REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 19, 1981 at 9:00 a.m. in Room 110, State Centennial Building, Denver, Colorado, upon the application of Mitchell Energy Corporation, for an order recommending the Dakota and Morrison formations underlying certain lands in Garfield and Mesa Counties, Colorado, each 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 ther eunder., and Mitchell Energy, 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 7976 of the Federal Energy Regulatory Commission, and has jurisdiction over the subject matter of Mitchell Energy's application.

3. The area of concern lies within the Grand Valley of western Colorado. It is bordered on the northeast by previously designated area by Cause No. NG-12, NG-15 and NG-19 (FERC Nos. Colorado 9, 11 and 14). The boundary along the southwest is parallel to the Dakota and Morrison outcrops along the Colorado River. The town of Grand Junction lies a short distance to the southwest of the area. Approximately 76,000 acres (25%) are fee lands and 227,000 acr es (75%) are federal lands.

4. The sandstones of the producing zones of the Dakota formation of Cretaceous age and the Morrison formation of Jurassic age are interpreted to be a network of local fluvial deposits of a lenticular nature. The Morrison sandstones were deposited in a continental environment and vary upward into the Dakota formation to a deltaic and near shore environment with some upper sandstone members being offshore marine bars Gas accumulations occur along the updip margin of the individual sandstones, which as a group form a regional stratigraphic trap. Gas production from the Dakota and Morrison formations is usually commingled where it has been considered a common source of supply. The producing sandstones exhibit very low porosities and permeabilities and generally occur between 2000 and 4000 feet in depth.

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 Dakota and Morrison formations, at depths ranging from 2000 feet to 4000 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 Dakota and Morrison formations reservoirs. No well is expects to produce more than five 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 7976 have been met; therefore, a recommendation should be made that the Dakota and Morrison formations, 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 Dakota and Morrison formations underlying the following described lands in Garfield and Mesa Counties, Colorado, each be designated a "Tight Formation" and incorporated in the list of "Tight Formations" established pursuant to Rule 271.706 of the Federal Energy Regulatory Commission.

Township 7 South, Range 102 West, 6th P.M. Sections 31 and 32

Township 8 South, Range 101 West., 6th P.M. Sections 7 thru 9 Sections 4 thru 23 Sections 5 thru 36

Township 8 South, Range 102 West, 6th P. M. Sections 2 thru 4 Section 7 Sections 10 thru 36

Township 8 South, Range 103 West, 6th P.M.

Section 1: S1/2 Sections 2 thru 18 Sections 21 thru 27

Township 8 South, Range 104 West, 6th P. M. Sections 1 and 12

Township 2 South, Range 100 West, 6th P. M. Sections 5 thru 8 Sections 17 thru 21 Sections 27 thru 35

Township 9 South, Range 101 West., 6th P.M. Sections 1 thru 8 Sections 17 thru 36

Township 2 South, Range 102 West, 6th P. M, Sections 1 thru 18

Township 10 South, Range 100 West, 6th P. M. Sections 1 thru 18

Township 10 South, Range 101 West, 6th P.M. Sections 1 thru 3 Sections 11 thru 15

Township 11 South, Range 97 West, 6th P.M. Sections 13 thru 16 Sections 21 thru 36

Township 11 South, Range 98 West, 6th P.M. Sections 25, 26, 35 and 36

Township 12 South, Range 97 West, 6th P.M. Sections 1 thru 36

Township 12 South, Range 98 West, 6th P.M. Sections 1, 2, 11, 12, 13, 14, 23, 24, 25, 26, 35, 36

Township 13 South, Range 97 West, 6th P.M. Sections 3 thru 9 Sections 16 thru 21

Township 13 South, Range 98 West, 6th P.M. Sections 1, 2, 11, 12, 13, 14, 23, 24, 25, 26, 35, 36

Township 1. North, Range 1 West, Ute P. M. Sections 1 thru 1 7 Sections 21 thru 2 7 Sections 34 thru 36

Township 1 North, Range 2 West, Ute P. M. Sections 1 thru 3 Section 12

Township 2 North, Range 2 West, Ute P. M. Sections 1 thru 5 Sections 8 thru 17 Sections 21 thru 28 Sections 34 thru 36

Township 1 North, Range 1 East, Ute P.M. Sections 1 thru 36

Township 1 South, Range 1 West, Ute P. M. Section 1

Township 1 South, Range 1 East, Ute P.M. Sections 1 thru 6 Sections 9 thru 16 Sections 21 thru 24

Township 1 South, Range 2 East, Ute P.M. Sections 1 thru 36

Township 2 South, Range 2 East, Ute P. M. Sections 1 thru 16 Sections 21 thru 28 Sections 34 thru 36

Township 3 South, Range 2 East, Ute P. M. Sections 1, 2, 3, 10, 11, 12, 13, 14, 24

ENTERED this 8th day of January, 1982, as of October 19., 1981.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary