May 24, 2004

 

            The Oil and Gas Conservation Commission met on May 24th, 2004 at 1:00 p.m. in the Community Room at City Hall, 1000 10th Street, Greeley, Colorado, for a hearing in Cause Nos. 1V, 1, 112 (2 matters), 226, and 506.

           

            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

Rich Griebling                        Director

Brian Macke                          Deputy Director

                        Patricia Beaver                     Hearings Manager

                       

            The Commission unanimously approved the minutes from the April hearing.

                       

            Executive Director’s Report:  There was no report.

                               

           Director’s Report:  Director Griebling provided a written report and Deputy Director Macke discussed the following: Jim Wason and David Siple were thanked for the field tour of a Kerr-McGee gas site and a Patina air emissions site.  Statistics show an increase in the issuance of drilling permits estimated at 2700 for this year.  One-third of the Applications for Permit-to-Drill (“APDs”) are expected to be in Weld County.  The Northwest Oil and Gas Forum will be held on Thursday, May 27th, and reports from the Department of Energy and Presco are on the agenda, among other things.  The Divide Creek gas seep will also be a topic of interest at the Forum.  Deputy Director Macke gave an update on the West Divide Creek gas seep.  Samples that were taken from the creek last week had approximately 200 mg of BTEX.  The sample was taken upstream from the air sparging system that EnCana has put in place.  The seep has dropped off dramatically, with only 10% of the bubbles that were there when the seep was first discovered.  EnCana continues to perform soil gas surveys and air toxics sampling.  Colorado Mountain College will perform an aquatic life study in the area.  A Notice of Alleged Violation (“NOAV”) was issued to EnCana.  A moratorium on drilling and completion operations is still in place while restrictions and conditions are determined for the area. 

 

Over 700 people attended the EnCana Energy Job Expo, resulting in positive interface with the public.  A report on the Leyden Gas Storage Facility closure was included in the Director’s Report.  Some storage gas from the 1960’s was found when a new water well was being drilled.  Paula Neal has announced her retirement effective June 30, 2004 and the Commission is in the process of filling her position by mid-June.  There are numerous well-qualified candidates.  Director Griebling has announced his retirement effective June 30, 2004 and there will be a reception in his honor on June 11th at the COGCC office.  Outstanding Operations Award applications are due on June 1, 2004 for presentation at the COGA Natural Gas Conference on August 11, 2004.  The July hearing docket is full, with a two-day hearing planned.  There will be at least one controversial matter on the docket.  The Legislature approved the COGCC budget requests at this year’s session.  The budget process for next year has begun, with a department retreat held last Thursday to start reviewing proposed budget recommendations.  The COGCC will be staying in the Chancery Building for the next two years, with negotiations underway for a third year and perhaps longer.  A Local Governmental Designee (“LGD”) Seminar was held on April 20th with five Commissioners and approximately twenty LGDs in attendance.  One variance was granted since last month’s report.  Hearings Manager Beaver gave an update on Rocky Mountain Operating Company (“RMOC”) stating that a new operator will most likely be taking over RMOC prior to the next COGCC hearing.

 

Assistant Attorney General’s Report:  AAG Harmon provided a written confidential litigation memo.  The COGCC received a favorable decision in the BDS International matter.  A letter to the Town of Frederick regarding inspections and associated fees was drafted by AAG Harmon and will be sent out to express the COGCC’s concern.

 

Commissioner Comments:  Chair Mueller thanked Kerr-McGee and Patina for the field tour and commented that it was very enlightening to see how operators are dealing with developers and setbacks.  Chair Mueller also expressed his appreciation to the Weld County Commissioners for visiting with the Commission. 

 

Audience Comments:  Greg Schnacke, COGA, congratulated the COGCC staff for their quick response to the Divide Creek issue and providing the public with information.  He said he thought the LGD Seminar was a good idea and thinks additional seminars are warranted.  COGA is in support of next year’s COGCC budget requests.  The Outstanding Operations Awards will be presented at the COGA Natural Gas Conference on August 11, 2004.  On June 2, 2004, COGA and CPA will hold a reception in honor of Director Griebling to thank him for his ten years of service.

 

Cause No. 232, Docket No. 0405-SP-06, request for an order to segregate the 320-acre drilling and spacing unit consisting of the S½ of Section 22, Township 5 North, Range 67 West, 6th P.M. into two 160-acre drilling and spacing units consisting of the SE¼ and the SE¼ of said Section 22 for production of oil and gas from the “J” Sand Formation was withdrawn.

 

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

 

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.

 

Cause No. 112, Docket No. 0405-UP-03, request for an order to pool all non-consenting interests for the drilling of a well in the 320-acre drilling and spacing unit of the W½ of Section 11, Township 33 North, Range 7 West, N.M.P.M. for production of gas and associated hydrocarbons from the Fruitland coal seams.

 

Cause No. 226, Docket No. 0405-SP-05, request to rescind the 80-acre drilling and spacing unit in the W½ of Section 10, Township 5 South, Range 60 West, 6th P.M. for production of oil from the Muddy “J” Sand Formation and to allow the lands to be developed pursuant to COGCC Rule 318, with a 200 foot tolerance for each well location.

 

Cause No. 1, Docket No. 0405-SP-08, request for an order to change the existing well setbacks in Rule 318.a. that apply to certain lands in Township 3 South, Range 49 West, 6th P.M., to allow wells to be located no closer than 300 feet from the boundaries of any lease line and no closer than 600 feet from any producible or drilling well or wells for production of oil, gas and associated hydrocarbons from the Niobrara, “D” Sand, “J” Sand  and Paleozoic-Mississippian Formations.

 

Cause No. 506, Docket No. 0405-SP-07, request to vacate Order No. 506-1, which established 320-acre drilling and spacing units for certain lands in Township 3 North, Ranges 96 and 97 West, 6th P.M. for the production of gas and associated hydrocarbons from the Cameo coal seams and allow the lands to be developed pursuant to COGCC Rule 318.

 

Cause No. 1V, Docket No. 0405-OV-21, request for an Administrative Order by Consent finding Starlight Resources LLC in violation of Rule 326.d., failure to repair or plug and abandon the Mark Degenhart #10 Well located in the SE¼ NE¼ of Section 18, Township 1 South, Range 67 West, 6th P.M. within six (6) months of failing a mechanical integrity test and assessing a fine of one thousand dollars.

 

Cause No. 1V, Docket No. 0405-OV-22, request for an Administrative Order by Consent finding Swift Beef Company in violation of Rules 206., 309., and 310A., failure to file accurate and complete reports, to submit an Operator's Monthly Report of Operations, Form 7 within forty-five (45) days after the month in which production occurs and to submit Oil and Gas Conservation Levy, Form 8 and levy payments for eleven wells located in certain sections of Township 4 North, Range 66 West, 6th P.M. and Township 5 North, Range 64 West, 6th P.M. and assessing a fine of one thousand dollars.

 

The meeting adjourned at 2:42 p.m.

====================================================================

            The Secretary was therefore authorized to issue the following orders:

 

Order No. 1-105, Washington County:  Approves the request by Delta Petroleum Corporation for an order to change the existing well setbacks in Rule 318.a. that apply to certain lands in Township 3 South, Range 49 West, 6th P.M., to allow wells to be located no closer than 300 feet from the boundaries of any lease line and no closer than 600 feet from any producible or drilling well or wells for production of oil, gas and associated hydrocarbons from the Niobrara, “D” Sand, “J” Sand and Paleozoic-Mississippian Formations.

 

Order No. 112-172, Ignacio-Blanco Field, La Plata County:  Approves the request by Maralex Resources, Inc. for an order to pool all non-consenting interests for the drilling of a well in the 320-acre drilling and spacing unit of the W½ of Section 11, Township 33 North, Range 7 West, N.M.P.M. for production of gas and associated hydrocarbons from the Fruitland coal seams.

 

Order No. 112-173, Ignacio-Blanco Field, La Plata County:  Approves the request by Four Star Oil and Gas Co. for an order allowing 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.

 

Order No. 226-22, Peoria Field, Arapahoe County:  Approves the request by Tyler Rockies Exploration, Ltd. for an order to remove the 80-acre drilling and spacing unit consisting of the W½ of Section 10, Township 5 South, Range 60 West, 6th P.M. from the provisions of Order No. 226-8 for production of oil from the Muddy “J” Sand Formation and to allow the lands to be developed pursuant to COGCC Rule 318, with a 200 foot tolerance for each well location.

 

Order No. 506-3, Pinyon Ridge Area, Rio Blanco & Moffat Counties:  Approves the request by KLT Gas, Inc. for an order to vacate Order No. 506-1, which established 320-acre drilling and spacing units for certain lands in Township 3 North, Ranges 96 and 97 West, 6th P.M. for the production of gas and associated hydrocarbons from the Cameo coal seams and to allow the lands to be developed pursuant to COGCC Rule 318.

 

Order No. 1V-270, Adams County:  Approves the Administrative Order by Consent finding Starlight Resources LLC in violation of Rule 326.d., failure to repair or plug and abandon the Mark Degenhart #10 Well located in the SE¼ NE¼ of Section 18, Township 1 South, Range 67 West, 6th P.M. within six (6) months of failing a mechanical integrity test and assesses a fine of One Thousand ($1,000) dollars.

 

Order No. 1V-271, Weld County:  Approves the Administrative Order by Consent finding Swift Beef Company in violation of Rules 206., 309., and 310A., failure to file accurate and complete reports, to submit an Operator's Monthly Report of Operations, Form 7 within forty-five (45) days after the month in which production occurs and to submit Oil and Gas Conservation Levy, Form 8 and levy payments for eleven wells located in certain sections of Township 4 North, Range 66 West, 6th P.M. and Township 5 North, Range 64 West, 6th P.M. and assesses a fine of One Thousand ($1,000) dollars.

 

 

 

_________________________________

                                                                                                            Patricia C. Beaver, Secretary

 

Approved:

 

 

__________________________________

            Peter M. Mueller, Chair