IN THE MATTER OF THE CONTINUING VIOLATION OF          CAUSE NO. 1
THE RULES AND REGULATIONS OF THE OIL AND
GAS CONSERVATION COMMISSION OF THE                           ORDER NO. 1V-125
STATE OF COLORADO BY TIPPS OIL COMPANY,
WASHINGTON COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on July 1, 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 and in accordance with §34-60-105, 34-60-121(6) and 34-60-122(6), C.R.S., allowing the COGCC Director to confiscate all equipment and any associated hydrocarbons located at wellsites operated by Tipps Oil Company.

FINDINGS

The Commission finds as follows:

1. Tipps Oil Company 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 or about December 19, 1995, after notice and hearing required by law, the COGCC entered Order No. 1-219 (now Order No. 1V-93) finding Tipps Oil Company (“Tipps”) in violation of COGCC Rules No. 604.a.4., inadequate berms around production tanks; 902.e., accumulation of oil on pits for more than twenty-four (24) hours after discovery and Rule 902.f., inadequate netting for seven (7) wells located in Washington County, Colorado (the “Tipps Wells”). The Commission ordered Tipps to close all pits or bring sites into compliance by May 15, 1996. The Commission also ordered an increase in Tipps’ plugging bond and assessed a sixty thousand dollar ($60,000) fine associated with these violations, with thirty thousand dollars ($30,000) of the fine suspended if the Tipps Wells were brought into compliance on or before May 15, 1996. The following wells were subject to this order:

Well Name Location
Scheetz No. 1 NW¼ NW¼ Sec. 14-3S-52W
Jefferson No. 1 SW¼ SW¼ Sec 11-3S-52W
Hickert Lease SE¼ SE¼ Sec 10-3S-52W
Anderson Lease NW¼ SW¼ Sec 20-3S-52W
Friend No. 1 SW¼ NE¼ Sec 20-3S-50W
Kejr Lease SW¼ NW¼ Sec 11-2S-56W
Marick A-1 SW¼ NW¼ Sec 10-3S-52W

5. Tipps has failed to conduct any of the work required to bring the wells into compliance, has failed to increase its plugging bond as ordered by the Commission and has failed to pay all or any portion of the fine assessed for the existing violations.

6. The Director’s recommendation to confiscate the equipment and any associated hydrocarbons is based on Tipps’ continued failure to comply with the Rules and Regulations of the Oil and Gas Conservation Commission, Tipps’ failure to comply with the Terms of Order No. 1-219 (now Order No. 1V-93) and the Commission’s prior finding that Tipps’ failure to comply with the terms of the Commission’s September 5, 1995 Cease and Desist Order can be construed as a violation of §34-60-106(2)(d), C.R.S. (an adverse environmental impact) and a violation of §34-60-117(1), C.R.S. (waste of a natural resource).

7. An order of the Commission should be entered allowing the Director to confiscate all equipment and any associated hydrocarbons located at the above-described wellsites operated by Tipps Oil. The Commission should also authorize COGCC staff to conduct such further operations as COGCC staff deems necessary in accordance with §34-60-124, C.R.S. and the Rules and Regulations of the Commission to bring the above-described wells and wellsites into compliance.

ORDER

NOW, THEREFORE, IT IS ORDERED, that the Director is hereby allowed to confiscate all equipment and any associated hydrocarbons located at the following wellsites operated by Tipps Oil Company. The Commission shall also authorize COGCC staff to conduct such further operations as COGCC staff deems necessary in accordance with §34-60-124, C.R.S. and the Rules and Regulations of the Commission to bring the below-described wells and wellsites into compliance.

Well Name Location
Scheetz No. 1 NW¼ NW¼ Sec. 14-3S-52W
Jefferson No. 1 SW¼ SW¼ Sec 11-3S-52W
Hickert Lease SE¼ SE¼ Sec 10-3S-52W
Anderson Lease NW¼ SW¼ Sec 20-3S-52W
Friend No. 1 SW¼ NE¼ Sec 20-3S-50W
Kejr Lease SW¼ NW¼ Sec 11-2S-56W
Marick A-1 SW¼ NW¼ Sec 10-3S-52W

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 18th day of July, 1997, as of July 1, 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 July 18, 1997

(1V#125)