Ky/Tenn Report

Volume 14, Number 10 October 2007

"FLASH FIRE" HITS SOMERSET REFINERY - Local firefighters responded to a fire at the Somerset Refinery, Friday, October 6th. Somerset Assistant Chief said the blaze was contained to an area approximately 100 feet by 100 feet area around the plant's reformer, a piece of equipment which transforms naphtha into gasoline. Bill Spears, the owner of the refinery which is now in bankruptcy, said the cause of the flash fire was likely metal fatigue. "The fire did some damage, but minimal," he said. "No one was injured and there was no environmental damage. It could have burned down a $60 million facility." The Environmental Protection Agency and the State Fire Marshall's office had representatives at the scene.

REFINERY CHANGES OWNERS, BANKRUPTCY, FIRE, FLOOD NEXT? - Frank Lynch and Roy Shirley sold the refinery to Bill Spears earlier this year. Spears quickly put the company into bankruptcy, which sparked a challenge in the courts by Lynch and Shirley. The battle for control continues. As oil producers, we have been through a change of ownership, bankruptcy, now a fire and some are wondering what is next, a flood.

STRIP YOUR GAS, SAYS EAST TENNESSEE - East Tennessee Natural Gas LLC has put operators on notice that the firm is asking FERC for authority to accept no gas into its pipeline with a Btu of higher than 1110. Tennessee gas normally has a Btu content of 1200 or more, which means the producers selling directly into the East Tennessee pipeline must strip their gas of hydrocarbons to reduce the Btu to 1110 or below. This impacts several Tennessee producers, including NGAS, Vinland, Atlas America as well as Citizens Gas Utility District. The pipeline is asking FERC to limit the Btu to 1110 by February 1, 2007. The producers are hopeful that if FERC grants East Tennessee's request, there will be time allow to add gas stripping facilities.

NOT SO FAST, FERC SAYS TO SOME PIPELINES - East Tennessee Natural Gas is citing a recent federal white paper that finds that gas with a Btu higher than 1110 is dangerous to transport. The pipeline has told producers it feels that FERC will grant their request to limit the gas it transports to 1110 Btu immediately. However, in several similar cases, FERC has denied the request and called for technical conferences to review the these Btu limiting requests. In the case of Northern Gas Company, the Wyoming Pipeline Authority filed a motion to intervene and protest with FERC and fully expects to prevail.

MONTELLO DRILLING AT 6,200 FEET ON BASEMENT TEST - Montello Resources Ltd. (TSX Ventures:MEO) reported on October 4, 2007 that on its John Bowen #2 in Morgan County, Tennessee, they have completed five cement squeezes over the highly porous and permeable Copper Ridge zone and are drilling ahead at 6,200 feet. The cost to drill, test and case the well was originally anticipated to be $3 million US, with Montello paying 10% of the costs, Austin Development Corp (TSX VENTURE:AUL) paying 80% and Great Northern Oilsands, Inc., (Pinksheets:GNN) paying 10%. To date, the company says a total of $4 million has been spent and a supplemental AFE for $1.7 has been submitted to the partners, based on their earned interest in the well. Montello has 55%, Austin 40% and Great Northern 5%. The well is targeted to be drilled to the basement, which is anticipated to occur at between 7,000 and 9,500 feet.

NEXT MEETING, CHRISTMAS PARTY - The next meeting of the Tennessee Oil & Gas Association Board of Directors will be held Saturday, December 1, 2007, prior to the Annual Christmas party. The meeting and party will be held at the Knoxville Marriott. Invitations with details of the meeting and party will be mailed prior to the events.

2008 CONVENTION IN KNOXVILLE - The 2008 TOGA convention will be held May 14th- 16th at the Marriott Hotel in downtown Knoxville, Tennessee. Plans for the convention will be reviewed at the December 1, 2007 Board of Directors meeting. More convention details and room reservation information will be featured in future newsletters.

GLEN BURKE TO SUPERVISE PLUGGING - Mike Burton, Supervisor, Oil & Gas Board, has informed the TOGA office that he is making a change in inspector's assignments. Glenn Burke will replace Jeff Laxton as the inspector handling plugging jobs. Operators planning to plug a well must call Burke at least 12 hours before the planned plugging job

CANNON COUNTY OPPORTUNITY - I have a water well approximately 250 feet deep that appears to have oil only. It comes to within 18 feet of the surface and burns. Located on Wilmouth Creek Road, Gassaway in Cannon County. Agent for the property is Jerry Spurlock. Home 615-597-1380, cell-931-284-1549. Owner is Jim King 615-563-5464.

