REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on December 20, 1982 at 9:00 a.m. in Room 110-, State Centennial Building. Denver, Colorado, upon the application of Coors Energy Co., for an order recommending the Dakota 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. The application was amended at th e hearing to delete certain lands from the proposed area, and Coors Energy Co. 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 Coors Energy Cols. application.

3. The area of concern is located approximately 20 miles east of the town of Grand Junction, Colorado. It is contiguous to the north to an area in which the Dakota formation has previously been designated a "Tight Formation" by the FERC (NG-19-1, Colo.-14). It also overlies a portion of the area in which the Upper Mancos and Mesaverde formations have been designated "Tight Formations" (NG-26-1, Colo.-22). The area is bounded on the east and south by Nati onal Forest lands, and consists of approximately 50,830 acres, of which approximately 89% are federal lands and 13% fee lands.

4. Geological testimony presented at the hearing indicates that the Dakota formation is an extension of the formation to the north previously approved as a "tight formation". The sandstones are of the same reservoir characteristics consisting mainly of quartzitic sands, fine to medium grained, with silica cementing and chlorite and kaolinite clays, tending to inhibit porosity and permeability. Environmental deposition was in three (3) controlled units, an upper nearshore marine facies, a middle delta plain facies and a lower fluvial facies. Individual sand bodies are limited in extent and are vertically stacked and laterally staggered, similar to that in the area of NG-19-1.

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 Dakota formation at depths between 7300-8900 feet, 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 Dakota formation reservoir. No well is expected to produce more than five (5) barrels of crude oil per day without stimulation.

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 Dakota formation underlying the area below described 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 Dakota formation underlying the following described lands in Mesa 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 11 South, Range 95 West, 6th P.M. Sections 1 thru 36, Inclusive

Township 11 South, Range 96 West, 6th P.M. Sections 1 thru 36, Inclusive ENTERED this 10th day of February 1983, as of December 20, 1982. OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary