BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF ALLEGED VIOLATIONS OF                      )     CAUSE NO. 1

A BOND CLAIM FOR THE BAIERL #2 DOMESTIC                    )

GAS WELL OPERATED BY LEONARD YOAST,                      )     ORDER NO. 1-142

ROUTT COUNTY, COLORADO                                                     )     

ADMINISTRATIVE ORDER BY CONSENT

(Pursuant to Rule 522.b.(3) of the Rules and Regulations of the

Colorado Oil and Gas Conservation Commission, 2 CCR 404-1)

FINDINGS

                        1.  On September 16, 1969, Ponka Drilling and Production Company (Operator #71411) submitted an Application for Permit-to-Drill (“APD”) for the Baierl #2 Well (API #05-107-06017) located in the NE¼ SE¼ of Section 25, Township 5 North, Range 88 West, 6^th P.M.  The director of the Colorado Oil and Gas Conservation Commission (“COGCC” or “Commission”) approved the APD.

                        2.  On December 17, 1969, Ponka Drilling and Production Company began drilling the Baierl #2 Well and reached total depth (4,288 feet) on January 17, 1970. 

                        3.  On January 30, 1970, the well was plugged back to 3,500 feet and completed as an open hole in the Niobrara Formation; the gas produced was not commercial but was used at a local farm house for domestic purposes.

                        4.  On October 19, 1970, a letter from the COGCC director to Ponka Drilling and Production Company indicated that Mr. Leonard Yoast (“Mr. Yoast”) had informed the COGCC that he was taking over operation of the Baierl #2 Well.

                        5.  On March 3, 1970, the COGCC director instructed Mr. Yoast to provide a $5,000 plugging bond if he wanted to assume operation of the Baierl #2 Well.

                        6.  On July 29, 1970, the COGCC received a plugging bond, in the amount of $5,000, from Mr. Yoast (Operator #98005).

                        7.  On September 17 and 18, 2007, Mr. Chris Ricks filed two complaints with COGCC staff (“Staff”) related to the pipeline that runs from the Baierl #2 Well to Mr. Leonard Yoast’s property.  The pipeline is made of either polyvinyl chloride or ¾-inch steel.  According to Mr. Ricks, the pipeline crosses the surface of three owners between the location of the Baierl #2 Well (on Mr. Ricks’ property) and Mr. Yoast’s farm.  It delivers natural gas to Mr. Yoast and his relatives’ houses approximately one mile north of the Baierl #2 Well.  The pipeline was broken by a bulldozer preparing land for a new fence; Mr. Ricks’ complaint expressed safety concerns for himself and other surface owners because of the existence of the line.

                        8.  On September 19, 2007, Staff inspected the Baierl #2 Well and its associated pipeline and observed the following violations of COGCC Rules: 

                        9.  On October 25, 2007, Staff issued Notice of Alleged Violation (“NOAV”) #200119253 to Mr. Yoast for violation of the above described Rules. 

                        10.  Within 30 days of receipt of the NOAV, Mr. Yoast was required to install temporary markers along the pipeline to alert the public of its presence. In addition, the NOAV contained a deadline of July 1, 2008 for the following actions: Install a legible well sign in accordance with Rule 210.  Bury the line to a minimum depth of 3 feet or provide the equivalent amount of cover sufficient to prevent damage to the line.  Install permanent markers along the route of the line to identify its location.  Replace or service and maintain all valves, fittings and pipe that affect safe and proper operation.  Register the line and demonstrate participation in Colorado‘s One Call Notification System. 

                        11.  On December 6, 2007, Staff re-inspected Mr. Yoast’s oil and gas operations and observed that the pipeline remained unmarked.

                        12.  On December 15, 2007, Mr. Yoast indicated he wanted to turn over his plugging bond to the COGCC and “eliminate[ ] all ties to the Baeirl [sic] Gas Well #2.”  Because of a possible inference that the COGCC would indemnify Mr. Yoast “by eliminating” his ties to the Baierl #2 Well, Staff did not accept his first letter.  Between December 2007 and May 2008, Staff unsuccessfully attempted to contact Mr. Yoast by telephone to discuss obtaining another letter from him. 

                        13.  On October 20, 2008, Mr. Yoast’s daughter, Ms. Lois Caster, contacted the COGCC about Mr. Yoast’s original letter.  She indicated her father is elderly (88 years old) and sufficiently hard of hearing that he may not have heard the telephone ringing or someone knocking on his front door.  Staff explained that a new letter was needed because the first letter was unacceptable. 

                        14.  On October 20, 2008, Ms. Caster sent a facsimile of a second letter from Mr. Yoast.  Mr. Yoast said he did not have the ability to plug and abandon the Baierl #2 Well.  He asked that the COGCC claim his bond and use the proceeds to plug and abandon the well.  The second letter was satisfactory to Staff because it was a request that did not contain any implication of indemnification by COGCC.

                        15.  To date, the pipeline from the Baierl #2 Well to Mr. Yoast’s and his relatives’ properties remains unburied and unmarked.  It appears to cross property owned by persons other than Mr. Yoast.  The line is low pressure (less than 15 pounds per square inch) and, therefore, is not considered by Staff to be a high-risk hazard.  The risk, however, is Mr. Yoast’s admission that he cannot comply with the NOAV requirements to bury, mark, and maintain the line, and he cannot cover the cost of plugging and abandoning the Baierl #2 Well.

                        16.  Mr. Yoast and Staff agree that Mr. Yoast’s $5,000 bond should be claimed by the Commission to plug and abandon the Baierl #2 Well and its associated production facilities. 

                        17.  Staff estimates that the cost of plugging, abandoning, and reclaiming the Baierl #2 Well and its associated production facilities in accordance with the Rules could be as much as $100,000. 

                        18.  Staff recommends that the Commission authorize and approve Staff’s plugging, abandoning, and reclaiming of the Baierl #2 Well and its associated production facilities by making a claim on Mr. Yoast’s bond and using monies from the Oil and Gas Conservation and Environmental Response Fund to cover any shortfall between the proceeds of the bond and the actual costs of the approved operations.

ORDER

                        NOW, THEREFORE, IT IS ORDERED, that COGCC staff are hereby authorized to plug, abandon and reclaim the Baierl #2 Well (API #05-107-06017) located in the NE¼ SE¼ of Section 25, Township 5 North, Range 88 West, 6^th P.M., and all associated production facilities including the pipeline that delivers natural gas from the Baierl #2 Well to domestic properties located approximately one mile north.

                        IT IS FURTHER ORDERED, that COGCC staff shall make a claim on Mr. Leonard Yoast’s plugging bond for the authorized operations.

                        IT IS FURTHER ORDERED, that COGCC staff are hereby authorized to utilize monies from the Oil and Gas Conservation and Environmental Response Fund to meet any shortfall in costs between the proceeds of Mr. Yoast’s bond and the actual costs of plugging, abandoning, and reclaiming the Baierl #2 Well and associated production facilities.

                        IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this order to be final agency action for purposes of judicial review within thirty (30) days after the date this order is mailed by the Commission. 

                        IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this order is not required prior to the filing for judicial review.

                        IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.

                        IT IS FURTHER ORDERED, that the Commission expressly reserves its right after notice and hearing, to alter, amend, or repeal any and/or all of the above orders.

                        RECOMMENDED this               day of October, 2008.

                                                                        IN THE NAME OF THE STATE OF COLORADO,

                                                                        OIL AND GAS CONSERVATION COMMISSION

                        By                                                                            ____ 

                                                                                    Carol Harmon, Enforcement Officer

Dated at Suite 801

1120 Lincoln St.

Denver, Colorado 80203

October 27, 2008 

                                                                        AGREED TO AND ACCEPTED this _________day of_______________, 2008.

                                    ____________________________________________

                                                Leonard Yoast                               

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

                        This cause came on for hearing before the Commission at 8:30 a.m. on December 9, 2008, in the Terrace Room at the Sheraton Hotel, 1550 Court Place, Denver, Colorado, for the approval of this Administrative Order by Consent.

                        ENTERED this________    day of December, 2008, as of December 9, 2008

                                                                        OIL AND GAS CONSERVATION COMMISSION

                        OF THE STATE OF COLORADO

                        By____________________________________

Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

December 18, 2008