IN THE MATTER OF DETERMINATION OF THE "J" SAND UNDERLYING CERTAIN LANDS IN BOULDER, LARIMER, WELD AND JEFFERSON COUNTIES, COLORADO, AS A "TIGHT FORMATION" PURSUANT TO REGULATIONS OF THE FEDERAL ENERGY REGULATORY COMMISSION Cause No. NG-3 Order No. NG-3-2

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 19, 1982 at 9:00 a.m. in Room 110, State Centennial Building, Denver, Colorado, after giving Notice of Hearing, as required, upon the application of Coral Gulf Exploration Corporation, Martin Oil Company, Energy Oil, Inc., Jade Petroleum, Machii-Ross Petroleum Company, Excel Energy Corporation, Energy Minerals Corporation, Teton Energy Company, Inc., Skaer Enterprises, Inc., Vessels Oil and G as Company and Centennial Petroleum, Inc., for an order recommending the "J" Sand which has been previously designated a "Tight Formation", to be extended to include additional lands in Boulder, Larimer, Jefferson and Weld Counties, Colorado, pursuant to Section 107(b) of the Natural Gas Policy Act of 1978 (15 U.S.C. 3317) and the regulations thereunder, and the applicants, having appeared in support of their application, and having amended the applicatio n as to the area, 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 interim rules in Docket No. 79-76 of the Federal Energy Regulatory Commission, and has jurisdiction over the subject matter of Coral Gulf Exploration Corporation, Martin Oil Company, Energy Oil, Inc., Jade Petroleum, Machii-Ross Petroleum Company, Excel Energy Corporation, Energy Minerals Corporation, Teton Energy Company, Inc. Skaer Enterprises, Inc., Vessels 04-1 and Gas Company and Centenni al Petroleum, Incorporated's application.

3. The area is an extension of the area in which the "J" Sand has been designated a "Tight Formation" by the FERC by Order No. 124 on January 23, 1981, with certain deletions. The lands are located to the west and north and are contiguous to the previously approved area.

4. Geological testimony presented at the hearing indicates that the "J" Sand in the extended area is of the same characteristics as that in the approved area. The "J" Sand consists of well cemented, fine grain sand of low permeability and porosity deposited in three (3) zones, the upper being a transgressive silt zone, next lower, a deltaic plain zone and the lower, a delta front.

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 aid "J" Sand at the producing depths, without stimulation, 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 "J" Sand.

c. Hydrocarbons usually do not exist as a liquid in said "J" Sand 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. EM 79-76 have been met; therefore, a Recommendation should be made that the "J" Sand underlying the area below described should be designated a "Tight Formation" and included in the area previously designated by FERC Order No. 124.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the Colorado Oil and Gas Conservation Commission recommends that the area in which the "J" Sand has been designated a "Tight Formation" by FERC Order No. 124, approved January 23, 1981, with certain deletions, be extended to include the following described lands in Boulder, Larimer and Weld Counties, Colorado.

Township 1 North, Range 70 West, 6th P.M. All

Township 2 North, Range 70 West, 6th P.M. All

Township 3 North, Range 69 West, 6th P.M. All

Township 3 North, Range 70 West, 6th P.M. Sections 1, 12, 13, 21 thru 28, 33 thru 36

Township 4 North, Range 69 West, 6th P.M. Sections 1 thru 3, 10 thru 15, 22 thru 36

Township 4 North, Range 70 West, 6th P.M. Sections 25, 36

Township 5 North, Range 63 West, 6th P.M. Sections 1 thru 18

Township 6 North, Ranges 63 thru 68 West (inclusive), 6th P.M. All

Township 6 North, Range 69 West, 6th P.M. Sections 1 thru 3, 10 thru 15, 22 thru 27, 34 thru 36

Township 1 South, Ranges 69 and 70, 6th P.M. All

Township 2 South, Ranges 69 and 70, 6th P.M. All

ENTERED this 18th day of February, 1982, as of January 19, 1982.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary