REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on June 21, 1982 at 9:00 a.m. in Room 110, State Centennial Building, Denver, Colorado, after giving Notice of Hearing upon the application of South Louisiana Production Co., Inc., requesting the recommendation of the Mesaverde formation 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. South Louisiana Production Co ., Inc., 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 South Louisiana's application.

3. The area is located approximately 26 miles southwest of the town of Meeker, Colorado, and 56 miles northeast of Grand Junction, Colorado. It is adjacent to previously designated "tight formation" areas in Cause Nos. NG-9 and NG-27 (Federal Energy Regulatory Commission Reference Nos. Colorado 4 and 24). There are approximately 14,004 acres in the area, of which 78% is Federal and 22% fee lands.

4. Geological testimony presented at the hearing indicates that the Mesaverde formation is an extension of the formation previously designated in Order No. NG-9 and NG-27. It is of the same reservoir characteristics consisting of dominantly non-marine rocks, with coastal plain and littoral coal bearing sandstones and shales, overlain by coastal floodplain and swamp deposits. The sandstones are carbonaceous and are interbedded with crossbedded siltstones , gray shales and coal beds.

5. Engineering testimony presented at the hearing indicates that:

a. The average in-situ gas permeability throughout the pay zones of the Mesaverde formation is not expected to exceed .1 millidarcy.

b. The stabilized production rate against atmospheric pressure, of wells completed for production, without stimulation, from said Mesaverde formation, at the average production depths, is not expected to exceed a maximum allowable production rate defined by depth in Section 271.705 (b)(ii).

c. Hydrocarbons usually do not exist as a liquid in said formations reservoirs; 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 interim rules in Docket No. RM 79-76 have been met; therefore, recommendation should be that the Mesaverde formation underlying the area below described should be designated a "Tight Formation".

O R D E R

NOW, THEREFORE, IT IS ORDERED, that the Colorado Oil and Gas Conservation Commission recommends that the Mesaverde formation underlying the following described lands in Rio Blanco County, 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 2 South, Range 96 West, 6th P.M. Section 31: S1/21 S1/2 NW1/4 Section 32: S1/E S1/2

Section 33: SW1/4 SW1/4

Township 2 South, Range 97 West, 6th P.M. Section 4: W1/2 W1/2 Sections 5, 2, 9, 16, 17, 20, 21, 22: All Section 23: W1/2 Section 25: SW1/4 Section 26: W1/2 SE1/4 Sections 27, 28, 29, 31 thru 36: All

Township 3 South, Range 97 West, 6th P.M. Sections 3 thru 7: All

ENTERED this 12th day of October, 1982, as of June 21, 1982. OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary