REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 18, 1983 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 Morrison 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 t he 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 interim 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 proposed area is located northeast of the town of Grand Junction, Colorado on the southwest flank of the Piceance Basin. The Colorado River traverses the area from the northeast to the southwest. The area overlies areas in which the Mesaverde, Cozzette/Corcoran and Dakota formations have been designated "Tight Formations" by the FERC (NG-12, Colo-9; NG-19, Colo-14; NG-21, Colo-17; and NG-38, Colo-32). There are approximately 581,038 acres in the area, 72.2% of which is Federal, 27.5 Fee and .3% State lands.

4. The Morrison formation of Jurassic age is primarily of non marine deposits consisting of two members, the upper Brushy Basin Member and the lower Salt Wash Member. Most hydrocarbon accumulations are found in the Salt Wash Member, rather than the Brushy Basin. The sandstones of this member consist of white to light gray, medium-coarse grained channel sands, poorly to well sorted, cemented with silica and contains interstitial clay matrix. The Brushy Basin Member consists of red, brown and green variegated mudstones with minor amounts of sandstones, saltstone and limestone. The gas reservoirs in the formation are very limited and of limited lateral extent, difficult to correlate. The sands in the reservoirs exhibit very low porosity and permeability.

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 Morrison formation at depths between 6300-9800 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 liquid in said Morrison formation reservoir, and 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 Morrison formation, underlying the area below "tight formation". described should be designated a "tight formation".

O R D E R

NOW, THEREFORE, IT IS ORDERED, that the Colorado and Gas Conservation Commission recommends that the Morrison 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 7 South, Ranges 95 thru 100 West, 6th P.M.

Township 8 South, Ranges 95 thru 100 West, 6th P.M.

Township 9 South, Ranges 95 thru 100 West, 6th P.M.

Excluding Township 9 South, Range 100 West, 6th P.M. Sections 5 thru 8 Sections 17 thru 21 Sections 27 thru 35

Township 10 South, Ranges 95 thru 99 West, 6th P.M.

Township 11 South Ranges 95 thru 99 West, 6th P.M.

Excluding Township 11 South, Range 98 West, 6th P.M. Sections 25, 26, 35, 36

Excluding Township 11 South, Range 97 West, 6th P.M. Sections 13 thru 16 Sections 21 thru 36 ENTERED this 17th day of March, 1983, as of February 18, 1983. OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary