REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on August 16, 1982, at 9:00 a.m., upon the application of Teton Energy, Inc., for the designation of the Upper Mesaverde formation underlying certain lands in Mesa County, 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 Teton, having appeared in support of its application, and no one having appeared i n 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. RM 79-76 of the Federal Energy Regulatory Commission, and has jurisdiction over the subject matter of Teton's application.

3. The area is located on the southwest flank of the Piceance Basin, approximately 20 miles northeast of the city of Grand Junction, Colorado. It is also located in the approximate center of the area in which the Cozzette and Corcoran (Lower Mesaverde) formations have been each designated a "Tight Formation" (Order No. NG-12-1, FERC Order No. 151). It is bounded on the east by the area in which the Upper Mancos and Mesaverde formations have been designa ted tight (Order No. NG-26-1, FERC Order No. 226). All lands in the area are Federal. The Coon Hollow Federal Unit is located within the area.

4. The Upper Mesaverde formation, which is defined for this purpose to be from the top of the Cozzette-Corcoran members to the base of the Wasatch formation, and would include the Rollins member. Deposition was a near-shore environment of regressive seas resulting in areas of deltaic sands, channel sands interbedded with near shore lagoon and swamp type facies. The lower sandstones are very fine to medium grained poorly sorted, and partially clay filled , interbedded with marine shales and siltstones. The upper Mesaverde consists of deltaic channel sands and shales with coal deposits. The formation on the western edge of the area is at a depth of approximately 1,000 feet and then outcrops to the surface at the eastern edge.

5. Engineering testimony presented at the hearing indicates that:

a. The average in-situ gas permeability as obtained from core data is .02873 millidarcies and 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 for production, without stimulation, from the Upper Mesaverde, as defined, at depths of from 1 to 1,000 feet, 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.

Very little hydrocarbons exist as liquid in said formation reservoirs, and 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. RM 79-76 have been met; therefore, a recommendation should be made that the Upper Mesaverde formation, as defined, 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 Upper Mesaverde formation underlying the following described lands in Mesa County, Colorado, be designated a "tight formation" and be incorporated in the list of "Tight Formations" established pursuant to Rule 271.706 of the Federal Energy Regulatory Commission.

Township 8 South, Range 98 West, 6th P.M. Section 25: N1/2, SE1/4, N1/2 SW1/4, SE1/4 SW1/4 Section 26: N1/2, SW1/4, NW1/4 SE1/4

Sections 27 thru 34: All Section 35: W1/2, SE1/4, W1/2 NE1/4, SE1/4 NE1/4 Section 36: All

Township 9 South, Range 98 West, 6th P.M. Sections 1 thru 12: All ENTERED this 24th day of November, 1982, as of August 16, 1982. OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary