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FINDINGS OF FACT3
On October 14, 1983, True Oil Co., the tax matters partner,
and Nielson Enterprises, Inc., a Delaware corporation, formed the
Nielson-True partnership. The partnership's principal place of
business was Casper, Wyoming, at the time the petition was filed.
The primary objective of the partnership was to drill two wells
in the "J" Sand formation in the Wattenberg Field in northern
Colorado, a gas field covering parts of several counties,
including Weld County, Colorado. Wells were drilled in Weld
County, known as the Alvin Vonasek "B" well (the Vonasek well)
and the Castor Hanson True well (the Hanson well). These wells
draw from the "J" Sand formation and produce only gas.
The Federal Energy Regulatory Commission (FERC or the
Commission) made an administrative determination that the "J"
Sand formation in the Wattenberg Field was a tight formation and
that the gas produced from that formation was tight formation
natural gas.4 The Commission's determination was pursuant to the
3 The parties' stipulated facts and exhibits are
incorporated by this reference.
4 A "tight formation" is a sedimentary layer of rock
cemented together in a manner that greatly hinders the
flow of any gas through the rock. Because such a
formation is characterized by low permeability, wells
drilled into gas-bearing formations of this kind
usually produce at very low rates. To stimulate
production from these formations, producers must use
expensive enhanced recovery techniques. [Citation
omitted.]
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