2008-07-28_PERMIT FILE - X200822902 (3)

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Site Development - Exploration Access: As previously discussed, all access will be by the extensive existing road network on the Hill Ranch property used to access the CBM well pads in the Lorencito Project Area. These designed roads have been constructed with proper drainage control and are surfaced with gravel (see photos in Attachment B). The exploration drill locations will use existing CBM well pads (see Table 1 and photos). The pads have been constructed as cut and fill features, have been finish graded and leveled, and covered with several inches of gravel. The pads are approximately 200x200 feet. These existing access and well pad conditions negate any requirement for new or additional disturbances. The Hill Ranch, owners of the project area surface, have coordinated the drilling access with Pioneer Energy for use of the pads and roads. Site Development - Drill Pad Construction: The maximum area associated with drilling on the CBM pads is 100x100 feet. There is no topsoil or subsoil to salvage and little or no grading required. The gravel surface on the pad will be removed where necessary and placed in a small stockpile on the pad adjacent to the drilling activity. The gravel will be respread during final reclamation. Mud pits will be constructed within the immediate vicinity of the drill site locations. Generally, two or three mud pits are required, with typical pit dimensions of 10x5 feet and six feet deep. Excavated material will be stockpiled adjacent to the mud pit for use in backfilling the pit following completion of drilling activities. A small berm will be constructed around these activities to contain any sediment on site. Drilling Operations: A rotary drill-rig, capable of rotary drilling and spot-coring, will be utilized for the exploration drilling. The drill-rig will be a truck-mounted, rubber-tired unit, capable of operating in rough terrain. Support equipment will include, but will not be limited to, a water truck, pipe truck and/or pipe trailer, rig-up truck, air compressor, core trailer, and two or three 4 x 4 pickups for the drill-crew and company representatives. For each drillhole, a short section (typically 40-60 feet) of threaded surface casing will be set to stabilize unconsolidated surface materials. Drillholes will be a nominal 6.25 inches in diameter and will vary in depth from approximately 590 to 940 feet. The anticipated total depth for each drillhole is identified in Table 2. The Primero coal seam will be cored in each drillhole. Cores will be recovered, examined and logged by a qualified geologist, and core samples sent-off for analysis of coal. The primary circulation medium will be water and drilling mud. In the event that subsurface conditions are favorable, air or an =' /foam medium may be utilized, as an alternative to mud. Water for drilling will be obtained from stock ponds located on surface controlled by the Hill Ranch. Drilling contracts will specify that only non-toxic, bio-degradable compounds and additives may be used for drilling muds.