RECORD OF PROCEEDINGS

 

                                                                                                                                                February 12, 2002

 

            The Oil and Gas Conservation Commission met on February 12th at 10:00 a.m. in the Raton Room, Holiday Inn Trinidad, 3125 Toupal Drive, Trinidad, Colorado, for a hearing in Cause Nos. 1V (1 matter), 112, 270, and 517.

 

            Those present were:

 

                        Brian Cree                               Vice Chair

                        Tom Ann Casey                      Commissioner

                        Michael Klish                           Commissioner

Peter Mueller                           Commissioner

                        Abe Phillips                             Commissioner

Carol Harmon                         Assistant Attorney General

Brian Macke                            Deputy Director

                        Patricia Beaver                       Hearings Manager

 

The Commission unanimously approved the minutes from the January 2002 meeting.

 

Executive Director’s Report:  Shane Henry, Assistant Director of the Department of Natural Resources (DNR) discussed the following:  The budget situation for the state shows a shortfall of approximately fifty (50) to ninety (90) million dollars with only one (1) million dollars needed this year. Less than 20% of the Department of Natural Resources’ budget is funded through the general fund.  The bill to codify the severance tax reserve balance for two (2) years is now null and void due to the budget situation.  The state assisted the Nature Conservancy in the acquisition of the Baca Ranch lands.  The Division of Wildlife is attempting to handle the elk wasting disease.  The Division of Parks is working on forest conditions in light of fire damage.  A Constitution Fund Bill for thirty (30) million dollars to fund various water projects throughout the state is in process.  The Division of Minerals and Geology is working to permit a facility in Pueblo that would bring additional revenue to the state.

 

Director’s Report: Deputy Director Macke provided a written report and discussed the following:  The statistics report shows the number of permits issued in 2001, with four hundred (400) of the 2273 total permits issued in Las Animas County, representing the third most Applications for Permit to Drill (APD) in Colorado.  It is estimated that between 1500 and 1900 APDs will be issued for 2002.  The Northwest Forum meeting will be held on Thursday, February 14th in Rifle.  Commissioner Cree inquired about similar forums in other areas.  Staff will participate in another Private Property/Oil and Gas Development Seminar as an outreach effort.  The deadline for nominations for the 2001 Outstanding Oil and Gas Operator Awards is May 17, 2002.  No variances were granted this month. 

 

AAG’s Report:  The Commission’s decision was upheld by the court in regard to the Petroglyph/Lively matter.  The Allen Oil and Gas federal case depositions are scheduled for March 19-22.  The Town of Frederick case is challenging the town’s ordinance by NARCO.  The COGCC filed its amicus brief in this case on January 1st and no further action is necessary by COGCC.  Colorado Oil and Gas Association, Evergreen and Vermejo Minerals have initiated a lawsuit against Las Animas County and COGCC has intervened since this is the first time there is a challenge to federal and state rules by a county’s rules.  Opening brief for the five Counties lawsuit is due April 11th.  The Committee on Legal Services may consider the Commission’s authority regarding Rule 303.a. on February 15th.

 

Commissioner Comments:  Commissioner Casey briefly described some of the issues concerning J.M. Huber’s pumping unit on a certain well in La Plata County.

 

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

 

            Cause No. 517, Docket No. 0202-SP-06, request by Evergreen Resources, Inc. to repeal and vacate Order Nos. 517-1 and 517-2 which established spacing and pooling for certain lands in Townships 33 and 34 South, Ranges 66 and 67 West for production of gas from the Raton and Vermejo Formations and places the lands under the provisions of the Colorado Oil and Gas Conservation Commission rules was approved.

 

Cause No. 270, Docket No. 0202-SP-07, request by R & G Oil, LLC to vacate Order No. 270-1 which

ordered that no gas shall be produced from the gas cap zone of the reservoirs in the Dakota and Lakota Formations in portions of Section 21, 28 and 33 of Township 9 North, Range 91 West, 6th P.M. and places the lands under the provision of the Colorado Oil and Gas Conservation Commission rules was approved.

            Cause No. 112, Docket No. 0202-UP-01, request by Exok, Inc. to pool unleased interests in the 320-acre drilling and spacing unit consisting of the S½ of Section 1, Township 32 North, Range 6 West, N.M.P.M. for the development and operation of the Fruitland Coal Formation was approved.

 

Audience Comments:  Tom Morrisey - land and mineral owner.  Founding member of East of Huajatolla Citizens Alliance. Mentioned possibility of Raton Basin forum.  Offered to help coordinate forum in Las Animas County and believes additional stakeholders should participate in field tour for different perspectives.  Also believes complaint form should be available electronically.

 

Leroy Hassenack - landowner in Sarcillo Canyon.  Questioned why fire hydrants cannot be placed on water lines coming off wells.  Stephanie Basey from Evergreen Operating explained problems with hydrants and discharge permits.

 

Kim Crisco - resides in Longs Canyon.  Interested in a forum to discuss water issues; concerned about quantity and quality of water now and in the future.  Mr. Crisco was told his water well was to be sampled and he wants to know if it has or will be sampled.  Curious about whether all water wells will be sampled in a second round.

 

Mark Ritz - Las Animas County Commissioner.  Thanked COGCC for reception/dinner the previous night.  Believes forum is essential for education of public and that water is important to the community.  Had a recent meeting with Evergreen that was frustrating since it doesn’t seem possible to find beneficial uses for produced water through DWR and COGCC and would like COGCC to work with the county to change water use.

 

Kenneth Torres - Las Animas County Commissioner.  Would like to find beneficial use for water being produced from coalbed methane wells in county.  Asked about timing of rulemaking notices and asked why all COGCC rules apply in federal units except spacing.

 

Albert Robinson - Was contacted in December about water well testing.  Robinson had his well tested for minerals and wants to locate state agency(ies) to take charge on finding answers to water issues.

 

Ron Leef - resides in Weston.  Would like to see first purchaser on gas companies’ printouts.  Discussed a newspaper article on Lorencito area where about 50 to 75 semis per day go through this area.  Concerned about Lorencito Coal Company using 10 million pounds of explosives near Evergreen’s wells and the impact the explosives may have on the wells.

 

Sara Ferguson - resides in Longs Canyon.  Believes that with Evergreen’s engineering capabilities they can create hydrants that won’t discharge.

 

Penny Beiber - Southern Colorado CURE.  Thanked Las Animas County Commissioners, Evergreen and others for attending and commenting.  Would also like to see a forum in the area.

 

Deputy Director Macke introduced John Duran as the new COGCC Southeast Field Inspector.  

 

            Cause No. 1, Docket No. 0202-GA-02, request by Eugene Dechant for an order to bring Energy Search Company before the Commission to determine why payment of proceeds have not been made on the Ginther 1 & 2 Wells since April 1998 was withdrawn.

 

            Cause No. 191, Docket No. 0202-AW-01, request by Calpine Natural Gas Company for an order to allow additional wells for certain lands in Section 22, Township 6 South, Range, 92 West, 6th P.M. was continued to the March 2002 hearing.

 

            Cause No. 1, Docket No. 0202-OV-02, request to approve and Order Finding Violation finding Woosley Oil Company in violation of Rule 326.b., for the Ken Decker #1 Well located in the NE¼ NW¼, Section 9, Township 35 North, Range 13 West, N.M.P.M., the Hackathorn #1 Well located in the NE¼ NW¼, Section 8, Township 35 North, Range 13 West, N.M.P.M., and the Kent Woosley #1 Well located in the SW¼ NE¼, Section 6, Township 35 North, Range 13 West, N.M.P.M. was approved.  The Commission heard testimony and reviewed exhibits presented by David Dillon, Engineering Supervisor in support of the staff’s position.  Mr. Dillon testified that Mrs. Woosley in a phone conversation described that Woosley Oil Company has been bankrupt for nine years. After deliberation, the Commission ordered Woosley Oil Company to pay a fine of six thousand dollars ($6000) for the violation; Woosley Oil Company was ordered to either perform MIT’s, return to production or plug, abandon and reclaim the wells.  If the work is not completed by May 1, 2002, COGCC staff is authorized to commence a claim on the Thirty Thousand dollar ($30,000) Bond posted by Woosley Oil Company in order to plug, abandon and reclaim the wells.

 

The meeting adjourned at 12:10 p.m.

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The Secretary was therefore authorized to issue the following orders:

 

Order No. 1V-220, Montezuma County:  Approves the Order Finding Violation finding Woosley Oil Company in violation of Rule 326.b., for the Ken Decker #1 Well located in the NE¼ NW¼, Section 9, Township 35 North, Range 13 West, N.M.P.M., the Hackathorn #1 Well located in the NE¼ NW¼, Section 8, Township 35 North, Range 13 West, N.M.P.M., and the Kent Woosley #1 Well located in the SW¼ NE¼, Section 6, Township 35 North, Range 13 West, N.M.P.M.  Woosley Oil Company was ordered to pay a fine of six thousand dollars ($6000) for the above violation; Woosley Oil Company shall either perform MIT’s, return to production or plug, abandon and reclaim the wells.  If the work is not completed by May 1, 2002, COGCC staff is authorized to commence a claim on the Thirty Thousand dollar ($30,000) Bond posted by Woosley Oil Company in order to plug, abandon and reclaim the wells.

 

            Order No. 517-7, Lorencito Field, Las Animas County:  Approves the request by Evergreen Resources, Inc. to repeal and vacate Order Nos. 517-1 and 517-2 which established spacing and pooling for certain lands in Townships 33 and 34 South, Ranges 66 and 67 West for production of gas from the Raton and Vermejo Formations and places the lands under the provisions of the Colorado Oil and Gas Conservation Commission rules.

 

Order No. 270-2, Lone Pine Field, Jackson County:  Approves the request by R & G Oil, LLC  to vacate

Order No. 270-1 which ordered that no gas shall be produced from the gas cap zone of the reservoirs in the Dakota and Lakota Formations in portions of Section 21, 28 and 33 of Township 9 North, Range 91 West, 6th P.M. and places the lands under the provision of the Colorado Oil and Gas Conservation Commission rules.

 

            Order No. 112-162, Ignacio-Blanco Field, Archuleta County:  Approves the request by Exok, Inc. to pool unleased interests in the 320-acre drilling and spacing unit consisting of the S½ of Section 1, Township 32 North, Range 6 West, N.M.P.M. for the development and operation of the Fruitland Coal Formation.

           

 

           

 Signed:

 

 Patricia C. Beaver, Secretary

 

 

Approved:

 

Brian J. Cree, Vice Chairman