REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 18, 1982 at 9:00 a.m. in Room 110, State Centennial Building, Denver, Colorado, and was continued to February 19., 1982, upon the application of Coral Gulf Exploration Corporation, Martin Oil Company, Energy Oil, Inc., Jade Petroleum, Machii-Ross Petroleum Company, Excel Energy Corporation and Energy Minerals Corporation, for an order recommending the Codell formation underlying certain lands in Adams, Boulder, Jefferson, Larimer and Weld Counties, Colorado, as a "Tight Formation" pursuant to section 107 (b) of the Natural Gas Policy Act of 1978 (15 U.S.C. 3317) and the regulations thereunder, and, Applicants, having appeared in support of their application and having amended application as to the area, and no one having appeared in opposition, and the Commission having heard the testimony and evidence presented;

The Commission finds as follows:

1. Notice of the time, place and purpose of the hearing has been given as required.

2. The Commission is the jurisdictional agency pursuant to the rules in Docket No. RM 79-76 of the Federal Energy Regulatory Commission, and has jurisdiction over the subject matter of Coral Gulf Exploration Corporation, Martin Oil Company, Energy Oil, Inc., Jade Petroleum, Machii-Ross Petroleum Company, Excel Energy Corporation and Energy Minerals Corporation's application.

3. The area of concern is located in approximately the same area of the "J" Sand "Tight Formation" in the Wattenberg Gas Spaced Area. The lands are located a few miles north of Denver, Colorado and lie on the western flank of the Denver-Julesberg Basin. The western boundary of the area more or less coincides with the outcrop of the Codell formation against the Front Range and the formation thins to the east.

4. The Codell formation lies approximately 450 feet above the "J" Sand in the area. It is equivalent to the Frontier sandstone in Wyoming which has been designated a "Tight Formation". The formation is a blanket deposition of upper Cretaceous age with an average thickness of approximately 15 feet. It consists of a very fine grained sandstone, shaley and highly clay-filled, lending itself to low permeabilities.

5. Engineering testimony presented at the hearing indicates that:

a. The average in-situ gas permeability throughout the pay section is not expected to exceed .1 millidarcy.

b. The stabilized production rate, against atmospheric pressure, of wells completed for production from said Codell formation, at the average producing depths, without stimulation, is not expected to exceed a maximum allowable production rate defined by depths in Section 271.705 (b)(ii) for any completion location in said formation.

c. Hydrocarbons usually do not exist as a liquid in said Codell formation reservoir. No well is expected to produce more than five (5) barrels of crude oil per day.

6. Typical casing design of wells drilled in the area protects fresh water aquifers in the area as required by the rules and regulations of the Oil and Gas Conservation Commission of the State of Colorado.

7. In view of the above findings, all the criteria required by the Federal Energy Regulatory Commission pursuant to the rules in Docket No. 79-76 have been met; therefore, a recommendation should be made that the Codell formation underlying the area below described should be designated a "Tight Formation".

ORDER

NOW, THEREFORE, IT IS ORDERED, that the Colorado Oil and Gas Conservation Commission recommends that the Codell formation underlying the following described lands in Adams, Boulder, Jefferson, Larimer and Weld Counties, Colorado, be designated a "Tight Formation" and incorporated in the list of "Tight Formations " established pursuant to Rule 271.706 of the Federal Energy Regulatory Commission:

Township 1 North, Ranges 64 thru 70 West (inclusive), 6th P. M. All

Township 2 North, Ranges 64 thru 69 West (inclusive), 6th P.M. All

Township 2 North, Range 70 West, 6th P. M. Sections 1 thru 5, 8 thru 36

Township 3 North, Ranges 64 thru 69 West (inclusive)., 6th P.M. All

Township 3 North., Range 70 West, 6th P.M. Sections 1, 12, 13, 21 thru 28, 33 thru 36

Township 4 North, Ranges 64 thru 69 West (inclusive), 6th P.M. All

Township 5 North, Ranges 64 thru 68 West (inclusive), 6th P. M. All

Township 5 North, Range 69 West, 6th P. M. Sections 1 thru 4, 9 thru 16, 20 thru 29, 31 thru 36

Township 6 North, Ranges 64 thru 68 West (inclusive), 6th P.M. All

Township 6 North, Range 69 West., 6th P.M. Sections 1 thru 4, 9 thru 16, 21 thru 28, 33 thru 36

Township 1 South, Ranges 64 thru 70 West (inclusive), 6th P.M. All

Township 2 South, Ranges 69 thru 70 West (inclusive), 6th P.M. All

ENTERED this 18th day of March, 1982, as of February 19, 1982.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary