REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on March 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, as to why Samotlor Petroleum Investments, LLC. was not in violation of Rule No. 323.a., underground disposal of water without written authorization; Rule No. 323.b., an injection well must pass mechanical integrity tests prior to approval; and R ule 324.a.4, supporting documents for mechanical integrity tests must be submitted and approved by the Director, 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. Samotlor Petroleum Investments LLC. 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 December 4, 1995, the Commission received an application to convert the Golden Hammer No. 2 Well, operated by Samotlor Petroleum Investments, LLC., located in the SE1/4 NW1/4 of Section 18, Township 16 South, Range 44 West, 6th P.M., to a saltwater disposal well. No action was taken on the injection application since the Operator had not posted a plugging bond and the application was incomplete. A plugging bond was posted on January 11, 1996.

5. On January 16, 1996, staff inspected the site and found the well was being used as a salt water disposal well which is in violation of Rule 323.a., underground disposal of water without written authorization; Rule 323.b., an injection well must pass a mechanical integrity test prior to approval; and Rule 324.a.4, supporting documents for the mechanical integrity test must be submitted and approved by the Director. The pumper for the well indicated t hat the well had been injecting since late October, 1995. On January 17, 1996, a Notice of Alleged Violation (NOAV) was issued requiring the Operator to immediately cease water injection.

6. On January 23, 1996, an Administrative Order by Consent (AOC) was sent to Samotlor Petroleum Investments, LLC., for the above-described violations with a proposed fine of Ten Thousand Dollars ($10,000). On February 16, 1996, a meeting was held between staff and the Operator. The Operator felt the fine was excessive and requested a Commission hearing.

7. On March 12, 1996, after discussions between Samotlor Petroleum Investments LLC. and COGCC staff, agreement with the terms of the AOC and the proposed fine were reached.

8. The Hearing Officer recommends that Samotlor Petroleum Investments LLC. be found in violation of Rule Nos. 323.a., operating a disposal well without approval; 323.b., operating an injection well without mechanical integrity testing; and 324.a.(4), operating an injection well without an approved mechanical integrity test. Further, the Hearing Officer recommends a fine of Ten Thousand Dollars ($10,000) be assessed for the above-mentioned violations, p ayable on or before May 15, 1996.

O R D E R

NOW, THEREFORE IT IS ORDERED, that Samotlor Petroleum Investments LLC. shall be found in violation of Rule Nos. 323.a., operating a disposal well without approval; 323.b., operating an injection well without mechanical integrity testing; and 324.a.(4), operating an injections well without an approved mechanical integrity test.

IT IS FURTHER ORDERED, that Samotlor Petroleum Investments LLC. shall be assessed a total fine of Ten Thousand Dollars ($10,000) for violation of Rule Nos. 323.a., 323.b., and 324.a.4, payable on or before May 15, 1996.

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 March 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 March 29, 1996 ??

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