IN THE MATTER OF DETERMINATION OF THE MESAVERDE FORMATION UNDERLYING CERTAIN LANDS IN LA PLATA AND ARCHULETA COUNTIES, COLORADO, AS A "TIGHT FORMATION" PURSUANT TO REGULATIONS OF THE FEDERAL ENERGY REGULATORY COMMISSION Cause No. NG-24 Order No. NG-24-1

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 21, 1981 at 9:00 a.m. in Room "G ", State Capitol Building, Denver, Colorado, upon the application of Atlantic Richfield Co., for an order recommending the Mesaverde 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 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 ARCO's application.

3. The Mesaverde 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 top of the Mesaverde formation is picked at being at the base of the Lewis Shale with the base at the top of the Mancos Shale, which is a transitional zone. The Mesaverde, also referred to as the Mesaverde group, consists of three (3) members. The Point Lookout, as the basal member, is a regressive marine deposit that transgresses from west to east across the area. It is overlain by the non-marine Menefee member consisting of interbedded sandsto nes, shales and coal, and overlain by a transgressive marine deposit of the Cliff House member. The producing sands in the Mesaverde are not blanketed throughout the area. They are lenticular and discontinuous. The sands are find grained, consolidated and well cemented with silica. The total interval of the Mesaverde is approximately 900 feet and varies in depth between 4500 to 6300 feet, with an average depth of 5380.

5. Engineering testimony presented at the hearing indicates that:

a. The in-situ gas permeability throughout the pay section averages .061 millidarcies and is not expected to exceed .1 millidarcy.

b. The stabilized production rate, against atmospheric pressure, of wells completed for production from said Mesaverde formation at an average depth of 5380 feet, without stimulation, is not expected to exceed a maximum allowable production rate of 163 MCF of gas per day.

c. Hydrocarbons usually do not exist as a liquid in said Mesaverde 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 Mesaverde 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 Mesaverde 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 6 West, (S of Ute Line) N.M.P.M. Sections 1 thru 36

Township 34 North, Range 7 West, (S of Ute Line) N.M.P.M. Sections 1 thru 36

Township 34 North, Range 8 West, (S of Ute Line) N.M.P.M. Sections 1 thru 36

Township 34 North, Range 9 West, (S of Ute Line) N.M.P.M. Sections 1 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