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

REPORT OF COMMISSION

The Commission heard this matter on April 16, 2012; May 29, 2012; and on August 20, 2012 at 1120 Lincoln Street, Denver, Colorado, upon application by Alamosa Drilling, Inc. for a variance to Rule 603.a.(2) (surface property line setback requirement).

FINDINGS

The Commission finds as follows:

1.         Alamosa Drilling, Inc. (“Alamosa” or “Applicant”), 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 prescribed order pursuant to the Oil and Gas Conservation Act.

4.         Rule 603.a.(2) of the Rules and Regulations of the Oil and Gas Conservation Commission states a well shall be a minimum distance of one hundred fifty (150) feet from a surface property line. An exception may be granted by the Director if it is not feasible for the operator to meet this minimum distance requirement and a waiver is obtained from the offset surface owner(s).

5.         Rule 502.b.(1) of the Rules and Regulations of the Oil and Gas Conservation Commission states variances to any Commission rules, regulations, or orders may be granted in writing by the Director without a hearing upon written request by an operator to the Director, or by the Commission after hearing upon application. The operator or the applicant requesting the variance shall make a showing that it has made a good faith effort to comply, or is unable to comply with the specific requirements contained in the rules, regulations, or orders, from which it seeks a variance, including, without limitation, securing a waiver or an exception, if any, and that the requested variance will not violate the basic intent of the Oil and Gas Conservation Act.

6.         On June 9, 2010 Alamosa spud the Janke #3 Well (API No. 05-007-06280) at a surface location not consistent with surface property line setback requirements of Rule 603.a.(2).  Alamosa sought a waiver under Rule 603.a.(2) from the affected adjacent surface property owner, Dr. Maude Nielsen. Dr. Nielson declined to waive the setback requirement. Alamosa then sought a variance from the Commission to Rule 603.a.2. to bring the surface location of the Janke #3 Well located on the below-listed lands (“Affected Lands”) into compliance with Rule 603.a.(2):

Township 32 North, Range 1 East 6^th N.M.P.M.

Section 18:      SE¼ NW¼

7.         On February 8, 2012, the Commission, by notice of hearing, set a hearing to consider Alamosa’s request for a variance to Rule 603.a.(2).  

8.         Dr. Maude E. Nielson objected to Alamosa’s request, and seeks to have the well abandoned and plugged.

9.         This matter was originally scheduled for hearing on March 5, 2012. Dr. Nielson requested a continuance for purposes of allowing more time to prepare for the hearing.  Alamosa consented to the continuance to April 16, 2012.

10.       On April 16, 2012 the Commission heard this matter.  A motion to deny Alamosa’s request failed on a three-three vote. The matter was continued to May 29, 2012 for a hearing de novo.

11.       On May 29, 2012, the Commission heard Alamosa’s variance request de novo with eight Commissioners participating. A motion to approve the variance failed on a 4-4 vote. During the hearing, members of the Commission expressed concern that Alamosa failed to act in good faith and questioned Alamosa’s representative as to the accuracy of its Sundry Notice - Form 4, dated May 14, 2010 and the distances identified therein.

12.       On May 31, 2012, the Commission entered an Order in this matter stating:

IT IS FURTHER ORDERED, this Application will be dismissed, and dropped from the Commission docket unless there is a motion for reconsideration filed within 30 days of the May 29, 2012 hearing.

IT IS FURTHER ORDERED, that should a motion for reconsideration be filed, the Commission reserves the right to consider the matter based on the record as submitted at the May 29, 2012 hearing, provided that the non-participating Commissioner at the May 29, 2012 hearing reviews the full record of the May 29, 2012 hearing, prior to participating in the Commission’s deliberations in this matter.

13.       On June 28, 2012, Alamosa filed a Motion for Reconsideration and Request to Continue to August 20, 2012 Commission Meeting. Dr. Nielsen consented to the continuance.

14.       On July 27, 2012, Alamosa filed a brief in support of its motion to reconsider.

15.       On August 11, 2012, Dr. Nielsen sent an email to the Hearing Officer that she would not be filing a written response to the Alamosa July 27, 2012 brief.

16.       On August 20, 2012, the Commission heard Alamosa’s motion to reconsider. Alamosa’s counsel was present. Todd Moore and Dr. Nielsen participated by telephone.

17.       Based upon Alamosa’s Brief in Support of its Motion for Reconsideration, oral argument presented by counsel for Alamosa, a statement from Mr. Moore, and other evidence in the Record, the Commission concluded a tie vote is insufficient grounds to reconsider a matter previously heard by a quorum of the Commission.  Commission Rules of Practice and Procedure require only that a quorum hear and decide an adjudicatory matter; no Rule requires an odd number of Commissioners to hear, or vote on, a matter.  Here, Alamosa sought reconsideration based solely on the lack of a majority vote in the two prior hearings.  The Commission noted that reconsideration may be appropriate where an applicant alleges and proves the Commission was mistaken about the law, or misapplied the law to the facts.  Alamosa did not allege either circumstance.  The Commission also noted that granting reconsideration solely on the basis of a tie vote could encourage applicants to seek a continuance based on which Commissioners were in attendance at a given hearing.  Such a practice should be discouraged.  After further discussion and full consideration, the Commission denied Alamosa’s Motion for Reconsideration on an 8-1 vote.

ORDER

NOW, THEREFORE IT IS ORDERED, that Alamosa’s Motion for Reconsideration is denied.

IT IS FURTHER ORDERED, that the Alamosa Application for the requested variance is denied by virtue of a failure to be approved by a majority vote of the Commission.

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 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 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  30^th   day of August, 2012, as of August 20, 2012.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________       

                                                                                    Robert J. Frick, Secretary