April 19, 2004

 

            The Oil and Gas Conservation Commission met on April 19th, 2004 at 9:00 a.m. in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for a hearing in Cause Nos. 1V, 1R, 112, and 440.

           

            Those present were:

 

                        Peter Mueller                         Chair

                        Brian Cree                             Vice Chair

                        John Ashby                            Commissioner

                        Tom Ann Casey                    Commissioner

                        Mike Klish                              Commissioner

                        Tom Reagan                          Commissioner

                        Lynn Shook                            Commissioner

                        Carol Harmon                        Assistant Attorney General

Brian Macke                          Deputy Director

                        Patricia Beaver                     Hearings Manager

                        Morris Bell                              Operations Manager

 

            The Commission unanimously approved the minutes from the March hearing.

                       

            Executive Director’s Report:  Shane Henry, Department of Natural Resources (“DNR”) Assistant Director stated that DNR Executive Director Russell George has sent out a memorandum to all the Boards and Commissions regarding a start time for hearings differing from 10:00 a.m.  A task force met to discuss involuntary pooling on April 5, 2004.  The basic issue is whether unleased mineral owners are entitled to be paid if they are not pooled.  Mr. Henry believes that at the least an educational tool will come out of these discussions.  DNR attended a meeting held by the Public Lands Advocacy and API on sage grouse last week concerning its listing as an endangered species.  The Bureau of Land Management (“BLM”) is also involved in this group.  Mr. Henry said that DNR Executive Director George appreciates the updates from the Colorado Oil and Gas Conservation Commission (“COGCC“) staff, especially on the Piceance Basin issues.

                               

            Director’s Report:  Director Griebling provided a written report and Deputy Director Macke discussed the following: Statistics have been updated and are now projected at 2600 Applications for Permits-to-Drill for the year.  The next Northwest Oil and Gas Forum will be held on May 27, 2004 from 10:00 a.m. to 2:00 p.m. at the Battlement Mesa Activity Center.  They will try to have a Department of Energy representative available at this meeting.  The COGCC participated in the Club 20 spring meeting. 

 

Director Macke described the chronology of the West Divide Creek gas seep in Mamm Creek Gas Field from March 30, 2004 when the seep was discovered through April 12, 2004.  Walt Lowry and Chris Williams of EnCana Energy described samples they have taken and readings they have measured at the seep.  The Brown and Schwartz wells are approximately 3500 feet from the seep.  It appears that the gas in the creek and pond is Williams Fork Formation gas.  No BTEX components were detected in extended analysis of gas coming in from the seep.  By April 15th, only a couple of bubbles were coming up periodically.  EnCana has put an air sparge system in the creek to strip out any BTEX.  There are eighteen (18) gas monitoring wells within a one (1) mile radius of the seep.  EnCana will monitor the wells on a weekly basis.  EnCana installed three (3) carbon filtration systems and thirteen (13) auxiliary water systems.  They are also monitoring air quality near the seep.  A soil gas survey has been started near the seep and will be conducted to the west to determine if there are any additional seeps.  EnCana has ceased completion operations within two (2) miles and believes they can differentiate between Williams Fork Formation and Wasatch Formation gas.  They have access to the site from all affected surface owners.  EnCana has detected methane in Stephanie Dietrich’s well and do not know the source of the methane.  EnCana has a meeting on April 20, 2004 with Colorado Mountain College to discuss conducting an aquatic study.  Deputy Director Macke appreciates the work the EnCana has done and the speed with which they have worked.  EnCana will be recording bradenhead pressures for all the wells in the area and will submit them to the COGCC by April 30, 2004. 

 

Since the March hearing, the COGCC staff has worked with the Department of Water Resources (“DWR”) to develop an informational pamphlet to provide with water well permits issued for Fruitland Formation wells.  Dick Wolfe and Glenn Graham from DWR described the number and depth of water wells in the area near the Fruitland coal outcrop.

 

Paula Neal has announced her retirement as of June 30, 2004 and the process to replace her has begun.  The deadline for Outstanding Operations Award submittals is June 1, 2004.  COGCC has received financial assurance from two (2) inactive well operators, written correspondence from fifteen (15) others who will comply and verbal correspondence from three (3) who will also comply.  Chair Mueller and Commissioner Reagan attended the Joint House and Senate Agriculture and Natural Resources Committee and there have been no additional requests for information from the Committee.  COGCC staff has visited other buildings for possible lease space and hopes the Chancery Building will be more competitive with its bid.  One variance was granted this past month.  The Environmental Protection Agency/COGCC flyover identified 3 or 4 pits and 1 water discharge that will be followed up by field visits and the possible issuance of Notices of Alleged Violation.  There is a Local Governmental Designee (“LGD”) informational meeting on April 20, 2004 with 20 LGDs coming.  If possible, Commissioner Ashby would like to see a gathering line being installed on the field tour prior to next month’s hearing.  There was an update on Rocky Mountain Operating Company.  Deputy Macke presented a draft COGCC Hearing Start Times Policy.  The Commission will commit to starting at 9:00 a.m. but will hold off on the more important matters until 10:00 a.m.  The Commission declined to adopt the policy.

 

Assistant Attorney General’s Report:  AAG Harmon provided a written confidential litigation memo and gave an update on the BDS case and Delta County case.

 

Commissioner Comments:  Chair Mueller thanked the staff for its additional work to address new issues raised at the March hearing, performed in light of all the regular work and the emerging gas seep issues.

 

Audience Comments:  There were no comments.

 

Cause No. 112, Docket No. 0403-AW-05, request for an order to allow a second well to be completed in an existing 320-acre drilling and spacing unit in the S½ of Section 12, Township 33 North, Range 10 West, N.M.P.M. for the production of gas and associated hydrocarbons from the Fruitland coal seams was continued to the May hearing.

 

After staff presentation, audience comments and Commission deliberation, Cause No. 1R, Docket No. 0404-RM-01, request to approve amendments to Rules 303.a., 303.d., 303.k., 303.l., 305.b.(4), 308A., 310A., 312., 319.b., 321., 502., 503.b., 522.c., and 909.e. and the statement of basis and purpose were approved with minor modifications.

 

Consent Agenda:  The Commission unanimously approved the following two matters:

 

Cause No. 440, Docket No. 0404-SP-02, request for an order to segregate the 320-acre drilling and spacing unit consisting of the N½ of Section 6, Township 7 South, Range 95 West, 6th P.M. into two 160-acre drilling and spacing units consisting of the NW¼ and NE¼ for the production of gas and associated hydrocarbons from the Williams Fork Formation.

 

Cause No. 112, Docket No. 0404-SP-04, request for an order to vacate the 320-acre drilling and spacing units and the 990 foot setbacks in Sections 11 and 14, Township 34 North, Range 6 West, N.U.L, N.M.P.M. and to establish Sections 11 and 14 as one approximately 939-acre drilling and spacing unit with 660 foot setbacks for the drilling of a horizontal well system and to pool unleased mineral interests owners.

 

Commissioner Ashby recused himself and the Commission approved the following matter: 

 

Cause No. 1V, Docket No. 0404-OV-20, request for an Administrative Order by Consent finding Fritzler Resources, Inc. in violation of Rules 324A.a., 906.b., 907.a.(1), and 907.c.(2), failure to prevent significant adverse environmental impacts to air, water, soil or biological resources, to prevent the unauthorized discharge or disposal of E&P waste, to report the spill/release as required by the June 2, 2003 field inspection, to ensure that E&P waste is properly stored, handled, transported, treated, recycled or disposed to prevent threatened or actual significant adverse environmental impacts, and for disposing of produced water in an unauthorized manner at the Fehringer #1 tank battery located in the NW¼ NE¼ of Section 28, Township 12 North, Range 52 West, 6th P.M. and assessing a fine of one thousand dollars.

 

The meeting adjourned at 5:07 p.m.

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            The Secretary was therefore authorized to issue the following orders:

 

Order No. 440-27, Parachute Field, Garfield County:  Approves the request by Williams Production RMT Co. for an order to segregate the 320-acre drilling and spacing unit consisting of the N½ of Section 6, Township 7 South, Range 95 West, 6th P.M. into two 160-acre drilling and spacing units consisting of the NW¼ and NE¼ for the production of gas and associated hydrocarbons from the Williams Fork Formation.

 

Order No. 112-171, Ignacio-Blanco Field, La Plata County:  Approves the request by CDX Gas, LLC for an order vacating the 320-acre drilling and spacing units and the 990 foot setbacks in Sections 11 and 14, Township 34 North, Range 6 West, N.U.L, N.M.P.M. and to establish Sections 11 and 14 as one approximately 939-acre drilling and spacing unit with 660 foot setbacks for the drilling of a horizontal well system and to pool unleased mineral interests owners.

 

Order No. 1V-269, Logan County:  Approves the Administrative Order by Consent finding Fritzler Resources, Inc. in violation of Rules 324A.a., 906.b., 907.a.(1), and 907.c.(2), failure to prevent significant adverse environmental impacts to air, water, soil or biological resources, to prevent the unauthorized discharge or disposal of E&P waste, to report the spill/release as required by the June 2, 2003 field inspection, to ensure that E&P waste is properly stored, handled, transported, treated, recycled or disposed to prevent threatened or actual significant adverse environmental impacts, and for disposing of produced water in an unauthorized manner at the Fehringer #1 tank battery located in the NW¼ NE¼ of Section 28, Township 12 North, Range 52 West, 6th P.M. and assesses a fine of One Thousand ($1,000) dollars.

 

Order No. 1R-94, Statewide:  Approves amendments to Rules 303.a., 303.d., 303.k., 303.l., 305.b.(4), 308A., 310A., 312., 319.b., 321., 502., 503.b., 522.c., and 909.e. of the Rules and Regulations and approves the statement of basis and purpose.

 

 

 

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                                                                                                            Patricia C. Beaver, Secretary

 

Approved:

 

 

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            Peter M. Mueller, Chair