REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on June 23., 1980 at 9:00 a. m., upon the application of Mountain Petroleum Corporation and J-W Operating Company, for the designation of the Niobrara formation underlying lands in Cheyenne,. Kit Carson, Lincoln, Logan, Phillips, Sedgwick, Washington and Yuma Counties, Colorado, as a "Tight Formation" pursuant to Section 1.07 (b) of the Natural Gas Policy Act of 1978 (15 U.S.C. 3317) and the regulation s thereunder, and Mountain Petroleum Corporation and J-W Operating Company having appeared in support of their application, 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 interim rules in Docket No. 79-76 of the Federal Energy Regulatory Commission, and has jurisdiction over the subject matter of said application.

3. The Niobrara formation,, of Cretaceous age, is a blanket deposit over an extensive area in Northeastern Colorado. It consists of chalks, shaley limestones and calcareous shales which were deposited during a major transgressive stage of marine deposition. Gas production is from a chalk zone in the Smoky Hill member of the Upper Niobrara. The producing zone, which ranges in depths from 1300 feet to approximately 3000 feet, has relatively high porositie s and low permeabilities. Accumulation of gas is associated with small, isolated, low relief structures rather than stratigraphic traps. Unpredictable faulting is present in the formation.

4. 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 Smoky Hill chalk at depths from 1300 feet to 3000 feet, without stimulation, is not expected to exceed the maximum allowable production rate defined by depth in Section 271. 705 (b)(ii) for any completion location in the Niobrara.

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

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

6. In view of the above findings, all the criteria required by the Federal Energy Regulatory Commission pursuant to the interim rules in Docket No. RM 79-76 have been met; therefore, a recommendation should be made that the Niobrara 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 Niobrara formation underlying all lands in Cheyenne, Kit Carson, Lincoln, Logan, Phillips, Sedgwick, Washington and Yuma Counties, Colorado, be designated a "Tight Formation" and incorporated in the list of "Tight Formations" to be established pursuant to Rule 271. 706 of the Federal Energy Regulatory Commission.

ENTERED this 21st day of July, 1980, as of June 23, 1980. OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary