A comprehensive effort is being carried out at LCG to develop, calibrate and test a basin diagenesis simulator for use in the prediction of the distribution and characteristics of tectonic fracture networks and then apply it to the Piceance Basin in coordination with remote sensing and other techniques. Progress on the simulator is approximately on schedule. The simulator has both two- (cross-section) and full three-dimensional options for preliminary and complete modeling, respectively. Data from the MWX site is being analyzed and input into a computer data bank. This data will be used to test and calibrate the model. Organic reactions and multi-phase flow were not a part of the original workplan for this modeling facet (subcontract) of the overall project. Nonetheless, its potential importance for the project has led LCG to expend time on developing modules required to account for their effects on overpressure and fracturing. In the course of code development, a technology of computational grid adaption was devised in order to obtain the accuracy in the prediction of fluid pressures and rock stresses needed for fracture prediction. Also, graphical analysis tools needed to visualize our results are being developed based on the AVS (Audio Visual Systems, Inc.) graphics software. In this report preliminary results on all aforementioned aspects of the project are shown. The report ends (Sect. VII) with an estimation of the consistency of progress to date with the originally proposed work schedule and with a bibliography and list of personnel participating in the project.