THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION OF PCR OPERATING LLC FOR THE ADENA FIELD, MORGAN COUNTY, COLORADO
CAUSE NO. 1
DOCKET NO. 170700459
TYPE: GENERAL ADMINISTRATIVE
ORDER NO. 1-201
REPORT OF THE COMMISSION
The Commission heard this matter on July 24, 2017, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln St., Denver, Colorado, upon application for an order to amend Order No. 1-186, so as to transfer certain obligations and liabilities of Order No. 1-186 to Applicant.
The Commission finds as follows:
1. PCR Operating LLC (“PCR” or “Applicant”) (Operator No. 10657), is an interested party in the subject matter of the above-referenced hearing.
2. PCR is the successor in interest to Black Raven Energy, Inc. (“BRE”), a subsidiary of EnerJex Resources, Inc., and has been assigned and conveyed all of BRE’s wells and interests in the Adena Field, in Morgan County, Colorado.
3. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.
4. 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.
5. On March 17, 2014, the Commission entered Order No. 1-186, which, among other things, required BRE to plug and abandon, return to production, convert to injection or otherwise complete for the purpose of enhanced oil recovery, twenty (20) wells per calendar year starting in 2014, through 2018. Order No. 1-186 also required Bradenhead testing and water well testing.
6. On October 26, 2015, the Commission entered Order No. 1-194, which amended Order No. 1-186, and required BRE to perform a mechanical integrity test (“MIT”) on 28 wells during the calendar year 2015, and plug or repair any well that fails an MIT. Order No. 1-194 waived the requirement for BRE to return to active status or plug twenty (20) wells for the calendar year 2015.
7. On December 12, 2016, the Commission entered Order No. 1-198, which amended Order Nos. 1-186 and 1-194, required BRE to perform MITs on 21 wells during the calendar year 2016, and waived the requirement for BRE to return to active status or plug twenty (20) wells for the calendar year 2016.
8. Although the requirements of Order No. 1-186 were modified by Order Nos. 1-194 and 1-198 for the calendar years 2015 and 2016, they remain in full force and effect for calendar year 2017 and future years.
9. On May 25, 2017, PCR, by its attorneys, filed with the Commission a verified application (“Application”) requesting that Order No. 1-186 be amended to reflect that Applicant is the party to which Order No. 1-186, as amended, applies, thereby transferring all rights, interests and obligations associated with Order Nos. 1-198, 1-194 and 1-186 to Applicant. Specifically, to the extent that Order No. 1-186 modified the financial assurance requirements under Rule 707.a. for BRE, such modifications shall now apply to Applicant. Additionally, BRE’s obligations to plug and abandon, return to production, convert to injection or otherwise complete for the purpose of enhanced oil recovery, twenty (20) wells per calendar year shall hereinafter be borne by Applicant, and Applicant expressly acknowledges and assumes such obligations.
10. On July 3, 2017, Applicant, by its attorneys, filed with the Commission a written request to approve the Application based on the merits of the verified application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the Application.
11. Testimony and exhibits submitted in support of the Application by David L. Kunovic, Executive Vice President for Pass Creek Resources LLC, to which PCR, as Applicant, is a wholly owned subsidiary, showed that on May 11, 2017, Applicant became the successor owner and operator of all of the properties previously owned and operated by EnerJex Resources, Inc. / Black Raven Energy, Inc. including the Adena Field. The entire staff of BRE, including all management and field personnel of the former operator of the Colorado properties, have moved to PCR. All of the bonding formerly held by EnerJex/Black Raven has been transferred to PCR. All of the appropriate forms have been filed with the COGCC relating to the transfer of operations. Further testimony showed that on May 3, 2017, PCR met with the COGCC staff to discuss the transition and change of operator to PCR. PCR and COGCC staff discussed the current orders that are in place for the Adena Field and PCR’s request to continue under the existing orders. The staff had no objections and advised PCR to formalize the transfer from EnerJex/Black Raven by order of the Commission. Finally, testimony showed the previous operator required variances from Order No. 1-186 for financial reasons but that PCR is well funded and plans to responsibly manage and develop the field in full compliance with all MIT and P&A obligations including the required annual bradenhead and water well testing.
12. Applicant agreed to be bound by oral order of the Commission.
13. Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Officer review of the Application under Rule 511., the Commission should enter an order amending Order No. 1-186, so as to transfer certain obligations and liabilities of Order No. 1-186 to Applicant.
IT IS HEREBY ORDERED:
1. Order No. 1-186 is hereby amended, so as to transfer all rights, obligations and liabilities of Black Raven Energy, Inc., a subsidiary of EnerJex Resources, Inc., arising under Order No. 1-186 to Applicant.
1. The provisions contained in the above order shall become effective immediately.
2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
3. Under the State Administrative Procedure Act, the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.
4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.
ENTERED this 16th day of August, 2017, as of July 24, 2017.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
James Rouse, Acting Secretary