REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 18, 1996, at 8:30 a.m., in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing as required by law, on why Marcus Production, Inc. (Marcus) is not in violation of Rule No. 902.c., inadequate freeboard in pit, and Rule 604, inadequate berms and diked area capacity around tank, of the Oil and Gas Conservation Commission, and why it should not invoke the provisions of 34-60-121 C.R.S., as amended, providing for penalties for violations of the Rules and Regulations of the Commission.

FINDINGS

The Commission finds as follows:

1. Marcus Production, Inc. 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 September 25, 1995, COGCC staff inspected the Jolly No. 41X-6 Well located in the NE1/4 NE1/4 of Section 6, Township 3 South, Range 55 West, 6th P.M., and found violations of Rule 902.c., inadequate freeboard in pit. A Notice of Violation (NOAV) was issued on September 27, 1996 with remediation to take place by October 25, 1995. On October 17, 1995, COGCC staff received the NOAV signed by Marcus stating that all violations were corrected. The s ite was reinspected December 7, 1995. The same violation of Rule 902.c. existed. All other violations were abated. On December 18, 1995, Marcus contacted COGCC staff and stated they planned to drop the pit fluid level to maintain adequate freeboard.

5. On December 26, 1995, a proposed Administrative Order of Consent (AOC) was issued by COGCC staff for violation of Rule 902.c. On January 11, 1996, a meeting was held between Marcus and COGCC staff to discuss the proposed AOC for the Jolly No. 41X-6 Well. On January 12, 1996, the AOC was revised to provide adequate time to complete all work on the well. The Hearing Officer recommends that Marcus be found in violation of Rule No. 902.c., inadequate freeboard in pit. Further, the Hearing Officer recommends a fine of Seven Hundred Fifty Dollars ($750) be assessed for the Jolly No. 41X-6 Well, payable within thirty (30) days from issuance of the Order. Such fine should be waived if all corrective actions are performed within six (6) months.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that Marcus Production, Inc. shall be found in violation of Rule No. 902.c. inadequate freeboard in pit for the Jolly No. 41X-6 Well, located in the NE1/4 NE1/4 of Section 6, Township 3 South, Range 55 West, 6th P.M.

IT IS FURTHER ORDERED, that Marcus Production, Inc. shall perform corrective action to ensure the pit freeboard is maintained until another pit is put into service to increase total pit capacity, which is to occur within six (6) months and that if pit capacity is not increased within six (6) months, Marcus Production, Inc., shall be assessed a total fine of Seven Hundred Fifty Dollars ($750), for violation of Rule 902.c, payable within thirty (30) days o f the date the order is entered.

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.

ENTERED this day of , 1996, as of January 18, 1996.

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 February 9, 1996 ??