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-127
POINT LOOKOUT DRILLING AND MIKE TURNER, OWNER, 
MONTEZUMA COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m., on August 4, 1997, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing as required by law, on why Point Lookout Drilling and Mike Turner, Owner, are in violation of certain rules and regulations of the Oil and Gas Conservation Commission and why the Commission 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. Point Lookout Drilling and Mike Turner, Owner, are interested parties 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 15, 1995 Point Lookout Drilling was notified that they were in violation of Commission Rule No. 308., failure to file completion report and Rule No. 312., failure to file certificates of clearance for six (6) wells in Montezuma County. Violations were to be corrected immediately. On August 15, 1996, Commission staff conducted an inspection of the Sierra Field and found additional violations for the below-listed wells. Notices of Alleged Violation (NOAVs) were issued for each well on August 27, 1996. These violations were also to be corrected immediately. Three (3) additional wells were found in violation on October 29, 1996. NOAVs were also issued for these wells. The following table summarizes all violations by Point Lookout Drilling and Mike Turner, Owner, to date.

WELL NAME ALLEGED VIOLATION CORRECTIVE ACTION RULE VIOLATED
Ellis #1
SE¼ NW¼ Section 5
T35N-R13W N.M.P.M. No well sign.
Oil on pit.

Has not filed Form 4 showing current status.
Well has been shut in 2 years without MIT*.
Junk on location. Post well sign.
Remove oil and clean pit.
File Form 4.

Perform MIT.

Remove debris and clean up location. 210.
902.e.

319.b.1.

326.b.1.

603.g.
Ellis #2
NE¼ SW¼ Section 5
T35N-R13W N.M.P.M. No well sign.
Has not filed Form 4 showing current status.
Well has been shut in 2 years without MIT. Post well sign.
File Form 4.

Perform MIT. 210.
319.b.1.

326.b.1.

Ellis #4
NW¼ SW¼ Section 5
T35N-R13W N.M.P.M. No well sign.
Has not filed Form 4 showing current status.
Well has been shut in 2 years without MIT.
Unremediated oil spill. Post well sign.
File Form 4.

Perform MIT.

Clean up oil spill. 210.
319.b.1.

326.b.1.

907.a.
Ellis #5
NW¼ SW¼ Section 5
T35N-R13W N.M.P.M. No well sign.
Has not filed Form 4 showing current status.
Well has been shut in 2 years without MIT.
Open casing.
Post well sign.
File Form 4.

Perform MIT.

Install valve or plug well. 210.
319.b.1.

326.b.1.

319.b.1.

Ellis #6
NW¼ SW¼ Section 5
T35N-R13W N.M.P.M. No well sign.
Has not filed Form 4 showing current status.
Well has been shut in 2 years without MIT.
Unremediated oil spill. Post well sign.
File Form 4.

Perform MIT.

Clean up oil spill. 210.
319.b.1.

326.b.1.

907.a.
Ellis #7
NW¼ SW¼ Section 5
T35N-R13W N.M.P.M. No well sign.
Has not filed Form 4 showing current status.
Well has been shut in 2 years without MIT.
Unremediated oil spill. Post well sign.
File Form 4.

Perform MIT.

Clean up oil spill. 210.
319.b.1.

326.b.1.

907.a.
Ellis #8
SW¼ NW¼ Section 5
T35N-R13W N.M.P.M. No well sign.
Has not filed Form 4 showing current status.
Well has been shut in 2 years without MIT.
Unremediated oil spill. Post well sign.
File Form 4.

Perform MIT.

Clean up oil spill. 210.
319.b.1.

326.b.1.

907.a.
Ellis Rob #1
SW¼ NW¼ Section 5
T35N-R13W N.M.P.M. No well sign.
Well has been shut in 2 years without MIT.
Form 5 not submitted.

Form 10 not submitted. Post well sign.
Perform MIT.

Submit Form 5 and logs.
Submit Form 10. 210.
326.b.1.

308.

312.
Ellis Rob #2
NW¼ SW¼ Section 5
T35N-R13W N.M.P.M. No well sign.
Well has been shut in 2 years without MIT.
Form 5 not submitted.

Form 10 not submitted. Post well sign.
Perform MIT.

Submit Form 5 and logs.
Submit Form 10. 210.
326.b.1.

308.

312.
Ellis Rob #3
NW¼ SW¼ Section 5
T35N-R13W N.M.P.M. No well sign.
Well has been shut in 2 years without MIT.
Form 5 not submitted.

Form 10 not submitted.
Unremediated oil spill. Post well sign.
Perform MIT.

Submit Form 5 and logs.
Submit Form 10.
Clean up oil spill. 210.
326.b.1.

308.

312.
907.a.
Ellis Rob #4
SW¼ NW¼ Section 5
T35N-R13W N.M.P.M. Form 5 not submitted.

Form 10 not submitted. Submit Form 5 and logs.
Submit Form 10. 308.

312.
Ellis Rob #5
SE¼ NW¼ Section 5
T35N-R13W N.M.P.M. Form 5 not submitted.

Form 10 not submitted. Submit Form 5 and logs.
Submit Form 10. 308.

312.
Ellis Rob #6
NE¼ SW¼ Section 5
T35N-R13W N.M.P.M. Form 5 not submitted.

Open hole. Submit Form 5.

Plug well. 308.

319.1.b.
Graf #1
SE¼ SW¼ Section 9
T35N-R13W N.M.P.M. No well sign.
Has not filed Form 4 showing current status.
Well has been shut in 2 years without MIT. Post well sign.
File Form 4.

Perform MIT. 210.
319.b.1.

326.b.1.
Graf #2
SE¼ SW¼ Section 9
T35N-R13W N.M.P.M. No well sign.
Has not filed Form 4 showing current status.
Well has been shut in 2 years without MIT. Post well sign.
File Form 4.

Perform MIT. 210.
319.b.1.

326.b.1.
Wallace #1
SE¼ SW¼ Section 17
T36N-R13W N.M.P.M. No well sign.
Well has been shut in 2 years without MIT.
Junk on location. Post well sign.
Perform MIT.

Remove debris and clean location. 210.
326.b.1.

603.g.
* Mechanical Integrity Test

5. All NOAVs were sent by certified mail to Point Lookout Drilling and Mike Turner’s last known address. All letters were unclaimed. On October 7, 1996, an Administrative Order by Consent (AOC) was sent to Point Lookout Drilling and Mike Turner’s last known address. This letter was also unclaimed.

6. On October 26, 1996, and there after, all wells were reinspected by Commission staff. All violations still existed.

7. Neither a representative from Point Lookout Drilling nor Mike Turner, Owner, were present at the August 4, 1997 hearing.

8. At the time of the hearing, Commission staff provided testimony and presented exhibits in support of the proposed order being recommended for adoption by the Commission.

9. The Commission should direct the Commission staff to commence a claim on the Thirty Thousand Dollar ($30,000) bond in order to plug and abandon and reclaim the wells listed in Finding No. 4.

10. The Commission should authorize the Commission staff to confiscate and sell for salvage any equipment abandoned at the well sites in accordance with §34-60-124.(6)(c).

11. That a knowing and willful pattern of violation exists by Point Lookout Drilling and Mike Turner, Owner, as described in §34-60-121.(7)., and thus the issuance of any new permits by the Commission to either party should be prohibited.

12. Based on the testimony presented, an order of the Commission should be entered finding Point Lookout Drilling and Mike Turner, Owner, in violation of Rule No. 210., failure to erect well signs; Rule No. 308., failure to submit completion reports and logs; Rule No. 312., failure to submit Certificates of Clearance, Form 10s; Rule No. 319.b.1., failure to notify COGCC of current well status; Rule No. 326.b.1., failure to perform Mechanical Iintegrity Tests; Rule No. 603.g. debris and junk on locations; Rule No. 902.e., failure to remove oil from pits within twenty-four (24) hours; and Rule No. 907.a., failure to report spills and releases of E&P waste or produced fluid exceeding five (5) barrels within ten (10) days. In addition, Commission staff should commence claim on the Thirty Thousand Dollar ($30,000) plugging bond and confiscate any and all equipment and tubulars for salvage. Further, a fine of Twenty-Eight Thousand Seven Hundred Fifty Dollars ($28,750) payable within thirty (30) days from the date the order is issued, should be assessed.

ORDER

NOW THEREFORE, IT IS ORDERED, that Point Lookout Drilling and Mike Turner, Owner, are found in violation of Rule No. 210., failure to erect well signs; Rule No. 308., failure to submit completion reports and logs; Rule No. 312., failure to submit Certificates of Clearance, Form 10s; Rule No. 319.b.1., failure to notify COGCC of current well status; Rule No. 326.b.1., failure to perform Mechanical Integrity Tests; Rule No. 603.g. debris and junk on locations; Rule No. 902.e., failure to remove oil from pits within twenty-four (24) hours; and Rule No. 907.a., failure to report spills and releases of E&P waste or produced fluid exceeding five (5) barrels within ten (10) days, for the wells specifically described above in Finding No. 4.

IT IS FURTHER ORDERED, that Commission staff should commence claim on the Thirty Thousand Dollar ($30,000) plugging bond in order to plug and abandon and reclaim the wells listed below:

Well Name Location
Ellis #1 SE¼ NW¼ Section 5 T35N-R13W N.M.P.M.
Ellis #2 NE¼ SW¼ Section 5 T35N-R13W N.M.P.M.
Ellis #4 NW¼ SW¼ Section 5 T35N-R13W N.M.P.M.
Ellis #5 NW¼ SW¼ Section 5 T35N-R13W N.M.P.M.
Ellis #6 NW¼ SW¼ Section 5 T35N-R13W N.M.P.M.
Ellis #7 NW¼ SW¼ Section 5 T35N-R13W N.M.P.M.
Ellis #8 SW¼ NW¼ Section 5 T35N-R13W N.M.P.M.
Ellis Rob #1 SW¼ NW¼ Section 5 T35N-R13W N.M.P.M.
Ellis Rob #2 NW¼ SW¼ Section 5 T35N-R13W N.M.P.M.
Ellis Rob #3 NW¼ SW¼ Section 5 T35N-R13W N.M.P.M.
Ellis Rob #4 SW¼ NW¼ Section 5 T35N-R13W N.M.P.M.
Ellis Rob #5 SE¼ NW¼ Section 5 T35N-R13W N.M.P.M.
Ellis Rob #6 NE¼ SW¼ Section 5 T35N-R13W N.M.P.M.
Graf #1 SE¼ SW¼ Section 9 T35N-R13W N.M.P.M.
Graf #2 SE¼ SW¼ Section 9 T35N-R13W N.M.P.M.
Wallace #1 SE¼ SW¼ Section 17 T36N-R13W N.M.P.M.

IT IS FURTHER ORDERED, that any equipment abandoned at the well sites shall be confiscated and sold for salvage by the Commission.

IT IS FURTHER ORDERED, that pursuant to §34-60-121(7), Point Lookout Drilling and Mike Turner, Owner, have demonstrated a knowing and willful pattern of violation and shall not be issued any new permits unless compliance with this order is reached.

IT IS FURTHER ORDERED, that Point Lookout Drilling and Mike Turner, Owner, shall be assessed a fine of Twenty-Eight Thousand Seven Hundred Fifty Dollars ($28,750), payable within thirty (30) days from the date the order is issued.

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 13th day of August, 1997, as of August 4, 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 August 13, 1997

(1V#127)