BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF A REQUEST FOR AN ) CAUSE NO. 1
EXTNESION OF TIME TO PERFORM WORK )
REQUIRED OF ROCKY MOUNTAIN OPERATING ) ORDER NO. 1-98
COMPANY, MESA COUNTY, COLORADO )
This cause came on for hearing before the Commission on April 22, 2002 at 10:00 a.m. in Suite 801, the Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an extension of time to perform the work described in Order No. 1V-219 on the Nichols No. 1-23 Well located in the SW¼ NE¼ of Section 23, Township 10 South, Range 97 West, 6th P.M.
The Commission finds as follows:
1. Rocky Mountain Operating Company (“RMOC”), as applicant herein is an interested party in the subject matter of the above-referenced hearing.
2. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.
3. The Commission has jurisdiction over the subject matter embraced in said notice and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.
4. On January 7, 2002 the Commission issued Order No. 1V-219 which found Rocky Mountain Operating Company (“RMOC”) in violation of Rule 326.b.(1), for the Nichols No. 1-23 Well located in the SW¼ NE¼ of Section 23, Township 10 South, Range 97 West, 6th P.M. RMOC was ordered to pay a fine of One Thousand dollars ($1,000) for the above violation. RMOC shall repair or plug and abandon the Nichols No. 1-23 Well by April 17, 2002, unless extenuating circumstances exist as to why the work cannot be performed and these circumstances are documented in writing to the Commission’s satisfaction. If RMOC demonstrates to the Commission’s satisfaction that extenuating circumstances exist as to why the Nichols No. 1-23 Well cannot be repaired or plugged and abandoned by April 17, 2002, then RMOC shall have until May 17, 2002 to perform the work. If the work is not completed by May 17, 2002, COGCC staff is authorized to commence a claim on the Thirty Thousand dollar ($30,000) Cashier’s Check posted by RMOC in order to plug, abandon and reclaim the well; if RMOC does not repair or plug and abandon the well by April 17, 2002, and no extenuating circumstances exist, a fine of One Thousand dollars ($1,000) for violation of Rule 326.b.(1) shall be assessed, payable by May 17, 2002 and COGCC staff is authorized to commence a claim on the Thirty Thousand dollar ($30,000) Cashier’s Check posted by RMOC in order to plug, abandon and reclaim the well.
5. On April 2, 2002, RMOC filed with the Commission a written request for an extension of time until June 1, 2002 to perform the work described in Order No. 1V-219. RMOC believes that the most cost effective method to rework the well and repair the casing leaks is to bring a rig on, repair the leaks, recomplete the well and place it immediately on production. A new gas processing plant is scheduled to be completed no later than June 1, 2002 which will allow the well to produce upon repair and recompletion.
6. On April 11, 2002, Rodney Eddy filed with the Commission a letter of comment describing his experiences with RMOC. Mr. Eddy did not appear at the hearing.
7. Edward Neibauer, President of Rocky Mountain Operating Company appeared at the hearing and provided testimony indicating his intent to resolve all issues on the Nichols No. 1-23 Well and his desire to perform the work by June 1, 2002 so that he can repair or recomplete the well, then fracture and place the well immediately on production. The gas plant proposed by Tom Brown, Inc. should be operational by June 1, 2002. Mr. Neibauer further testified that at the time of the January 7, 2002 hearing, he believed the gas plant would be operational by March 1, 2002. He testified that the well has been shut-in since November 2001 by the pipeline due to the gas quality.
8. Morris Bell, COGCC Operations Manager, provided testimony at the hearing indicating staff’s belief that extenuating circumstances for RMOC to comply with Order No. 1V-219 do not exist. Mr. Bell further testified that the One Thousand dollar ($1,000) fine assessed in Order No. 1V-219 and due on February 11, 2002 has not been paid.
9. Mr. Neibauer provided testimony clarifying his intent to repair the well first and if successful, to recomplete the well from the Cozzette-Corcoran Formations to the Dakota Formation. He further testified that if the well cannot be repaired, it would be plugged and abandoned. Mr. Neibauer indicated that RMOC has not submitted necessary paperwork to the COGCC staff to request approval to recomplete the Nichols No. 1-23 Well. He requested a one (1) week extension to perform work on the well if the Commission denies the request for a June 1, 2002 extension.
10. COGCC staff would be in favor of allowing RMOC a brief extension of time to plug and abandon the well rather than claiming the financial assurance to plug and abandon the well.
11. After deliberation by the Commission on the testimony presented, the Commission should enter an order denying RMOC an extension until June 1, 2002 and requiring RMOC to plug and abandon the Nichols No. 1-23 Well by May 6, 2002. If RMOC plugs and abandons the well by May 6, 2002, the One Thousand dollar ($1,000) fine previously assessed in Order No. 1V-219 should be waived. If RMOC does not plug and abandon the well by May 6, 2002, COGCC staff should be authorized to commence a claim on the Thirty Thousand dollar ($30,000) Cashier’s Check in order to plug, abandon and reclaim the well. If COGCC staff claims the Cashier’s Check, RMOC should post financial assurance to cover its remaining wells. The One Thousand dollar ($1,000) fine assessed in Order No. 1V-219 for violation of Rule 326.b.(1) due February 11, 2002 has not been paid by RMOC and is overdue.
NOW, THEREFORE IT IS ORDERED, that the request for an extension to perform the
required work on the Nichols No. 1-23 Well located in the SW¼ NE¼ of Section 23, Township 10 South, Range 97 West, 6th P.M. is hereby denied.
IT IS FURTHER ORDERED, that Rocky Mountain Operating Company shall plug and abandon the Nichols No. 1-23 Well by May 6, 2002.
IT IS FURTHER ORDERED, that if Rocky Mountain Operating Company plugs and
abandons the Nichols No. 1-23 Well by May 6, 2002, the One Thousand dollar ($1,000) fine previously assessed in Order No. 1V-219 shall be waived.
IT IS FURTHER ORDERED, that if Rocky Mountain Operating Company does not plug and abandon the Nichols No. 1-23 Well by May 6, 2002, the One Thousand dollar ($1,000) fine previously assessed in Order No. 1V-219, shall be payable within thirty (30) days of the May 6, 2002 date, and COGCC staff shall be authorized to commence a claim on the Thirty Thousand dollar ($30,000) Cashier’s Check to plug, abandon and reclaim the Nichols No. 1-23 Well.
IT IS FURTHER ORDERED, that if the Thirty Thousand dollar ($30,000) Cashier’s Check is claimed, Rocky Mountain Operating Company shall be required to provide financial assurance for its remaining wells within thirty (30) days of the claim made on the Cashier’s Check.
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.
ENTERED this day of May 2002, as of April 22, 2002.
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
May 3, 2002