IN THE MATTER OF DETERMINATION BEFORE THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO IN THE MATTER OF DETERMINATION OF THE "J" SAND FORMATION UNDERLYING CERTAIN LANDS IN ADAMS, ARAPAHOE AND ELBERT COUNTIES, COLORADO, AS A "TIGHT FORMATION" PURSUANT TO REGULATIONS OF THE FEDERAL ENERGY REGULATORY COMMISSION Cause No. NG-37 Order No. NG-37-1

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on November 15, 1982 at 9:00 a.m. in Room 110, State Centennial Building, Denver, Colorado, upon the application of Samuel Gary Oil Producer, for an order recommending the "J" Sand underlying certain lands in Adams, Elbert 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 Samuel Ga ry Oil Producer, having appeared in support of its application, which was amended at the hearing to delete certain lands from 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 rules in Docket No. RM 79-76 of the Federal Energy Regulatory Commission and has jurisdiction over the subject matter of Samuel Gary Oil Producer's application.

3. The area of concern is located approximately 12 miles east of the city of Denver and contiguous to the areas to the north and east in which the "J" Sand has been designated a "tight formation" by the FERC (Colo-1 and Colo-29). There are approximately 223,040 acres in the proposed area consisting of fee and State lands.

4. The "J" Sand in the area 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, shaley and clay filled.

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 stimulations, 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 the "J" Sand formation underlying the area below described should be designated a "Tight Formation".

O R D E R

NOW, THEREFORE, IT TS 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, Arapahoe and Elbert 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:

Adams County:

Township 2 South, Range 63 West, 6th P.M. Sections 7, 18, 19, 30, 31: All Section 32: S1/2

Township 2 South, Range 64 West, 6th P.M. Sections 10 thru 15, 22 thru 27, 34 thru 36: All

Township 2 South, Range 65 West, 6th P.M. Sections 25 thru 36: All

Township 3 South, Range 63 West, 6th P.M. Sections 1 thru 12: All

Township 3 South, Range 64 West, 6th P.M. Sections 1 thru 36: All

Township 3 South, Range 65 West, 6th P.M. Sections 1 thru 36: All

Arapahoe County:

Township 4 South, Range 64 West, 6th P.M. Sections 1 thru 30, 32 thru 36: All

Township 4 South, Range 65 West, 6th P.M. Sections 1 thru 30: All

Township 5 South, Range 63 West, 6th P.M. Sections 1 thru 36: All

Township 5 South, Range 64 West, 6th P.M. Sections 1 thru 5. 1 8 thru 17, 20 thru 29, 32 thru 36: All Elbert County: Township 6 South, Range 63 West, 6th P.M. Sections 1 thru 35: All

Township 6 South, Range 64 West, 6th P.M. Sections 1 thru 5, 8 thru 17, 20 thru 29, 34 thru 36: All

Township 7 South, Range 63 West, 6th P.M. Sections 4 thru 9. 16 thru 21, 28 thru 33: All

Township 7 South, Range 64 West, 6th P.M. Sections 1 thru 3, 10 thru 15 22 thru 27, 34 thru 36: All

ENTERED this 14th day of January, 1983, as of November 15, 1982.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary