REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on March 15f 1982 at 9:00 a.m. in Room 110, State Centennial Building, Denver, Colorado, upon the application of Vessels Oil and Gas Company, for an order recommending the "J" Sand underlying certain lands in Adams and Arapahoe 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 Vessels, having a ppeared 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 beet 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 Vessels Oil and Gas Company's application.

3. The area of concern is located approximately 24 miles due east of the City of Denver near the town of Strasburg, and consists of approximately 51,200 acres of private and state lands.

4. The "J" Sand in this area is of the same depositional environment as that of the "J" Sand as described in NG-3. It consists of very fine to fine grained sandstone, light brown to grey in color, angular quartzitic, clay filled and tight.

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 "J" Sand, at the average producing depths, 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 "J" 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. 79-76 have been met; therefore, a recommendation should be made that "J" Sand formation, underlying the area described below should be designated a "tight formation".

O R D E R

NOW, THEREFORE, IT IS ORDERED, that the Oil and Gas Conservation Commission of the State of Colorado, recommends that the "J" Sand formation underlying the following described lands in Adams and Arapahoe Counties, Colorado, 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 3 South, Range 62 West, 6th P.M. Sections 17 thru 20, 29 thru 32

Township 3 South, Range 63 West, 6th P.M. Sections 13 thru 36

Adams County

Township 4 South, Range 62 West, 6th P.M. Sections 5 thru 8. 17 thru 20, 29 thru 32

Township 4 South, Range 63 West, 6th P.M. All

Arapahoe County ENTERED this 26th day of July 1982, as of March 15, 1982. OIL AND GAS CONSERVATION COMMISSION CONSERVATION COMMISSION

By Frank J. Piro, Secretary