IN THE MATTER OF DETERMINATION OF THE UPPER MANCOS FORMATION, UNDERLYING CERTAIN LANDS IN RIO BLANCO COUNTY, COLORADO, AS A "TIGHT FORMATION" PURSUANT TO REGULATIONS OF THE FEDERAL ENERGY REGULATORY COMMISSION Cause No. NG-25 Order No. NG-25-1

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 21, 1981 at 10:00 a.m. in Room "G", State Capitol Building, Denver, Colorado, upon the application of Twin Arrow, Inc. for the designation of the Mancos "A" formation, which is defined as being the geological interval from the top of the Mancos formation to the top of the Mancos "B " formation, and includes the Mancos "A" zone and the Morapas zone and shall henceforth be referred to as the Upper Mancos 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 Twin Arrow, 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 Twin Arrow's application.

3. The area is located on the northeast flank of the Douglas Creek Arch in the southwest corner of Rio Blanco County, approximately 70 miles northwest of Grand Junction, Colorado. The lands overlap an area overlying the Mancos "B" formation which has been designated a "Tight Formation" by the FERC, (NG-14-1 and Colorado 13). Topography is rough with surface elevations ranging from 5500 feet to 8500 feet with extreme weather conditions presenting drillin g problems, especially during the winter months. The area consists of approximately 69,120 acres, of which 63,651 acres are federal, 5309 acres fee and 160 acres state.

4. The Upper Mancos formation, as defined, consists of a series of thinly interbedded sandstones, siltstones, and shales within the upper 1500 to 2000 feet of the massive Mancos formation. The Mancos contains varying amounts of bentonite and other water sensitive clays. Structurally, the area can be described as a nose trending north-south with regional dip to the northeast at the rate of 500 to 600 feet per mile. There are a series of normal faults tr ending northeast-southwest with displacements, up to 500 feet which are often found to die out in the Mancos Shale below the Upper Mancos formation.

5. Engineering testimony presented ;it 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 Upper Mancos formation at various depths, in said formation, without stimulation, has been to small to measure and is not expected to exceed a maximum allowable production rate defined by depth in Section 271.705 (b) (ii) for any completion location in said Upper Mancos Formation.

c. Very small amounts of hydrocarbons exist as a liquid in said Upper Mancos formation reservoir; however, 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 Upper Mancos formation, as defined, 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 Upper Mancos formation, as defined, underlying the following described lands in Rio Blanco County, 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 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. 10 thru 15, 22 thru 27, 34 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 I thru 3. 10 thru 15, 22 thru 27, 34 thru 36

ENTERED this 10th day of September, 1981 as of July 21, 1981.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary