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 on November 29, 2010, in Suite 801, The Chancery Building, 1120 Lincoln Street, Suite 801, Denver, Colorado, for an order for renewal of an existing pit permit to allow the continued discharge of treated production water from the Wellington Muddy Unit into the Boxelder Creek Alluvium.

FINDINGS

                        The Commission finds as follows:

1.     Wellington Operating Company, LLC (“Wellington”) 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.     On August 15, 2005, the Commission entered Order No. 1-108, which authorized the Colorado Oil and Gas Conservation Commission (“COGCC”) Staff to process and approve a variance from Rule 901.f. and Rule 904.a.(2) to allow Wellington to discharge treated produced water from the Wellington Muddy Unit into the Boxelder Creek alluvium at the following location:

Township 9 North, Range 68 West, 6^th P.M.

Section 7:        SE¼

                                    Larimer County, Colorado

Order No. 1-108 required the COGCC Staff to impose conditions of approval on the variance, to include:  (1) the amount of financial assurance to be provided, (2) identification of the responsible party(ies), (3) establishment of points of compliance (“POC”) closer to the infiltration pit than the property boundary, (4) installation of additional monitoring wells spaced at regular intervals across the paleo-channel of Boxelder Creek and between the POC and the infiltration pit, (5) establishment of type, monitoring frequency and location of each monitoring well, (6) preparation of a contingency plan, (7) establishment of a process for immediate notification of COGCC and Water Quality Control Division (“WQCD”) staffs if an upset occurs, (8) monitoring of irrigation wells, and (9) any other conditions COGCC Staff, in consultation with WQCD, believe are appropriate.

5.     Wellington was issued a discharge permit (“Permit”) on December 5, 2005 for the 3W Production Water Treatment Facility (Pit Permit Nos. 281818 and 281824).  The Permit expires by its own terms on December 31, 2010.

6.     On October 7, 2010, Wellington, by its representative, submitted a verified application (“Application”) for an order renewing the Permit. 

7.     Wellington has alleged numerous technical matters regarding the permit, including the following:

a.   Wellington has obtained a classification from the Office of the State Engineer that produced water from the Wellington Muddy Unit is nontributary.

b.   Wellington reports that data collected over the course of last four years for the groundwater monitoring wells (namely, 050A, 050B, 050C, 050D and 050E) indicate that the concentration of most parameters fluctuates within a range but appears stable.

c.   The Permit stipulates that the benzene in the treated discharge from the facility be less than 5 parts per billion (“ppb”).  The 5 ppb limit is based on the drinking water standards promulgated by the WQCD.  Wellington believes that the current limit of 5 ppb is not applicable in this case as the facility discharges into the Boxelder Creek Alluvium, which is primarily used for agriculture.

d.   Wellington has observed that the rate of infiltration through its rapid infiltration basins (“RIBs”) has decreased.  Wellington believes that a potential solution may be to cover the RIBs to eliminate light to prevent algal growth, and to reduce wind-blown deposition. 

8.     Wellington has requested several modifications to the Permit in the renewal process, to include:

a.   The Commission modify the Permit to require monitoring of wells on a quarterly basis, instead of the current monthly monitoring requirement.  If changes in the trends of any parameters are observed, Wellington agrees to revert to monthly sampling frequency.

b.   The discharge limit for benzene be modified to 10 ppb. 

c.   If Wellington can show that the decrease in flow through its RIBs can be remedied by covering them, that Wellington can either cover the RIBs or convert the RIBs to leach fields.

9.     Based on its preliminary analysis, COGCC Staff recommends that the Commission renew the Permit to Wellington to allow the continued discharge of treated production water from the Wellington Muddy Unit into the Boxelder Creek Alluvium, with the exception of reducing monitoring frequency in some cases from monthly to quarterly, and to consider the possibility of allowing Wellington to cover the RIBs to discourage algal growth and to protect the RIBs from wind-blown deposition.

10.   A final renewal Permit was not ready for presentation to the Commission for consideration at its November 29, 2010 Commission hearing.  Accordingly, to avoid a situation where the Permit expires before a renewal Permit can be issued, COGCC staff recommends that the Commission extend the Permit term until such time as the permit renewal process can be completed and a renewal Permit is duly authorized by the Commission at a future Commission hearing.

11.   Based on the facts stated in the verified Application, having received no protests, and based on the review of the Application by COGCC Staff, the Commission should extend the term of the Permit beyond its expiration date of December 31, 2010, and until such time the COGCC Staff can complete the permit renewal process and present a renewal Permit for consideration by the Commission at a future hearing.

ORDER

                        NOW, THEREFORE IT IS ORDERED, that:

1.     The term of the Permit issued on December 5, 2005 to Wellington Operating Company, LLC for the 3W Production Water Treatment Facility, otherwise due to expire by its own terms on December 31, 2010, is hereby extended.

2.     The term of the Permit shall continue until such time as a renewal permit is approved by the Commission, or this Order is otherwise modified by action of the Commission.

3.     All other Permit terms and conditions shall remain unchanged by this Order.

                        IT IS FURTHER ORDERED, that the provisions contained in the above Order shall become effective immediately.

                        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 December 2010, as of November 29, 2010.

                                                            OIL AND GAS CONSERVATION COMMISSION

                                                              OF THE STATE OF COLORADO

                                                                                                                                                                                                                    By__________________________    ______

                                                                        Robert A. Willis, Acting Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

December 28, 2010