REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on September 21, 1992 at 8:30 a.m., in Room 101, State Education Building, 201 East Colfax Avenue, Denver, Colorado, after giving Notice of Hearing as required by law, on the verified application of C & F Energy, Inc. for an order recommending the "J" Sand Formation underlying certain lands in Weld County, Colorado as a "Tight Formation", pursuant to Section 107 (b) of the Natural Gas Policy Act of 197 8 (15 U.S.C. 3317) and the regulations thereunder. The Applicant, having appeared in support of the application, and no one having appeared in opposition, and the Commission having heard the testimony and evidence presented;

The Commission finds as follows:

1. C & F Energy, Inc. applicant herein, is an interested party in the subject matter of the above-referenced hearing.

2. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

3. The Commission is the jurisdictional agency pursuant to the interim rules in Docket No. RM 79-76 of the Federal Energy Regulatory Commission, and has jurisdiction over the subject matter of application.

4. The area is located in the western portion of the Denver-Julesberg Basin approximately five (5) miles north and east of the town of Kersey, Colorado and approximately sixty (60) miles northeast of Denver, Colorado. The area is contiguous to lands previously designated as "tight formation" for the "J" Sand Formation by FERC Order No. 271. No federal lands are included in the area.

5. The "J" Sand Formation is of the same characteristics and depositional environment as that in the contiguous areas. The sandstone consists of very fine to fine grained sands, poorly sorted and interbedded with shales and siltstones.

6. Engineering testimony presented at the hearing indicates that: a. The average in-situ gas permeability is not expected to exceed .1 millidarcy for the formation.

b. The stabilized production rate, against atmospheric pressure of wells completed from said "J" Sand Formation 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 is said "J" Sand Formation.

c. Hydrocarbons usually do not exist as liquid in said "J" Sand Formation reservoir, and no well is expected to produce more than five (5) barrels of crude oil per day.

7. 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.

8. In view of the above findings, all the criteria required by the Federal Energy Regulatory Commission pursuant to the rules in Docket No. 79-76 have been met; therefore, a recommendation should be made that the "J" Sand 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 "J" Sand Formation underlying the following described lands in Weld County, Colorado, be designated a "Tight Formation" and incorporated in the list of "Tight Formations" as described pursuant to Rule 271.706 of the Federal Energy Regulatory Commission:

Township 5 North, Range 61 West, 6th P.M. Sections 4 through 9: All Sections 16 through 18: All

Township 5 North, Range 62 West, 6th P.M. Sections 1 through 36: All

Township 6 North, Range 61 West, 6th P.M. Sections 19 through 21: All Sections 28 through 33: All

Township 6 North, Range 62 West, 6th P.M. Sections 1 through 36: All

Township 7 North, Range 63 West, 6th P.M. Sections 1 through 36: All

ENTERED this day of , 1992, as of September 21, 1992.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 380 1580 Logan Street Denver, Colorado 80203 October 1, 1992

September 30, 1992

Ms. Janet Ardinger, Chief Well Determination Branch in Field Review Federal Energy Regulatory Commission 825 N. Capitol St., NE Washington, DC 20426

RE: Recommendation of the "J" Sand Formation Underlying Certain Lands in Weld County, Colorado, as a "Tight Formation", Cause No. NG-3

Dear Ms. Ardinger:

Enclosed you will find three (3) copies of the recommendation of the Colorado Oil and Gas Commission pursuant to Section 107(b) of the Natural Gas Policy Act of 1978 regarding the "J" Sand Formation underlying certain lands in Weld County, Colorado.

Also enclosed are two (2) sets of exhibits presented at the time of hearing, along with one set of transcripts from the hearing.

Should you have any questions, or desire additional data, please respond in writing. Please direct any correspondence to my attention at the above address.

Sincerely,

Patricia C. Beaver Technical Secretary

Enclosures

IN THE MATTER OF THE RECOMMENDATION OF THE ) CAUSE NO. NG-3 COLORADO OIL AND GAS CONSERVATION COMMISSION ) THAT THE "J" SAND FORMATION UNDERLYING ) ORDER NO. NG-3-6 CERTAIN LANDS IN WELD COUNTY, COLORADO BE ) DESIGNATED AS A "TIGHT FORMATION" PURSUANT TO) NGPA Section 107(b) THE REGULATIONS OF THE FEDERAL ENERGY ) REGULATORY COMMISSION ) FERC Regulation 271.705

The Colorado Oil and Gas Conservation Commission is the designated jurisdictional agency under subpart (g) of Part 271 of Title 18, Code of Federal Regulations. Pursuant to Section 271.705 of the Federal Energy Regulatory Commission regulations, under Section 107(b) of the Natural Gas Policy Act, the jurisdictional agency herewith submits its recommendation, as per Order No. NG-3-6 that the "J" Sand Formation underlying certain lands in Weld County, Col orado, be designated as a "tight formation" and incorporated into the list of "Tight Formations" established under Section 271.706 of the regulations. Pursuant to the guidelines established under Section 271.705(b)(l)(i)(ii)(iii), and the contents prescribed by 271.705(c), the Colorado Oil and Gas Conservation Commission submits the following:

1. Geological and geographical description of the "J" Sand Formation.

a. Commission Order No. NG-3-6.

2. Geologic and engineering data supporting the recommendation and the source of that data.

a. Transcript and exhibits from the public hearing held September 21, 1992.

3. A report to the extent to which existing state regulations will assure development of the recommended "tight formation" will not adversely affect any fresh water aquifers.

a. Colorado Oil and Gas Conservation Commission "Statement on Water Sand Protection".

b. A report from the State Engineer Water Resources Investigation section concerning water sand protection for the area has previously been submitted with NG-3-1 (Colo 1) and NG-29-1 (Colo 25).

c. State Rule No. 317.

4. Additional information.

a. State Rule No. 318.

All geological and engineering testimonial evidence to support this recommendation has been received under oath. Copies of all documentary evidence received at the public hearing accompany this report. The requirements of 271.705(c) pursuant to 271.705(b)(l)(i)(ii)(iii) have now been met. The Oil and Gas Conservation Commission of the State of Colorado, therefore recommends, as per Order No. NG-3-6, that the "J" Sand Formation be designated as a "Tigh t Formation", in the area as described in said order, and having made such recommendation concludes its responsibility in the premises has been discharged.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

BY Patricia C. Beaver, Secretary

September 30, 1992

attachments

STATEMENT OF WATER SAND PROTECTION

CAUSE NO. NG-3

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. A description of an idealized-type casing program, and/or cementing program which will be used in wells drilled for production in the "J" Sand Formation was presented at the hearing. This plan was reviewed by representatives of the Office of the State E ngineer, Water Resources Investigation Branch. All aquifers above the "J" Sand Formation will be behind pipe or protected by cement stage work, as required by State Rule No. 317, if these aquifers are below the shoe of the surface casing. State Rule No. 317 requires sufficient surface casing shall be run to reach a depth below all known or reasonably estimated utilizable fresh water levels. In areas where fresh water strata or zones are of such depth t o make it impractical or uneconomical to set the full amount of surface casing necessary to cover or isolate all fresh water strata, the production string shall be stage cemented with a solid cement plug extending 50 feet below each fresh water strata to 50 feet above fresh water strata.

The Commission, therefore concludes that development of the recommended "tight formation" will not affect any fresh water aquifers that are, or are expected to be used as domestic, agricultural or other supplies. ??