RECORD OF PROCEEDINGS
RECORD OF PROCEEDINGS
July 15, 2002
The Commission unanimously approved the minutes from the June 2002 meeting. Assistant Attorney General Harmon signed the May 1, 2002 Executive Session minutes.
Director’s Report: Director Griebling provided a written report and discussed the following: The Commission approved the request by Director Griebling to docket a levy increase of approximately two-tenths of a mil for the September hearing. The permit level is 7% behind last year’s record second highest level of 2,273 permits. The Colorado complaint chart shows a dramatic decrease in complaints filed with the Colorado Oil and Gas Conservation Commission (“COGCC”). On June 18, 2002 Deputy Director Macke attended the South of Silt Landowners Forum in Delta County. The Applications for Permits-to-Drill (“APDs”) filed by Gunnison Energy have been approved by COGCC. The publicity continues to emphasize the potential number of wells as a high number, much more than the APDs on file with COGCC. The three budget change requests proposed for fiscal year 2003-2004 have been approved by the MEGA Board. The Fire Prevention Directive for Oil and Gas Operations was approved on June 21, 2002 and has received favorable comments. Beginning in July, hearing applications and final orders will be available for viewing on the website by clicking on the 2002 hearing docket and then clicking on docket number or cause number. Department of Natural Resources Boards and Commissions members are invited to attend a lunch and reception at the State Fair on Friday, August 23, 2002 at 12:00 p.m. There were no variances requested this month.
Assistant Attorney General’s Report: AAG Harmon provided a confidential litigation memo and requested an Executive Session to discuss imminent litigation. AAG Harmon has been delayed in providing the Commission with the previously requested executive session and attorney-client privilege memo. She mentioned her concern about information contained in the La Plata County Impact Report describing how impacts from oil and gas have affected the La Plata County area. Chair Sonnenberg suggested that COGCC staff review the report. AAG Harmon mentioned that the Attorney General’s office is supportive of the COGCC Commissioners and other state agencies educating county officials.
Commissioner Comments: There were no comments.
Audience Comments: Greg Schnacke, COGA – Looking forward to Commissioners participation in the COGA National Gas Conference and the presenting of the Outstanding Operators Awards during the conference. Complimented the Commissioners on taking a proactive approach on the Fire Prevention Directive and views it as an opportunity to understand what agencies are trying to do and being able to support those efforts. COGA has made it a priority to support full funding of the COGCC with the legislature over the next year. Concerned with national environmental groups harassing Rocky Mountain Region oil and gas operations now that ANWAR is not moving forward. Chair Sonnenberg wants the Commissioners to discuss how to respond to media articles that misrepresent many issues.
Ken Wonstolen, COGA – LEAF has appealed to the Supreme Court regarding hydraulic fracturing issues, which will be opposed by the Department of Justice on behalf of the EPA, and COGA among others, will file an amicus brief. Phase II Regulations under the Stormwater Discharge Permit of the Clean Water Act took effect on July 1, 2002 and now effects most oil and gas operators in Colorado. COGA has drafted a permit for its members to use. Effort underway before the Air Quality Control Commission (“AQCC”) to review flashing losses at oil and gas sites. A large number of tank batteries are now likely to be under Air Quality regulations. COGA plans to develop a proposal for the AQCC hearing in October.
Executive Director’s Report: Shane Henry, Assistant Director of the Department of Natural Resources (“DNR”) discussed the following: Colorado has had over 1000 fires since April 2002 with 365,000 acres destroyed and approximately 365 homes lost with sixty percent of the fires caused by humans. There is an estimated 13,000 firefighters who reside in Colorado. $116 million has been spent to fight this year’s fires, considering the average cost over 10 years is $70 million and there has been $80 million in insurance costs this year compared to an average of $17 million a year. The Governor’s office has asked DNR to take the lead on coordinating agencies in responding to the current situation and future situations. A September date is planned for DNR agencies to hold a meeting to discuss Coalbed Methane issues. The State Engineer’s Office will make an official recommendation to the Water Court on Las Animas County’s water rights lawsuit. Chair Sonnenberg mentioned the desire to get funding for a technical person or group to review reports that are being prepared by citizens’ groups, etc. in an effort to respond to these reports in a formal, scientific manner. Assistant Director Henry will follow up with Vicki Cowart at Colorado Geological Survey to see if her agency can accommodate this request.
Ken Wonstolen, COGA – The Colorado Oil and Gas Association has filed an opposition to the Las Animas County water rights lawsuit. Assistant Director Henry indicated that the list of objectors is very lengthy.
Cause No. 191, Docket No. 0202-AW-01, Garfield County, request by Calpine Natural Gas Company for an order to allow additional wells on the 640-acre drilling and spacing unit consisting of Section 22, Township 6 South, Range 92 West, 6th P.M. for the production of gas from the Mesaverde Formation has been withdrawn.
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. The Commission heard testimony provided by COGCC staff Morris Bell, Operations Manager and Mark Weems, Field Inspector. Testimony was provided by Paul Lerno, Landowner who showed a video and made a statement. Testimony was provided by 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.
Cause No. 523, Docket No. 0207-GA-07, Garfield County, request by SWD, LLC for an order to establish a surface use plan designating approved well site locations within the Stillwater Planned Unit Development (the “Stillwater PUD”) located in the town of Silt, covering and including 1450 acres in portions of Sections 9 through 16, Township 6 South, Range 92 West, 6th P.M. was approved. Testimony was provided by Edward Sutton, Senior Vice President of SWD regarding the background and plans for developing the 1450 acres of land known as the Stillwater Development. Testimony was provided by John Obourn, an independent petroleum landman regarding mineral ownership. Testimony was provided by Logan MacMillan, a Certified Professional Geologist regarding the geologic development in the area, and the possible existence of natural gas underlying the Stillwater Development. Testimony was provided by Walter Pearson, consulting professional engineer regarding proposed drilling pad locations and dimensions, maximum required directional drilling deviations and additional directional drilling costs. Testimony was provided by Leslie Hope, Engineering Division Manager for High Country Engineering, Inc. regarding alternate drilling pad locations in response to the protestants’ concerns. Comments were made by Gene Burk, attorney for Bobby Roy McPherson and Leslie Dale McPherson regarding the McPhersons’ desire to prevent diminution in the value of their mineral estate and access issues. Testimony was provided by Mary McPherson regarding leasing of her family’s minerals by Williams Exploration and the subsequent release of the leased minerals. Rule 510. statements were made by Ken Wonstolen, Senior Vice President and General Counsel for the Colorado Oil and Gas Association who provided a written statement and made an oral statement in support of the concept of preserving access for oil and gas development and by John Spillane, attorney, individually and representing Bob Lembke, who commended SWD for bringing an application before the Commission to address mineral development prior to commencing surface development. Janet Steinbach, Community Development Director for the Town of Silt read a letter from John Evans, Mayor of the Town of Silt, describing the Town’s concerns about mineral development and the belief that a surface use plan would allow for orderly development in light of the proposed surface development plan. Staff analysis provided by Rich Griebling, COGCC Director indicated that the staff strongly supports SWD’s application. The application was approved by all Commissioners except Commissioner Phillips.
Consent Agenda: The Commission unanimously approved the consent agenda, which included the following:
Cause No. 1V, Docket No. 0207-OV-06, Washington County, request to approve an Administrative Order by Consent finding Alfred Ward & Son Operating Company in violation of Rules 324A.a., 324A.b., 902.a., 907.a.(1), 907.a.(2), and 907.c.; failure to ensure that E&P waste is properly stored, handled, transported, treated, recycled or disposed and for the unauthorized and intentional discharge of produced water into adjacent surface waters for the State #1 and #2 tank battery in the NE¼ SE¼ of Section 36, Township 3 South, Range 54 West, 6th P.M. was approved.
Cause No. 1V, Docket No. 0207-OV-07, Baca County, request to approve an Administrative Order by Consent finding Oneok Resources Company in violation of Rules 302, 312, and 706; failure to provide a Registration for Oil and Gas Operations, Certification of Clearance and/or Change of Operator, and financial assurance for the Bauman A #1-2 Well in the SW¼ SW¼ of Section 2, Township 33 North, Range 42 West, 6th P.M. was approved.
Cause No. 112, Docket No. 0207-GA-06, Ignacio-Blanco Field, La Plata County, request by Texaco Exploration and Production, Inc. for an order to allow the West Animas-University #9-3 Well to be located 1085 feet FSL and 2300 feet FWL in the SE ¼ SW ¼ of Section 9, Township 34 North, Range 9 West, N.M.P.M. within one and one-half miles of the outcrop between the Fruitland and Pictured Cliffs Formations was approved.
Cause No. 112, Docket No. 0207-EX-02, Ignacio-Blanco Field, La Plata County, request by 44 Canyon, LLC for an order to allow the drilling of the Eagles #1-2 Well at an exception location of 1465 feet FSL and 690 feet FWL in the SW¼ of Section 1, Township 34 North, Range 9 West, N.M.P.M. for the production of gas from the Fruitland coal seams was approved.
Cause No. 232 and 499, Docket No. 0207-SP-09, Wattenberg Field, Weld County, request by United States Exploration, Inc. to amend Cause Nos. 232 and 499 to allow the 320-acre drilling and spacing unit consisting of the N½ of Section 9, Township 4 North, Range 63 West, 6th P.M. to be segregated into 160-acre drilling and spacing units consisting of the NE¼ and NW¼ of Section 9, for the production of oil, gas and associated hydrocarbons from the “J” Sand and Dakota Formations was approved.
The meeting adjourned at 7:20 p.m.
The Secretary was therefore authorized to issue the following orders:
Order No. 1V-223, Washington County: Approves the Administrative Order by Consent finding Alfred Ward & Son Operating Company in violation of Rules 324A.a., 324A.b., 902.a., 907.a.(1), 907.a.(2), and 907.c.; failure to ensure that E&P waste is properly stored, handled, transported, treated, recycled or disposed and for the unauthorized and intentional discharge of produced water into adjacent surface waters for the State #1 and #2 tank battery in the NE¼ SE¼ of Section 36, Township 3 South, Range 54 West, 6th P.M., and assesses fine of Six Thousand dollars ($6,000.00) for the above violations.
Order No. 1V-224, Baca County: Approves the Administrative Order by Consent finding Oneok Resources Company in violation of Rules 302., 312., and 706. for the Bauman A #1-2 Well located in the SW¼ SW¼ of Section 2, Township 33 South, Range 42 West, 6th P.M., and assesses a fine of One Thousand Seven Hundred Fifty dollars ($1,750) for the above violation.
Order No. 112-166, Ignacio-Blanco Field, La Plata County: Approves the request by 44 Canyon, LLC for an order to allow the drilling of the Eagles #1-2 Well at an exception location of 1465 feet FSL and 690 feet FWL in the SW¼ of Section 1, Township 34 North, Range 9 West, N.M.P.M. for the production of gas from the Fruitland coal seams.
Order Nos. 232-235 and 499-73, Wattenberg Field, Weld County: Approves the request by United States Exploration, Inc. to amend Cause Nos. 232 and 499 to allow the 320-acre drilling and spacing unit consisting of the N½ of Section 9, Township 4 North, Range 63 West, 6th P.M. to be segregated into 160-acre drilling and spacing units consisting of the NE¼ and NW¼ of Section 9, for the production of oil, gas and associated hydrocarbons from the “J” Sand and Dakota Formations.
Order No. 523-1, Garfield County: Approves the request by SWD, LLC for an order to establish a surface use plan designating approved well site locations within a PUD covering portions of Sections 9-16, Township 6 South, Range 92 West, 6th P.M.
Patricia C. Beaver, Secretary
Stephen Sonnenberg, Chair