February 10, 2004

 

            The Oil and Gas Conservation Commission met on February 10, 2004 at 9:00 a.m. in Room 100, 108 8th Street, Garfield County Courthouse, Glenwood Springs, Colorado, for a hearing in Cause Nos. 1V (2 matters) and 139.

           

            Those present were:

 

                        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

                        Richard Griebling                  Director

Brian Macke                          Deputy Director

                        Patricia Beaver                     Hearings Manager

 

            The Commission unanimously approved the minutes from the January hearing.

                       

            Executive Director’s Report:  Shane Henry, DNR Assistant Director stated that Russ George is the new Executive Director of the Department of Natural Resources (“DNR”) and he is anxious to meet with the Commissioners.  Executive Director George will be at the March hearing to introduce himself to the Commissioners.  The Senate Agricultural confirmation hearing went well for Vice Chair Cree and Commissioner Ashby.  Mr. Henry has spent a great deal of time discussing the Roan Plateau Plan with the Bureau of Land Management.  The DNR pulled together the Department of Wildlife (“DOW”), the Colorado Oil and Gas Conservation Commission (“COGCC”) and State Parks to prepare the state’s comments on the Roan Plateau.  Senator Isgar’s bill on pooling has been an issue lately and yesterday he killed his own bill so that a work group can be formed to discuss the ideas and reasons that initiated the bill.

                               

            Director’s Report:  Deputy Director Macke provided a written report and discussed the following: Thanks from COGCC staff to EnCana Energy and Williams Production for the field tour.  Deputy Director Macke also thanked the Garfield County Commissioners and staff for their participation in the Northwest Colorado Oil and Gas Forum and the dinner on February 9th.  The COGCC appreciates its great working relationship with Garfield County.  Statistics are projected at 2500 Applications for Permits-to-Drill for the year.  The Northwest Colorado Oil and Gas Forum will meet quarterly and the next meeting will be held on May 20, 2004.  There has been an increase in field presence in Garfield County by relocating COGCC staff member Jaime Adkins to a home office in Battlement Mesa.   The Leyden closure report filed on January 20, 2004 shows that they have begun to inject water into the cavern and have injected 300 acre/feet of water so far.  The Joint Colorado Oil and Gas Association (“COGA”) and Colorado Counties Inc. (“CCI”) Gathering Line Regulation workgroup has met three times and at the last meeting, several additional counties participated.  The Counties are getting together to outline their concerns on the type of regulations they are interested in.  They will not be ready for the rulemaking hearing in April.  The Draft Budget request includes a permitting tech, additional money for document processing and one additional vehicle.  The request has gone through the Office of State Planning and Budgeting and is still alive.  The lease space status for the COGCC is that negotiations can begin but for no longer than a two year lease.  Three variances were granted as listed in the staff report.

 

            COGCC Hearings Manager Tricia Beaver described the Rocky Mountain Operating Company status report and updated the Commissioners on the progress being made to identify a new operator, increase the bond amount and get the fines paid.  The Commissioners agreed that the Director can grant a Rule 502.b. variance to the compliance schedule once the Change of Operator, Form 10s and additional bond money is provided to the COGCC.  Hearings Manager Beaver also described the staff proposed rulemaking.  The Commissioners agree that the rulemaking should be docketed for the April hearing.

 

Assistant Attorney General’s Report:  AAG Harmon provided a written confidential litigation memo.  She described the litigation between BDS and Gunnison County.

 

Commissioner Comments:  On behalf of Chair Mueller, Vice Chair Cree asked the Director about the status of the previously requested shut-in well report.  Commissioner Reagan wanted to go on the record about the concern he has regarding financial responsibility to the state from operators.  He agrees with Chair Mueller on the importance of the shut-in well report.  Commissioner Klish shares their concern and wants to see the report.  Commissioner Ashby and Commissioner Shook also share this concern but do not want to drive small business operators out of the state.  Vice Chair Cree summarized by saying that the entire Commission is concerned about the number of shut-in wells and wants it addressed.  COGCC Deputy Director Brian Macke said the COGCC staff will put together more background data on the bond claims.  COGCC Operations Manager Morris Bell will provide a report to the Commission on Environmental Response Fund projects completed and proposed.  Vice Chair Cree clarified the Commission’s position on the Garfield County Energy Advisory Board by reading two paragraphs from the memo from Director Griebling to the Garfield County Commissioners.

 

Audience Comments:  Clem Mayer, boiler company owner.  Mr. Mayer had some kind words to say about oil field workers.

 

Lisa Bracken encouraged Commissioners to look at financial assurance and burden to surface owners.  She commented on air quality and its degradation in the area.  Ms. Bracken asked what rules address air issues.  Deputy Director Macke described how air complaints are handled and what data points were gathered by previous air monitoring tests.

 

Tresi Houpt, Garfield County Commissioner, said Doug Dennison is in the process of applying for Energy Impact Funds for air monitoring.  Garfield County is in the process of proposing pipeline regulations for the county along with road impact issues, emergency response, neighborhood issues and reclamation viewshed.  Ms. Houpt believes that CCI and COGA may have a proposal to the Commission by this summer.  She thanked Commissioner Reagan for bringing up the financial assurance issue.

 

Kathy Hall, COGA Western Slope Chapter, has worked for two state senators and just finished two terms as a county commissioner for Mesa County.  She is working for COGA as a liaison between federal, state and local issues.  Ms. Hall stated that CCI brought forward the One Call bill regarding road maintenance and it will be heard this week.

 

Orlyn Bell, property owner south of Silt, wanted to discuss MOU’s and proactive versus reactive issues.  Mr. Bell has worked for the DNR as a Division Water Engineer.  He said that a gas well went in several years ago and used roads that about 12 private homeowners used.  Mr. Bell worked with EnCana to establish an MOU to address the concerns and issues of the 12 families and the gas company.  He would like there to be a proactive approach regarding pipelines to help operators and surface owners work together.  Mr. Bell also wants to see the Garfield County Energy Advisory Board go forward.  He stated that things are going well with EnCana now but who knows what will happen if there is a downturn in gas prices.  Mr. Bell thinks another look at bonding is warranted.  He would like support from the COGCC on installing monitoring equipment.

 

Joel Fox, EnCana Team Leader for Mam Creek, stated that EnCana is not in favor of another regulatory group but has met with numerous landowners about their concerns.  Mr. Fox tried to provide facts and data to the landowners.  He is willing to provide an entire technical team to address landowners’ concerns and answer questions.

 

Cause No. 407, Docket No. 0401-UP-01, request for an order to pool all non-consenting owners in the 80-acre drilling and spacing unit consisting of the W½ SW¼ of Section 34, Township 5 North, Range 67 West, 6th P.M. for the development and operation of the Codell-Niobrara Formation, was withdrawn.

 

Cause No. 407, Docket No. 0402-UP-02, request for an order to pool all non-consenting owners in the 80-acre drilling and spacing unit consisting of the E½ SW¼ of Section 34, Township 6 North, Range 67 West, 6th P.M. for the development and operation of the Codell-Niobrara Formation, was withdrawn.

 

Cause No. 300, Docket No. 0402-AW-01, request for an order to allow up to four (4) wells to be drilled in the existing 160-acre drilling and spacing units located in certain sections of Township 2 South, Ranges 43 and 44 West, 6th P.M. and Township 3 South, Range 43 West, 6th P.M. for production from the Niobrara Formation was continued to the March hearing.

 

Cause No. 318, Docket No. 0402-AW-02, request for an order to allow up to three (3) wells to be drilled in the existing 160-acre drilling and spacing units located in Sections 25 through 28, Township 1 North, Range 45 West, 6th P.M. for production from the Niobrara Formation was continued to the March hearing.

 

Cause No. 139, Docket No. 0402-AW-03, request for an order to amend the 640-acre drilling and spacing units in Sections 30 and 31, Township 7 South, Range 94 West, 6th P.M. and Sections 25, 26, 35 and 36, Township 7 South, Range 95 West, 6th P.M. to allow 40-acre well density in those lands for production from the Williams Fork Formation was removed from the consent agenda because of concerns related to the Project Rulison site.  After deliberations, the Commission expressed safety concerns regarding drilling near Project Rulison and approved the application with a requirement that for any wells proposed to be drilled within one half (½) mile of the Austral Oil Hayward #25-95 (R-E) Well in Lot 11 of the NE¼ SW¼ of Section 25, Township 7 South, Range 95 West, 6th P.M., a hearing before the Commission should be held prior to approval of any Application for Permit-to-Drill, Form 2.

 

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

 

Cause No. 1V, Docket No. 0402-OV-05, request to approve an Administrative Order by Consent finding Petroleum Development Corporation in violation of Rule 303.a., failure to obtain the COGCC Director's approval for its Application for Permit-to-Drill before commencing operations with heavy equipment on the Chevron/Texaco #41C-13D Well located in the SE¼ SE¼ of Section 12, Township 6 South, Range 97 West, 6th P.M., and assessing a fine of One Thousand ($1,000) dollars.

 

Cause No. 1V, Docket No. 0402-OV-06, request to approve an Administrative Order by Consent finding EnCana Energy Resources, Inc. in violation of Rule 303.b., 301., and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit-to-Recomplete to the Dakota Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Owens Brothers #13-32 Well located in the NW¼ SW¼ of Section 32, Township 3 North, Range 67 West, 6th P.M., and assessing a fine of One Thousand ($1,000) dollars.

 

The meeting adjourned at 1:00 p.m.

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            The Secretary was therefore authorized to issue the following orders:

 

Order No. 139-43, Rulison Field, Garfield County:  Approves the request by Presco, Inc. for an order to amend the 640-acre drilling and spacing units in Sections 30 and 31, Township 7 South, Range 94 West, 6th P.M. and Sections 25, 26, 35 and 36, Township 7 South, Range 95 West, 6th P.M. to allow 40-acre well density in those lands for production from the Williams Fork Formation, with a requirement that for any wells proposed to be drilled within one half (½) mile of the Austral Oil Hayward #25-95 (R-E) Well in Lot 11 of the NE¼ SW¼ of Section 25, Township 7 South, Range 95 West, 6th P.M., a hearing before the Commission shall be held prior to approval of any Application for Permit-to-Drill, Form 2.

 

Order No. 1V-254, Garfield County: Approves an Administrative Order by Consent finding Petroleum Development Corporation in violation of Rule 303.a., failure to obtain the COGCC Director's approval for its Application for Permit-to-Drill before commencing operations with heavy equipment on the Chevron/Texaco #41C-13D Well located in the SE¼ SE¼ of Section 12, Township 6 South, Range 97 West, 6th P.M., and assesses a fine of One Thousand ($1,000) dollars.

 

Order No. 1V-255, Weld County:  Approves an Administrative Order by Consent finding EnCana Energy Resources, Inc. in violation of Rule 303.b., 301., and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit-to-Recomplete to the Dakota Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Owens Brothers #13-32 Well located in the NW¼ SW¼ of Section 32, Township 3 North, Range 67 West, 6th P.M., and assesses a fine of One Thousand ($1,000) dollars.

 

 

 

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                                                                                                            Patricia C. Beaver, Secretary

 

Approved:

 

 

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            Brian Cree, Vice Chair