August 18, 2003

 

            The Oil and Gas Conservation Commission met on August 18th at 10:00 a.m. in the Petroleum Hall and on August 19th at 8:00 a.m. in the Metals Halls in the Green Center, Colorado School of Mines, 1500 Illinois Street, Golden, Colorado, for a hearing in Cause Nos. 1V (2 matters), 133, 146, 139 and 440, 139, 440, 479 and 510, 232 and 499.

            Those present were:

 

                        Peter Mueller                           Chair

                        Brian Cree                               Vice Chair

                        Tom Ann Casey                      Commissioner

                        Michael Klish                           Commissioner

                        Tom Reagan                           Commissioner

                        Lynn Shook                             Commissioner

                        Carol Harmon                         Assistant Attorney General

                        Richard Griebling                    Director

Brian Macke                            Deputy Director

                        Patricia Beaver                       Hearings Manager

            The Commission unanimously approved the minutes from the July 14, 2003 hearing.

 

Executive Director’s Report:  There was no report.

 

            Director’s Report:  Director Griebling provided a written report and discussed the following: The Williams Production RMT Co. application on the Consent Agenda covers approximately 16,000 acres.  The EnCana Energy Expo was well-attended.  Deputy Director Brian Macke and COGCC staff members Jaime Adkins, Bob Chesson, and Jay Krabacher attended the Expo on behalf of the COGCC.  Director Griebling proposed that since there were no protests to the William’s 10-acre density application that monthly reporting on new APDs in the Staff Report should not be required.  Director Griebling thanked COGCC staff for participating in the tour to show new La Plata County Commissioners and employees oil and gas operations in their county.  Congratulations to Linda Pavelka on her promotion to Permit Supervisor.  The Outstanding Operations Awards were presented on August 5th at the COGA’s Natural Gas Conference and thanks to Tom Reagan and DNR Executive Director Greg Walcher for their assistance during the presentation.  There were two variances granted this month.  Director Griebling mentioned an attached article in the Glenwood Springs Post Independent about gas drilling.

 

Assistant Attorney General’s Report:  AAG Harmon provided the Commissioners with a confidential litigation memo.  A hearing will be held to consider combining the Delta County lawsuit with the Denver County lawsuit.  AAG Harmon would like an executive session over lunch to discuss litigation in the BDS International LLC matter.  The Commission voted to go into executive session over lunch and come out after lunch.

 

Commissioner Comments:  There were no comments.

 

Audience Comments:  Greg Schnacke, Executive Director of COGA, congratulated Chair Mueller on his new role on the Commission.  Mr. Schnacke thanked Commissioner Reagan for his participation in the COGCC Outstanding Operations Awards.  COGA would appreciate the Commissioners’ endorsement on its proposed Economic Study that requests approximately $400,000 from severence tax funds from the COGCC budget.  Commissioner Reagan believes the goal of COGA’s proposal is very important and thinks COGA’s effort should be supported.  Vice Chair Cree would support the proposal and thinks it is important for the oil and gas industry.  He also mentioned that he would like to understand the dollars in the severence tax fund and would like to have information on the balances of the severance tax and projects proposed.  Mr. Schnacke would like a concept endorsement from the Commission.  The Commission indicated that they would like more information on the dollars in the fund before signing the letter of endorsement.  After further discussion, the Commissioners signed a letter of support to be sent to Greg Walcher.

 

Cause No. 146, Docket No. 0304-GA-02, request for an order authorizing the closure of the Leyden Underground Natural Gas Storage Facility in the caverns of the abandoned Leyden Coal Mine.  Chair Mueller made opening remarks on the purpose of the Leyden hearing and the manner in which the hearing will be conducted.  AAG Harmon described the Rule 510.A Statement process.  The Commission unanimously approved the August 13, 2003 memo describing decisions made by Chair Mueller as Hearing Officer at five of the seven prehearing conferences.

 

The Commission heard expert testimony and reviewed exhibits from:

 

Bill Uding, Gas Storage Projects Director, regarding the history of the Leyden Gas Storage Facility, the proposed closure plan and monitoring program, lost and unaccounted for gas, and the City of Arvada’s future plans for water storage. 

 

Benjamin Fowke, Vice President/Treasurer, Public Service, regarding Public Service’s financial position to guarantee performance and the ability to fulfill any obligation imposed under §34-60-106(17), C.R.S., including by not limited to, post closure corrective action. 

 

Robert Weimer, Consulting Geologist, regarding the structural and stratigraphic geology of the Leyden Gas Storage Facility in relation to storage and closure, including sandstone reservoirs, gas migration and seals.

 

Dave Cox, Senior Consultant, Questa Engineering Corp., regarding the potential for gas leakage out of the Facility, methods to abandon wells, amount of gas remaining in the Facility at closure and the proposed use of the Facility for water storage. 

 

Greg Sherman, Geologist and President of Western Environmental and Ecology, Inc., regarding subsidence in the context of closure at the Facility.

 

Tom Hesemann, Hydrogeologist and Engineering Geologist, Tetra Tech RMC, regarding the adequacy of the closure plan with respect to hydrogeology. 

 

David Folkes, Engineer and President, EnviroGroup Limited, regarding the potential for storage gas to be present in shallow soils after the closure of the Leyden Facility. 

 

Mark Floyd, Engineer, City of Arvada, regarding the post-closure use of Leyden Facility. 

 

            The Commission heard staff analysis from:

 

            Morris Bell, COGCC Operations Manager and Al Amundson, Mining Engineer with the Division of Minerals and Geology, who having reviewed the expert reports and heard the testimony from the expert witnesses are in support of the proposed closure plan with several amendments.

 

            Kevin Rein, Water Engineer with the Division of Water Resources, State Engineer’s Office, who described the manner in which water wells are permitted by his office, and the agreement currently in place to notify Public Service of any proposed water well over or within a one-half (½) mile of the Leyden Facility.

 

Public comments were made under Rule 510. by the following: 

 

Chris Eatherton, Homeowner – Presented exhibits from Public Service’s files.  Has evidence that gas is present in a well outside the cavern.  Questioned the completeness of the science in Public Service’s presentation.  Mentioned the Hutchinson, Kansas gas storage field explosion where gas migrated seven miles.  Read from Public Service’s gas report and from Bill Uding’s testimony in district court and at the April COGCC hearing. 

 

Greg Murray, Homeowner – Stated that Public Service has been a good neighbor.  Likes the idea of converting the facility to a water storage facility.  Wants Public Service to open additional wells and monitor them.  Questioned why Public Service did not address the “lost” gas issue before.  Believes gas has migrated both laterally and vertically.  Thinks Public Service should remediate and pay for any damages that may occur.

 

Richard Loesby, President of Northwest Industrial Subdivision II, Inc. – speaking as a citizen, not as a party.  Has obtained ten water well permits from the Department of Water Resources.  This is the first time he has heard that blow-out prevention equipment should be used when drilling water wells.  Has attempted to get a 1000 foot water well drilled on his property but a water well contractor contacted in October of 1995 would not drill the well.  Has been told by Lane Western that the cost to drill an 1100 foot water well would be $100,000 to $120,000.  Would like Public Service to plug and abandon the #35 Well sooner than they plan to and wants a specific date of when they will plug the well.

 

Roy Laws, Jefferson County Health Department, Environmental Engineer – has been with JeffCo for five years.  Advocates science-based decisions.  Agrees with using the caverns for underground storage of water.  Would like a better accounting of lost and unaccounted for gas.  Would like to see the Colorado School of Mines work with Public Service to do more science.

 

Ken Wonstolen, COGA – believes that the General Assembly made the proper decision to have the COGCC decide on the closure plan for Leyden.  Has never seen the Rule 510 statement process abused so badly.  Will submit his concerns to the Commission in writing.

 

            After deliberation, the Commission suggested that Public Service consider installing additional soil gas monitoring wells in an effort to provide nearby homeowners with more data.  Public Service consented to the installation of twenty (20) new soil gas monitoring wells, to be evenly spaced along the perimeter of the Facility, where it can obtain surface access, not located near the landfill or Superfund site, and with the wells to remain in place for two (2) years post-closure.  In addition, Public Service proposed that approval of the location of the additional soil gas monitoring wells by COGCC staff be obtained within ninety (90) days of the date of the hearing and agreed to let Mr. Greg Murray participate in the discussion with COGCC staff.  The Commission then entered an order to approve the proposed Closure Plan for the Leyden Gas Storage Facility with four (4) additional plan provisions and the twenty (20) additional soil gas monitoring wells.

 

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

 

Cause Nos. 232 and 499, Docket No. 0307-SP-04, request for an order to amend the drilling and spacing units in Section 32, Township 5 North, Range 63 West, 6th P.M. by establishing 80-acre drilling and spacing units in the W½ SE¼, SW¼, NE¼, and NW¼ and establishing 40-acre drilling and spacing units in the E½ SE¼ for the production of oil, gas and associated hydrocarbons from the Dakota, “J” Sand, Codell and Niobrara Formations.

 

Cause No. 133, Docket No. 0308-AW-08, request for an order to allow up to eight (8) wells to be drilled in the existing 320-acre drilling and spacing units in Section 26 and the N½ of Section 36, Township 12 North, Range 101 West, 6th P.M. for the production of oil and associated hydrocarbons from the Wasatch, Fort Union/Lance/Lewis and Mesaverde Formations.

 

Cause Nos. 139 and 440, Docket Nos. 0308-AW-09 and 0308-AW-10, request for an order to increase well density, the equivalent of 1 well per 20 acres, from the Williams Fork Formation in Sections 1 and 2, Township 7 South, Range 94 West, 6th P.M. for the production of gas and associated hydrocarbons from the Williams Fork Formation.

 

Cause Nos. 139, 440, 479 and 510, Docket No. 0308-SP-05, request for an order to increase well density, the equivalent of 1 well per 10 acres, in certain sections of Township 6 South, Ranges 94-96 West, 6th P.M. and Township 7 South, Ranges 95 and 96 West, 6th P.M. for the production of gas and associated hydrocarbons from the Williams Fork Formation.

 

Cause No. 1V, Docket No. 0308-OV-05, request to approve an Administrative Order by Consent finding Puckett Energy Company in violation of Rules 325.a., 210, and 326.b., failure to obtain written authorization for injection, to install a well sign, and to conduct an MIT on a shut-in well every five (5) years for the Dalke #2 Well located in the SW¼ SW¼ of Section 11, Township 8 North, Range 54 West, 6th P.M., assessing a fine of Ten Thousand Dollars ($10,000).

 

Cause No. 1V, Docket No. 0308-OV-06, request to approve an Administrative Order by Consent finding Antelope Energy Company in violation of Rules 308A., 301., 319.b.(1), and 1003.b., failure to submit a Drilling Completion Report, Form 5 within thirty (30) days of the suspension of commenced drilling activities prior to reaching total depth, to provide written notice of intention to change plans previously approved, to obtain approval of the Director for temporarily abandoning the well and failure to close the well to the atmosphere prior to the temporary abandonment and to reclaim the location within twelve (12) months after drilling operations for the Maddy #1 Well located in the SE¼ SW¼ of Section 31, Township 10 North, Range 57 West, 6th P.M., assessing a fine of One Thousand Dollars ($1,000).

 

The meeting adjourned at 6:00 p.m.

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            The Secretary was therefore authorized to issue the following orders:

 

Order No. 133-22, Hiawatha West Field, Moffat County:  Approves the request by Ensign Operating Company to allow up to eight (8) wells to be drilled in the existing 320-acre drilling and spacing units in Section 26 and the N½ of Section 36, Township 12 North, Range 101 West, 6th P.M. for the production of oil and associated hydrocarbons from the Wasatch, Fort Union/Lance/Lewis and Mesaverde Formations.

 

Order Nos. 139-39 and 440-24, Rulison and Parachute Fields, Garfield County:  Approves the request by Tom Brown, Inc. to increase well density, the equivalent of 1 well per 20 acres, from the Williams Fork Formation in Sections 1 and 2, Township 7 South, Range 94 West, 6th P.M. for the production of gas and associated hydrocarbons from the Williams Fork Formation.

 

Order Nos. 139-40, 440-25, 479-12 and 510-9, Rulison, Parachute and Grand Valley Fields, Garfield County:  Approves the request by Williams Production RMT Co. to increase well density, the equivalent of 1 well per 10 acres, in certain sections of Township 6 South, Ranges 94-96 West, 6th P.M. and Township 7 South, Ranges 95 and 96 West, 6th P.M. for the production of gas and associated hydrocarbons from the Williams Fork Formation.

 

Order No. 146-3, Leyden Storage Reservoir, Jefferson County:  Approves the request by Public Service Company to authorize the closure of the Leyden Underground Natural Gas Storage Facility in the caverns of the abandoned Leyden Coal Mine.

 

Order Nos. 232-237 and 499-75, Wattenberg and Codell-Niobrara Spaced Area, Weld County:  Approves the request by CFG Energy, Inc. and Eddy Oil Company to amend the drilling and spacing units in Section 32, Township 5 North, Range 63 West, 6th P.M. by establishing 80-acre drilling and spacing units in the W½ SE¼, SW¼, NE¼, and NW¼ and establishing 40-acre drilling and spacing units in the E½ SE¼ for the production of oil, gas and associated hydrocarbons from the Dakota, “J” Sand, Codell and Niobrara Formations.

 

Order No. 1V-246, Logan County:  Approves the Administrative Order by Consent finding Puckett Energy Co. in violation of Rules 325.a., 210., and 326.b., for failure to obtain written authorization for injection, to install a well sign, and to conduct an MIT on a shut-in well every five (5) years for the Dalke #2 Well located in the SW¼ SW¼ of Section 11, Township 8 North, Range 54 West, 6th P.M., and assesses a fine of Ten Thousand Dollars ($10,000).

 

Order No. 1V-247, Weld County:  Approves the Administrative Order by Consent finding Antelope Energy Co. in violation of Rules 308A., 301., 319.b.(1), and 1003.b., for failure to submit a Drilling Completion Report, Form 5 within thirty (30) days of the suspension of commenced drilling activities prior to reaching total depth, to provide written notice of intention to change plans previously approved, to obtain approval of the Director for temporarily abandoning the well and failure to close the well to the atmosphere prior to the temporary abandonment and to reclaim the location within twelve (12) months after drilling operations for the Maddy #1 Well located in the SE¼ SW¼ of Section 31, Township 10 North, Range 57 West, 6th P.M., and assesses a fine of One Thousand Dollars ($1,000).

 

                                                                                                           

Signed:

Patricia C. Beaver, Secretary

 

Approved:

Peter Mueller, Chair