REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 19, 1984 at 9:00 a.m. in Room 110, State Centennial Building, Denver, Colorado, after giving Notice of Hearing, upon the application of Strata Exploration, Inc. and Skaer Enterprises, Inc., for an order recommending the Niobrara formation underlying certain lands in Larimer and Weld Counties, Colorado, as a "Tight Formation, pursuant to Section 107 (b) of the Natural Gas Policy Act of 1978 (1 5 U.S.C. 3317) and the regulations thereunder. The Applicants, having appeared in support of their 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 the application.

3. The area is located in the western portion of the Denver-Julesburg Basin and the Wattenberg Gas Spaced Area. The "J" Sand and the Codell formation have been designated "tight formations" in the area. The city of Loveland lies directly to the north of the area and the town of Berthoud to the south. No federal lands are included.

4. The Niobrara formation outcrops on the western edge of

the area and drops to a depth of 7000 feet in the eastern edge. The formation consists of shales, mudstones . and limestone with some dolomite. The producing zone is made up of black to gray limestone with numerous very small hairline vertical fractures. Some horizontal fractures occur, but may or may not be interconnected. The formation has an average thickness of approximately 300 feet and ranges in an average depth of 2000-3000 feet.

5. Engineering testimony presented at the hearing indicates that:

a. 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 producing interval of the Niobrara formation, is not expected to exceed the maximum allowable production rate defined by depth 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.

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 Niobrara 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 and Gas Conservation Commission recommends that the Niobrara formation, underlying the following describe lands in Larimer and Weld 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:

Township 4 North, Range 68 West, 6th P.M. Sections 4 thru 6

Weld County

Township 4 North, Range 69 West, 6th P.M. Sections 1 thru 6, 7 thru 10, 15 thru 18, 19 thru 22

Township 5 North, Range 68 West, 6th P.M. Sections 19 thru 21, 28 thru 30, 31 thru 33

Township 5 North, Range 69 West, 6th P.M. Sections 25 thru 30, 31 thru 36

Larimer County

ENTERED this 8th day of February, 1984, as of January 19, 1984.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary