IN THE MATTER OF DETERMINATION OF THE SUSSEX FORMATION UNDERLYING CERTAIN LANDS IN WELD COUNTY, COLORADO, AS A "TIGHT FORMATION" PURSUANT TO REGULATIONS OF THE FEDERAL ENERGY REGULATORY COMMISSION Cause No. NG-20 Order No. NG-20-1

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on June 15, 1981 at 9:00 a.m., in Room 110, State Centennial Building, Denver, Colorado, upon the application of Colton & Colton, Homestead Oil, Inc., and Nielson Enterprises, Inc., for an order recommending the Sussex formation underlying certain lands in Weld 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 Colton & Colton, Homestead Oil, Inc., and Nielson Enterprises, Inc., 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 rules in Docket No. RM 79-76 of the Federal Energy Regulatory Commission, and has jurisdiction over the subject matter of Colton & Colton, Homestead Oil and Nielson Enterprises application.

3. The area of concern is located generally between the towns of Gilcrest and La Salle, Colorado. slightly northwest of Highway 85. There is approximately 7040 acres in the area, most of which is fee with some State lands. There are no federal lands in the area.

4. The Sussex formation in this area is generally a very tight clay-filled sandstone. Porosities and permeabilities are low and water saturation is in the approximate 50-60 percent range. The Sussex pay zone is usually found at an approximate depth between 4400-4500 feet, and the characteristics are fairly common and uniform throughout the formation underlying the area.

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 Sussex formation at an average depth of between 4400-4500 feet, 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 Sussex 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. RM 79-76 have been met; therefore, a recommendation should be made that the Sussex 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 Sussex Formation, underlying the following described lands in Weld County, Colorado, be designated a "Tight Formation" and incorporated in the list of "Tight Formations" as described pursuant to Rule 271.706 of the Federal Energy Regulatory Commission:

Township 4 North, Range 66 West, 6th P.M. Section 2: All Section 11: N1/2 Section 3: All Section 15: W1/2 Section 10: All

Township 5 North, Range 66 West, 6th P.M. Section 33: All Section 35: All Section 34: All

ENTERED this 14th day of August, 1981, as of June 15, 1981.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary