paz Nos. 1, 11, and 13 placer mining claims.

Section 19:

All less Lots 1-7, as the same is embraced and bounded by the Sheridan Placer No. 21 and La Paz Nos. 10-13, and 14 placer mining claims.

Township 6 South, Range 96 West, 6th P.M.

Section 13:

N½ S½, S½

Section 24:

NE¼

Note: All references to the individual Sheridan placer mining claims mentioned above are as described and platted in Survey No. 19942. All references to the individual La Paz placer mining claims mentioned above are as described and platted in Survey No. 19837

                        IT IS FURTHER ORDERED, that for the Williams Fork Formation wells, the permitted well shall be located no closer than one hundred (100) feet from the outside boundary of the application lands, unless such boundary abuts or corners lands in respect of which the Commission has not at the time of the drilling permit application granted the right to drill 10-acre density wells, in which event the Williams Fork Formation wells to be drilled on the application lands shall be drilled downhole no closer than two hundred (200) feet from that portion of the boundary which so abuts or corners the lands in respect of which 10-acre density downhole drilling for Williams Fork Formation wells has not been ordered by the Commission.

                        IT IS FURTHER ORDERED, that except as previously authorized by order of the Commission, wells to be drilled under this application shall be drilled from the surface either vertically or directionally from no more than one (1) pad located on a given quarter quarter section unless exception is granted by the Colorado Oil and Gas Conservation Commission pursuant to application made for such exception.

                        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 filing for judicial review.

                        ENTERED this __________ day of January, 2007, as of January 8, 2007.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

By:

 

Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

January 18, 2007