August 19, 2002

 

            The Oil and Gas Conservation Commission met on August 19^th at 10:00 a.m. in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for a hearing in Cause Nos. 1, 34, 479 and 510, and 1V (2 matters).

 

            Those present were:

 

                        Stephen Sonnenberg           Chair

                        Brian Cree                             Vice Chair

                        Tom Ann Casey                    Commissioner

                        Michael Klish                         Commissioner

                        Lynn Shook                            Commissioner

                        Carol Harmon                        Assistant Attorney General

Rich Griebling                        Director

Brian Macke                          Deputy Director

                        Patricia Beaver                     Hearings Manager

 

The Commission unanimously approved the amended minutes from the July 2002 meeting. 

 

Director’s Report: Director Griebling provided a written report and discussed the following:  The next Northwest Oil and Gas Forum will be held on October 2, 2002 in Rangely.  Gunnison Energy provided update on APDs submitted to COGCC.  The State Engineer’s Office has allowed produced water to be used in a subdivision during the drought for non-potable uses.  The new COGCC receptionist will start on August 20, 2002.  Rule-making to increase the mill levy is scheduled for September with an increase to 1.1 mills.  Director Walcher and Chair Sonnenberg were thanked for the presenting of the Outstanding Operator Awards on August 6, 2002 at the COGA Natural Gas Conference.  Those companies and individuals who donated displays for the Colorado State Fair were thanked for their contributions.  Hearing applications and final orders can be viewed online by clicking on the 2002 docket and then clicking on docket number.  Two variances were granted this month.   

 

Vicki Cowart, State Geologist and Jim Cappa, Mineral Section Chief, both of the Colorado Geological Survey presented to Director Griebling and the Commissioners a new map of the Oil and Gas fields in Colorado.  They also presented the Colorado Mineral and Mineral Fuel Activity 2001 publication.

 

Jim Milne, Geographical Information Systems Administrator, described a new map with topography and inactive and active well spots.  Director Griebling offered to frame either the CGS or COGCC map for all Commissioners.

 

Assistant Attorney General’s Report:  AAG Harmon provided a confidential litigation memo.  The Rule 303.a. lawsuit has been dismissed without prejudice for lack of standing.  This rule could possibly be challenged again.  The deadline to appeal the court’s decision is September 23, 2002.  AAG Harmon passed out copies of the Town of Frederick decision.  Pat Herron from the Tort Litigation section of the Attorney General’s Office will handle the constitutional issues related to the Delta County lawsuit filed August 2, 2002.  The Commissioners voted to go into and come out of Executive Session to discuss the Delta County lawsuit.     

 

Commissioner Comments:  Chair Sonnenberg thanked Commissioner Phillips for his service as a Commissioner and welcomed Commissioner Reagan.

 

Audience Comments:  Ken Wonstolen, COGA – The Natural Gas Conference was successful and COGA enjoyed having the Outstanding Operator Awards presented during the conference.  COGA will have its Board of Directors Reception in Evergreen on September 14, 2002 and the Commissioners are invited.  COGA is interested in update on Garfield County air quality monitoring data prior their rulemaking in October before the APCC.  Las Animas County filed a petition in District Court to have produced water determined to be non-tributary.  Cases have been found where coalbed methane produced water has been determined to be wastewater.  Evergreen, Cedar Ridge and Williams have filed objections to Las Animas County’s petition.  COGA was pleased with the outcome of the Town of Frederick case in that the COGCC setbacks were determined to be preempted and this decision was upheld.  The Town may appeal to the Colorado Supreme Court.  COGA has a pending appeal with the Court of Appeals on the dispute over deductions from royalties.  A recent decision from Weld County concerning a landowner who physically barred frac crews from completing an EnCana well is also in court.  The BP lawsuit on the Neva Dove well will likely not get settled and go to trial in November.              

 

Executive Director’s Report:  Shane Henry, Assistant Director of the Department of Natural Resources (“DNR”) discussed the following:  Mary Marchun, Assistant Director of Legislative Affairs who replaced Brad Lundhal was introduced.  The State Fair is up and going.  The Commissioners are invited to attend a lunch and reception on August 23, 2002 at the Fair.  DNR is working on getting legislators out in the field to review DNR issues. 

 

Hearings Manager Beaver read the Gunnison County letter regarding a meeting between County Commissioners and COGCC Commissioners.  Director Griebling suggested preparing a letter to send to Gunnison County describing how the COGCC process works and inviting County Commissioners to a COGCC hearing.  Assistant Director Henry suggested meeting with CCI representatives to discuss COGCC issues and he will follow up with a meeting schedule.

 

Cause No. 1V, Docket No. 0206-OV-05, La Plata County, request to approve an Order Finding Violation finding MarkWest Resources, Inc. in violation of Rule 1003.a. for the Tiffany No. 2-17 Well located in the NE¼ NW¼ of Section 17, Township 32 North, Range 6 West, N.M.P.M. was withdrawn.  At the July hearing, the Commission heard testimony from COGCC staff Morris Bell, Operations Manager and Mark Weems, Field Inspector; Paul Lerno, Landowner; and MarkWest representatives, Mike Finney, Landman and Scott Davis, Engineer.  After deliberation, the Commission directed the landowner and the MarkWest to attempt a settlement prior to the August hearing.  The parties reached agreement prior to the August hearing, the COGCC staff withdrew NOAV and the hearing was cancelled.