TENNESSEE SEPTEMBER PERMITS: Anderson County - Atlas America, Coal Creek Mining & Mfg., #CC-2178, 6170', #CC-3180, 6170', #CC-2176, 6135', #CC-2106, 6190', #CC-2144, 6055' / Vinland Energy Operations, The Coal Creek Co., #LC17, 3200', Lake City / Fentress County - Berry Resources, Inc., Jimmy King, #1-A, 2000', Riverton / Morgan County - Atlas America, Coal Creek Mining & Mfg., #CC1113, 4455', #CC1112, 4350', #CC1114, 4425', #CC1115, 4195', #CC-215, 4345', Petros / Overton County - National Energy Development, Juanita Story, J5N, 2000' / Young Oil Corp., Reba Copeland, #2, 2000', #4, 2000' / Chatham Drilling, Dixie White, #9, 2000', Alpine / US Energy Partners, Inc., Johnny Nash ET AL, Unit #1, 4000' / James Mathews, #3, 2000', #4, 2000', Obey City / Pickett County - Source Oil & Gas, Inc., Fred W. Clarke, #7, 2000', Byrdstown / Ruth Oil Company, David Brain Smith, #1, 2000', Alpine / Scott County - Outdoor Resources, Mary Pauline Ross, #2, 2000', Robbins / Atlas America, LLC, Fund 7 Domestic, LLC, #BR-1159, 3505', #BR-1160, 3355', Gobey, #BR-1156, 2930', #BR-1153, 3170', Fork Mountain / #BR-1154, 2935', #BR-1155, 2910', Norma

KENTUCKY SEPTEMBER PERMITS: Baren County - Mark Cornell, Lana, Lovell, #1, Dutch Creek Ss - Clinton County - Steve Burchett Oil Co., Robert Beaty, #1A, Sunnybrook / Robert Beaty, #1, #2, / Lucky Production Oil Expl, LLC, #7, / John Poore, #KY1, #Ky2, #KY3, / Orville, Freeman, #2, Knox Gp - Cumberland County - Sunset Energy, LLC, Earl Riddle, #14, #13, Knox Gp / Clifford Bradshaw, #22, #23, Murfreesboro / Hart Oil, LLC, Chat Chowning, #1, #2 / Kroger Capital Investments, LP, Benny Stearns, #2, Knox Gp - Harlan County - Equitable Production Company, Pardee Minerals, LLC, #537543, #537547, #537552, / Daugherty Pet, Inc., H & H Worldwide Financial Services, #DPI-1623, / Millers Cove ET AL, #1794T, Devonian, LP - Knox County - Vinland Energy Operations, LLC, Cherokee Holdings, #3, / Jerry Collinsworth, #3, #5, #6, / Ernest Taylor ET AL #1, #2, / Nami Resources Company, LLC, Patricia Henson, #2, / Amwes Exploration, LLC, Gordon Murphy, #17, Clinton Sh / Gordon Murphy, #18, Lexington Ls - Leslie County - Chesapeake Appalachia, LLC, Harvey Gay ET AL, #826616, Clinton Sh / Daugherty Pet, Inc., WPP, LLC, # DPI-1215, #DPI-1214, Devonian, LP / Vinland Energy Operations, LLC, Bertha Lewis, #1, / Nami Resources Company, LLC, Medina Royalties, LLC, #SMEPA-144, Clinton Sh - Letcher County - Equitable Production Company, Equitable Production Company, #567126, #567127, #567306, #567303, Huron Mbr, Ohio Sh / #567128, #567129, #567084, Cleveland Mbr, Ohio Sh / Clean Gas, Inc., Rover Land, LLC, #214, #215, Equitable Production Company, Elkhorn Collieries, Inc., #566571, Equitable Production Company, #567083, #567302, Devonian LP / Daugherty Pet, Inc., Vernon Cornett, #DPI-1208, Devonian LP

The Ky/Tenn Report is published monthly and distributed at no cost to oil and gas operators in Tennessee and Southern Kentucky. It is owned and operated by W.D. Goodwin, Inc., The editor is Bill Goodwin, e-mail: tmdbill@aol.com it is the official publication of the Tennessee Oil & Gas Association, 750 Old Hickory Blvd, #150-2, Brentwood, TN, 37027. Phone 615.371.6137, Fax 615.599-1806. Web site: www.tennoil.com.

KY/TENN REPORT
750 OLD HICKORY BLVD, #150-2
BRENTWOOD, TN 37027