BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 9:00 a.m. on September 16, 2010, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for an order to seek a partial exemption from Rule 804, Visual Impact Mitigation, which requires operators to paint production facilities in earth tone colors by September 1, 2010.  Applicant requests that Rule 804, as it existed prior to the 2009 amendments, be applicable to operators in the County.

FINDINGS

The Commission finds as follows:

1.         Logan County, Colorado (“Logan County” or the “County”), 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 pursuant to the Oil and Gas Conservation Act.

4.         Rule 804 of the Oil and Gas Conservation Commission requires production facilities, regardless of construction date, that are observable from any public highway to be painted with uniform, non-contrasting, non-reflective color tones, and with colors matched to but slightly darker than the surrounding landscape by September 1, 2010. 

5.         Further, Rule 801 provides that any Colorado county, home rule or statutory city, town, territorial charter or city and county may, by application to the Commission, seek a determination that any rules and regulations of the 800-Series should not apply to oil and gas activities occurring within its boundaries, or any part thereof. Such determination must be based upon a showing by any Colorado county, home rule or statutory city, town, territorial charter or city and county that, because of conditions existing therein, the enforcement of the rule and regulation is not necessary within the relevant boundaries, for the protection of public health, safety and welfare.

6.         Rule 503.b.(5) provides that any local government within whose jurisdiction the affected operation is located may seek a variance from the Commission.

7.         On July 28, 2010, Logan County, filed a written request, by its attorney, for a Commission hearing to seek a partial exemption from Rule 804 for all lands within its boundaries. The County is only requesting a variance from the amended version of the Rule, which requires all production facilities, even those constructed or repainted, prior to May 30, 1992, to be repainted prior to September 1, 2010. The County has no objection to the enforcement of Rule 804 as it existed prior to the 2009 amendments.   Further, it is alleged that the enforcement of Rule 804 is not necessary within the boundaries of the County for the protection of public health, safety and welfare.

8.         At the September 16, 2010, hearing of the Commission, Attorney, George Monsson, acting on behalf of Logan County, explained that the County believes that enforcement  of the September 1, 2010 deadline of Rule 804 is not necessary for the protection of public health, safety and welfare, or the environment on the Application Lands.  He requested that the Application Lands be exempted from this rule for the following reasons:

a.    Oil and gas production facilities are predominantly located in areas where they will not distract drivers on public highways.

b.    The area of the County, where the majority of the affected oil and gas facilities are located is not densely populated.  Accordingly, the visual impact of the tanks and other production facilities is substantially mitigated.

c. The public, as represented by the Board of County Commissioners of Logan County, has expressed a desire for an exemption from enforcement of Rule 804.

d. Many of the older production facilities which have been exempt from the requirements of Rule 804 are low producing “stripper” wells of marginal economic utility and little remaining useful life. Enforcement of the present version of Rule 804 could result in wells being shut in as the cost of compliance will outweigh the economic returns possible. This will reduce county revenues and resource production and will increase unemployment. Between 1999 and 2009 Logan County oil production declined from 231,199 barrels in 1999 to 210,042 barrels in 2009.  Annual gas production declined from 385,601 MCF in 1999 to 237,847 MCF in 2009. Enforcement of the current version of Rule 804 will only exacerbate this decline. At least half of the facilities in Logan County will be affected by enforcement of Rule 804.

9.         Based on the facts stated in the verified application and the testimony presented at the hearing, the Commission should allow Logan County a variance from Rule 804 for what the Commission considers to be a land use matter.  The Commission should order that operators in Logan County do not have to meet the deadline of September 1, 2010.  The variance does not, however, eliminate the need for painting production facilities in earth tone colors, upon installation or repainting as part of regular maintenance, with the understanding that production facilities shall be kept in good condition and subject to regular, effective maintenance. 

ORDER

NOW, THEREFORE IT IS ORDERED, that

1.         The Rule 804 compliance deadline of September 1, 2010 is hereby waived for Logan County.

2.         The former requirement that any oilfield equipment, including tank batteries, must be painted in earth tone colors upon installation or repainting as part of regular maintenance is reinstated in Logan County.

3.         Production facilities shall be kept in good condition and subject to regular, effective maintenance.

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.

                        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.

                        ENTERED this__________ day of October, 2010, as of September 16, 2010.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________         

                                                                                    Carol Harmon, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

October 12, 2010