 

Cause No. 1, Docket No. 0208-GA-08, Kiowa County, request by Midwest Enterprises for an order to release the $30,000 statewide plugging bond on the Fenton 2-31 Well located in Section 31, Township 20 South, Range 42 West, 6^th P.M. was continued.

 

Cause No. 1V, Docket No. 0208-OV-08, Weld County, request to approve an Order Finding Violation finding BIC Petroleum, Inc. in violation of Rule 326.b., for the Cottonwood State #1 Well located in the SE¼ NW¼ of Section 16, Township 9 North, Range 56 West, 6^th P.M. was approved.  The Commission heard testimony and reviewed exhibits presented by Morris Bell, Operations Manager in support of the COGCC staff’s position.  After deliberation, the Commission found BIC in violation, ordered BIC to pay a fine of two thousand dollars ($2,000) for the violation, and to plug, abandon and reclaim the wellsite by September 15, 2002.  If the work is not performed by September 15, 2002, COGCC staff is authorized to commence a claim on the CD in order to plug, abandon and reclaim the well.  In the future no Forms 2 and 10 submitted by BIC or any of its principals will be approved unless:  1) the fine is paid, 2) any money used from the ERF is reimbursed, and 3) an increased financial assurance amount is posted.

 

Consent Agenda:  The Commission unanimously approved the consent agenda, which included the following:

 

            Cause Nos. 479 and 510, Docket No. 0208-SP-11, Garfield County, request by Williams Production Company for an order to allow the drilling of additional wells, the equivalent of 20-acre density, to be located in portions of Sections 1, 2, 11, and 12 in Township 7 South, Range 96 West, 6^th P.M. for the production of gas and associated hydrocarbons from the Williams Fork Formation was approved.

 

            Cause No. 34, Docket No. 0208-SP-10, Baca County, request by Sandlin Oil Corporation for an order to remove certain lands in Townships 33 and 34 South, Range 41 West 6^th P.M. from Order No. 34-1 and place them under the provisions of the Rules and Regulations of the Colorado Oil and Gas Conservation Commission was approved.

 

Cause No. 1V, Docket No. 0208-OV-09, Rio Blanco County, request to approve an Administrative Order by Consent finding ChevronTexaco USA, Inc. in violation of Rules 324A.a., 324A.b., 604.a.(4), and 907.a.(1); failure to take adequate precautions to prevent the unauthorized discharge of exploration and production wastes, water quality standards established by WQCC, to provide a berm with sufficient volume to contain contents, and to ensure that exploration and production wastes are properly stored, handled, and disposed to prevent environmental impacts to air, water, soil or biological resources for the Wilson Creek batter #2 Tank located in the SE¼ SE¼ of Section 27, Township 3 North, Range 94 West, 6^th P.M. and assessing a fine of eight thousand dollars ($8000) was approved.

           

            The meeting adjourned at 12:35 p.m.

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The Secretary was therefore authorized to issue the following orders:

 

Order No. 1V-225, Weld County:  Approves the Order Finding Violation finding BIC Petroleum, Inc. in violation of Rule 326.b.; failure to perform a mechanical integrity test within two years of the initial shut-in date for the Cottonwood State #1 Well located in the SE¼ NW¼ of Section 16, Township 9 North, Range 56 West, 6^th P.M., and assesses a fine of two thousand dollars ($2000) for the above violation.

 

Order No. 1V-226, Rio Blanco County:  Approves the Administrative Order by Consent ChevronTexaco USA, Inc. in violation of Rules 324A.a., 324A.b., 604.a.(4), and 907.a.(1), for the Wilson Creek batter #2 Tank located in the SE¼ SE¼ of Section 27, Township 3 North, Range 94 West, 6^th P.M., and assesses a fine of eight thousand dollars ($8000) for the above violation.

 

            Order No. 34-21, Greenwood Field, Baca County:  Approves the request by Sandlin Oil Corporation for an order to remove certain lands in Townships 33 and 34 South, Range 41 West 6^th P.M. from Order No. 34-1 and place them under the provisions of the Rules and Regulations of the Colorado Oil and Gas Conservation Commission.

 

            Order Nos. 479-10 and 510-7, Grand Valley Field, Garfield County:  Approves the request by Williams Production Company for an order to allow the drilling of additional wells, the equivalent of 20-acre density, to be located in portions of Sections 1, 2, 11, and 12 in Township 7 South, Range 96 West, 6^th P.M. for the production of gas and associated hydrocarbons from the Williams Fork Formation. 

            

           

                                                                                                 Signed:

                                                                                                 Patricia C. Beaver, Secretary

Approved:

  Stephen Sonnenberg, Chair