IN THE MATTER OF ALLEGED VIOLATIONS OF THE
CAUSE NO. 1
RULES AND REGULATIONS OF THE COLORADO OIL
AND GAS CONSERVATION COMMISSION BY
ORDER NO. 1V-118
V.T.L., INC., LINCOLN COUNTY, COLORADO
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission on March 17, 1997, 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 V.T.L., Inc.
is not in violation of Rule Nos. 317.b. (319.b. as of June 1, 1996), and Rule
324.b. (326.b. as of June 1, 1996), 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. V.T.L., 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 August 7, 1992, Colorado Oil and Gas Conservation Commission (COGCC) staff
issued a request for information concerning the status of the State #1 Well,
located in the SW¼SE¼ of Section 36, Township 17 South, Range 53 West, 6th P.M.
No response was received.
5. On April 6, 1995, COGCC staff conducted a field inspection on the State #1
Well and found the well to be shut-in. The inspection notice required that the
well be tested. On February 2, 1996 COGCC staff conducted a field inspection on
the State #1 Well and found the well to be shut-in. The inspection notice
required that a mechanical integrity test be performed on the well, that the
well be produced, or that the well be plugged. On February 5, 1996, COGCC staff
issued a Notice of Alleged Violation (NOAV) to V.T.L. for the State #1 Well. The
NOAV cited violation of Rule 317.b. (319.b. as of June 1, 1996), failure to
obtain Director approval for continuing shut-in status, and Rule 324.b. (326.b.
as of June 1, 1996), failure to perform a mechanical integrity test within two
years of initial shut-in date. Commission records indicate that the well has not
produced since completion in December of 1983. The NOAV specified an abatement
date of August 5, 1996. The NOAV was accepted on February 8, 1996, as indicated
by the return receipt.
6. On April 25, 1996, COGCC staff received a copy of the NOAV that had been
signed by Mr. Gary Pahl, President of V.T.L., Inc. In a telephone conversation
the same day, Mr. Pahl informed COGCC staff that no work had been done to date.
On September 9, 1996 COGCC staff contacted Mr. Pahl by telephone. Mr. Pahl
informed COGCC staff that no work had been done. On September 13, 1996 COGCC
staff sent a letter to Mr. Pahl. The letter gave V.T.L., Inc. an unrequested
extension for compliance to December 1, 1996 and restated the abatement options
that would bring the well into compliance.
7. On December 2, 1996, COGCC staff issued an Administrative Order by Consent to
V.T.L., Inc. On December 16, 1996 Mr. Gary Pahl with V.T.L., Inc. contacted
COGCC staff and requested an extension to February 28, 1997 to do the work. The
extension was granted with the condition that Mr. Pahl submit a letter to the
COGCC detailing a time frame for compliance. No such letter was submitted.
8. On February 18, 1997, COGCC staff requested that the Director make an
application to the Commission for an Order Finding Violation. As of March 11,
1997, COGCC staff has received no correspondence from V.T.L. or any indication
that the alleged violations have been abated.
9. The Commission finds that the above has sufficiently established a knowing
and willful pattern of violation of the regulations under §34-60-121(7), C.R.S.
10. The Commission finds that the above-described violations resulted in an
economic benefit to the operator and has been taken into consideration in
assessing a fine.
11. Testimony presented at the hearing indicates that failure to properly plug
and abandon the well threatens to cause a significant environmental impact by
allowing possible aquifer contamination.
12. Testimony presented at the hearing indicates that the cost to plug and
abandon the well exceeds the posted bond, thus, under §34-60-124(6)(c), C.R.S.,
the Commission shall bring an action to confiscate the equipment to cover costs.
13. An order of the Commission should be entered finding V.T.L., Inc., in
violation of Rule 317.b. (319.b. as of June 1, 1996), failure to obtain Director
approval for continuing shut-in status, and Rule 324.b. (326.b. as of June 1,
1996), failure to perform a mechanical integrity test within two years of
initial shut-in date, and assessing a fine of Four Thousand Dollars ($4,000)
payable within thirty (30) days from the date the order is issued.
ORDER
NOW, THEREFORE, IT IS ORDERED, that V.T.L., Inc. shall be found in violation of
Rule 319.b., failure to obtain Director approval for continuing shut-in status,
and Rule 326.b., failure to perform a mechanical integrity test within two years
of initial shut-in date for the State #1 Well, located in the SW¼SE¼ of Section
36 Township 17 South, Range 53 West, 6th P.M.
IT IS FURTHER ORDERED, that V.T.L., Inc. shall be assessed a total fine of four
thousand dollars ($4,000.00) for violation of Rule 319.b. and 326.b. for the
State #1 Well, payable within thirty (30) days of the date the order is issued.
IT IS FURTHER ORDERED, that V.T.L., Inc. shall be required to either: 1) perform
a successful mechanical integrity test; 2) properly plug and abandon; or 3) put
on production the State #1 Well, within thirty (30) days of the date that the
order is issued.
IT IS FURTHER ORDERED, that if V.T.L., Inc. does not comply with the above order
the Commission shall make a claim on the individual plugging bond and plug the
State #1 Well. If plugging costs exceed the bond amount, the Commission shall
confiscate available equipment and tubulars for salvage pursuant to
§34-60-124(6)(c), C.R.S.
IT IS FURTHER ORDERED, that pursuant to §34-60-121(7), C.R.S., the Commission
shall not issue any permits to drill to V.T.L., Inc., or any company of which
Mr. Gary Pahl is a principal, until V.T.L., Inc. complies with the above order.
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 28th day of March, 1997, as of March 17, 1997.
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 27, 1997
(1V#118)