REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 21, 1980 at 9:00 a.m., upon the application of Rio Blanco Natural Gas Co. ("Rio Blanco"), for the designation of the Wasatch formation from the base of the Douglas Creek Sandstone to the top of the Ft. Union formation, the Ft. Union formation; the Mesaverde Formation; and the Mancos Formation to the base of the Mancos "B" Zone, underlying certain lands in Rio Blanco County, Colorado, each 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 Rio Blanco having appeared in support of its 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. RM 79-76 of the Federal Energy Regulatory Commission, and has Jurisdiction over the subject matter of Rio Blanco Natural Gas Company's application.

3. The formations for which the "Tight Formation" designation is requested, are located in an area approximately 40-miles southwest of Meeker, Colorado, and 30 miles northwest of Rifle, Colorado. The area is bounded on the north and South by synclinal and anticlinal trends, and on the northeast by an anticlinal closure known as the Piceance Creek Dome. In addition. the area is made up of two (2) federal units, the ?ry Gulch and Rio Blanco Units, and is c omprised of approximately 94% federal lands and approximately 6% fee lands.

4. Geological testimony presented at the hearing indicates that the Ft. Union formation of Paleocene age consists of extremely fine-grained, very tightly cemented clay-filled sandstones and siltstones with interbedded varicolored shales. Environmental deposition was fluvial which took place predominately onshore with minimum sand supply to the area, Thickness of the Ft. Union formation is approximately 4000-5000 feet. The Mesaverde formation of Cretaceo us age was a swamp-nearshore marine deposition. The sandstone intervals consist of very fine to very coarse sand grains, and are calcareous, carbonaceous, clay-filled and tightly cemented. The inter-bedded shales are fissile, variably calcareous and carbonaceous, with some fracturing. Thickness ranges from approximately 4000-5000 feet at depth intervals of approximately 5500-9000 feet. The Cretaceous Mancos formation (defined as being from the top of the Mancos to the base of the Mancos "B" Zone), is a marine deposit consisting predominately of black, fissile, carbonaceous shales and siltstones. The interbedded sandstones are very fine grained, calcareous to dolomitic, clay-filled and laminated. Thickness is approximately 3000 feet at depth intervals of 9000-12,000 feet.

5. Engineering testimony presented at the hearing indicates that:

a. The average in-situ gas permeability for the Ft. Union, Mesaverde and Mancos formations (as defined) is not expected to exceed .1 millidarcy.

b. The stabilized production rate, against atmospheric pressure of wells completed for production, without stimulation, from the Ft. union formation, at an average depth of 4700 feet, the Mesaverde Formation at an average depth of 7200 feet, and the Mancos formation (as defined) at an average depth of 10,500 feet, is not expected to exceed the maximum allowable production rate defined by depth in Section 271. 705(b)(ii) for any completion location in said formations.

c. Very little hydrocarbons exist as liquid in said formations reservoirs, and no well is expected to produce more than five (5) barrels of Crude oil per day.

6. Substantial evidence to support a determination that the Wasatch formation meets the criteria, as required for "Tight Formation" status, was not available, nor presented at the hearing. Therefore, the Wasatch formation should not be recommended at this time for a "Tight Formation" designation.

7. 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.

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 Ft. Union, Mesaverde and Mancos (as defined) formations, underlying the area below described should each be designated a "Tight Formation"

ORDER

NOW, THEREFORE, IT IS ORDERED, that the Colorado Oil and Gas Conservation Commission recommends that the Ft. Union, Mesaverde and Mancos (as defined) formations underlying the following described lands in Rio Blanco County, Colorado, each be designated a "Tight Formation" and be incorporated in the list of "Tight Formations" to be established pursuant to Rule 271.706 of the Federal Energy Regulatory Commission.

Township 2 South, Range 97 West, 6th P.M. Sections 6, 7, 18, 19 and 30

Township 2 South, Range 98 West, 6th P.M. Sections 1 thru 3; 9 thru 36

Township 2 South, Range 99 West, 6th P.M. Sections 13, 14, 23 thru 26; 35 and 36

Township 3 South, Range 95 West, 6th P.M. Sections 19 thru 21, 28 thru 33

Township 3 South, Range 96 West, 6th P.M. Sections 4 thru 10; 14 thru 36

Township 3 South, Range 97 West, 6th P.M. Sections I, 2, 8 thru 36

Township 3 South, Range 98 West, 6th P.M. Sections 1 thru 20; 21, 23, 24, 25, 26 thru 29; 32 thru 36

Township 3 South, Range 99 West, 6th P.M. Sections 1, 13; 23 thru 26

Township 4 South, Range 97 West, 6th P.M. Sections 1 thru 6

Township 4 South, Range 98 West, 6th P.M. Sections 1 thru 5; 8 thru 17

ENTERED this 15th day of October, 1980, as of August 18, 1980.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary