REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on August 18, 1980 at 9:00 a. m. , upon the application of Koch Industries, Inc., (Koch), for the designation of the Rollins, Cozzette and Corcoran formations underlying certain lands in Mesa and Garfield Counties, 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 Koch, having appeared in support or 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 Koch Industries' application.

3. The area of concern is located on the southwest flank of the Piceance Basin approximately 10 miles northeast of the city of Grand Junction. The Mesaverde formation outcrops to the west and South of the area forming the Bookcliffs. The area consists of approximately 150,176 acres of which 93 percent is Federal acreage and 7 percent fee acreage. Three (3) Federal units are located within the area comprising approximately 48 percent of the total area.

4. The Cozzette and Corcoran Sandstones (referred to for this purpose as formations) are considered to be lower or transitional Mesaverde or upper Mancos of Cretaceous age. The Cozzette interval averages approximately 175 feet in total thickness; it normally includes two (2) or more sandstone benches, with an approximate combined thickness of 90 feet. The lower interval, the Corcoran, averages approximately 150 feet in total thickness; of this total, one to three separate sand benches occur with a combined thickness of 70 to 80 feet. The sandstones in the Corcoran and Cozzette are very fine grained with considerable amounts of detrital clay and silt. Deposition was marginal marine encompassing beach and offshore bar deposits with associated lagoonal, tidal and deltaic deposits. There is intertonguing with marine Mancos shales. Resistivity and porosity logs in this area indicate the gas zones to be ass ociated with the sand benches. The average depth to the producing zones in the Cozzette formation is 2478 feet and in the Corcoran formation 2673 feet.

5. Engineering testimony presented at the hearing indicates that:

a. The average in-situ gas permeability, as obtained from core data, is .0147 millidarcies for the Cozzette formation and .0495 millidarcies for the Corcoran formation. The average in-situ gas permeability is not expected to exceed .1 millidarcy for either formation.

b. The stabilized production rate, against atmospheric pressure of wells completed for production, without stimulation, from the Cozzette formation, at average depth of 2478 feet and the Corcoran formation at an average depth of 2673 feet is not expected to exceed the maximum allowable production rate defined by depth in Section 2 7 Is 705 (b)(ii) for any completion location in said formations.

c. Very little hydrocarbons exist as liquid in said formation 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 Rollins formation meets the criteria as required for "Tight Formation" status, was not available, nor presented at the hearing. Therefore, the Rollins 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.

8. 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 Cozzette and Corcoran 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 Cozzette and Corcoran formation underlying the following described lands in Mesa and Garfield Counties, 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 8 South, Range 98 West, 6th P.M. Sections 1 thru 36

Township 8 South, Range 99 West, 6th P.M. Sections 1 thru 36

Township 8 South, Range 100 West, 6th P.M. Sections 21 thru 28, 33 thru 36

Township 9 South, Range 97 West, 6th P.M. Sections 1 thru 24, 26 thru 35

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

Township 9 South, Range 99 West, 6th P.M. Sections 1 thru 36

Township 9 South, Range 100 West, 6th P.M. Sections 1 thru 4, 9 thru 14, 23 thru 25, 36

Township 10 South, Range 97 West, 6th P.M. Sections 2 thru 11

Township 10 South, Range 98 West, 6th P.M. Sections 1 thru 12

Township 10 South, Range 99 West, 6th P.M. Sections 1 thru 5, 9 thru 12

ENTERED this 5th day of September, 1980, as of July 21, 1980

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary