REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 20, 1980 at 9:00 a.m., upon the application of Northwest Exploration Company, for the designation of the Mancos "B" formation underlying certain lands in Rio Blanco County, 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 Northwest Exploration Co. 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 Northwest Exploration Company's application.

3. The area of concern is located in the southwest portion of Rio Blanco County, approximately 70-miles northwest of' the town of Grand Junction. It is an extension of the areas requesting "Tight Formation" designation for the Mancos "B" in Cause Nos. NG-5 and NG-6. Topography is fairly rough with surface elevations ranging from 5500 feet to 8500 feet with extreme weather conditions presenting drilling problems, especially during the winter months. The area consists of approximately 151,680 acres of which 146,234 is Federal, 5,286 is fee and 160 is State. Located within the area are the Missouri Creek Federal Unit, Douglas Creek Federal Unit, Dragon Trail Federal Unit, Sage Brush Hills Federal Unit and the Cathedral Field (160-acre spacing).

4. The geological testimony presented at the hearing indicates that the Mancos "B" (referred to for this purpose as the Mancos "B" formation) is a continuation of the blanket sand as described in Cause No. NG-5-and NG-6. The sands are fine grained. The sequence was deposited in an of'fshore marine shelf environment and overlies and underlies the dense marine shales , the massive Mancos formation occurring in the upper-one-third portion. The Mancos "B" is considered age equivalent to the Emery sand identified in central Utah and some geological records are referenced to the Emery. Average depth to the producing zone is considered to be approximately 3500 feet.

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 Mancos "B" formation at an average depth of 3500 feet, without stimulation, is not expected to exceed a maximum allowable production rate of 105 MCF of gas per day.

c. Very small amounts of hydrocarbons exist as liquid in said Mancos "B" 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 interim rules in Docket No. RM 79-76 have been met; therefore a recommendation should be made that the Mancos "B" formation, 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 Mancos "B" formation 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 1 South, Range 100 West, 6th P.M. Sections 1 thru 36

Township 1 South, Range 101 West, 6th P.M. Sections 1 thru 6, 9 thru 16, 21 thru 28, E1/2 33, 34 thru 36

Township 2 South, Range 100 West, 6th P.M. Sections 1 thru 36

Township 2 South, Range 101 West, 6th P.M. Sections 1 thru 3, E1/2 4, 9 thru 36

Township 3 South, Range 100 West, 6th P.M. Sections 1 thru 36

Township 3 South, Range 101 West, 6th P.M. Sections 1 thru 36

Township 1 South, Range 102 West, 6th P.M. Sections 1 thru 36

ENTERED this 14th day of January, 1981, as of October 20, 1980.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary