REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 20, 1981, at 9:00 a. m. in Room 110, State Centennial Building, Denver, Colorado, upon the application of Atlantic Richfield Co. for an order recommending the Dakota formation underlying certain lands in La Plata and Archuleta Counties, 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 ARCO, hav ing 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 heating 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 ARCO's application

3. The Dakota formation underlies an area located on the north flank of the San Juan Basin, of which the major part of the Basin extends into the State of New Mexico. The area is south of the city of Durango, Colorado and is located within the Southern Ute Indian Reservation. Approximately 61% is Federal and/or Indian land and 39%, fee and state land.

4. The Dakota formation consists of a series of lenticular sands 225 to 250 feet thick, very fine to medium grained, well cemented and consolidated. Environmental deposition was of a transgressive marine sea from east to west across the area. Although considered to be marine, the middle section is considered to be deltaic with the lower section fluvial. Depth of the producing zone varies from 7180 to 8720 feet with an average of 7930 feet.

5. Engineering testimony presented at the hearing indicates that:

a. The in-situ gas permeability throughout the pay section averages 0.0765 millidarcies and is not expected to exceed . 1 millidarcy.

b. The stabilized production rate, against atmospheric pressure, of wells completed for production from said Dakota formation at an average depth of 7930 feet, without stimulation, is not expected to exceed a maximum allowable production rate of 336 MCF of gas per day.

c. Hydrocarbons usually do not exist as a liquid in said Dakota 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 79776 have been met; therefore, a recommendation should be made that the Dakota 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 Dakota formation underlying the following described lands in La Plata and Archuleta 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:

Township 32 North, Range 6 West, N.M.P.M. Sections 1 thru 24

Township 32 North, Range 7 West, N.M.P.M. Sections 1 thru 24

Township 32 North, Range 8 West, N.M.P.M. Sections 1 thru 24

Township 32 North, Range 9 West, N.M.P.M. Sections 1 thru 24

Township 32 North, Range 10 West, N.M.P.M. Sections 1 thru 24

Township 32 North, Range 11 West, N.M.P.M. Sections 1 thru 24

Township 33 North, Range 6 West, N.M.P.M. Sections 1 thru 36

Township 33 North, Range 7 West, N.M.P.M. Sections 1 thru 36

Township 33 North, Range 8 West, N.M.P.M. Sections 1 thru 36

Township 33 North, Range 9 West, N.M.P.M. Sections 1 thru 36

Township 33 North, Range 10 West, N.M.P.M. Sections 1 thru 36

Township 33 North, Range 11 West, N.M.P.M. Sections 1 thru 36

Township 34 North, Range 8 West, (S of Ute Line) N.M.P.M. Sections 25 thru 36

Township 34 North, Range 9 West, (S of Ute Line) N.M.P.M. Sections 25 thru 36

Township 34 North, Range 10 West, (S of Ute Line) N.M.P.M. Sections 1 thru 36

Township 34 North, Range 11 West, (S of Ute Line) N.M.P.M. Sections 1 thru 36

ENTERED this 10th day of September, 1981, as of July 20, 1981.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary