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-129
MR. JACK SQUIRES, LA PLATA COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission at 8:30 a.m. on September 16, 1997, in the La Plata County Commissioner Hearing Room, 1060 E. 2nd Avenue, Durango, Colorado, after giving Notice of Hearing as required by law, on why Mr. Jack Squires is 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. Mr. Jack Squires 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. In July of 1955, Hudson Oil and Metals Company drilled and completed the J. Fred Hill No. 1 Well located in the NEĽ SEĽ of Section 1, Township 32 North, Range 7 West, N.M.P.M. Surface casing was set at 205’ and cemented to surface. Intermediate casing was set at 2,292’ and cemented with 125 sacks of cement. The well was deepened to 2,485’ and a slotted liner was installed to total depth. In November 1955, the well was deepened to 2,530’. In July 1966, the well was plugged by setting a 25 sack cement plug across the Fruitland Coal Formation and a 30 sack cement plug at 1,365’. The intermediate casing was pulled from the well at 1,365’. After the two cement plugs were set and the casing pulled from the well, enough gas was produced from the well for the surface owner, Mr. Jack Squires, to request the continued use of the well for domestic gas usage. The staff approved this request on April 5, 1966. No financial assurance was required from the surface owner.

5. On June 10, 1996, gas and water samples were taken from the well and analyzed. The gas and water analyses indicated the fluids were from the Fruitland Coal Formation. This indicates the two cement plugs set in 1966 have not sealed or separated the producing horizon to prevent the intermingling of their contents. On June 12, 1997, COGCC staff met with Mr. Jack Squires at his residence to discuss with him the status of his well, explain COGCC Rules and explain how the J. Fred Hill No. 1 Well was in violation of the COGCC Rules and Regulations. On June 13, 1997, a Notice of Alleged Violation (NOAV) was sent to Mr. Jack Squires specifying violations of Rules 209. and 706. of the Rules and Regulations of the Colorado Oil and Gas Conservation Commission. The abatement date for compliance was July 14, 1997, to repair the well and provide financial assurance in the amount of Five Thousand Dollars ($5,000). Rule 209. was cited for failure to seal or separate Fruitland Coal Formation gas and water and prevent the intermingling of their contents with other strata. Rule 706. was cited due to the lack of financial assurance provided by the owner to plug and abandon the well. On July 17, 1997, COGCC staff contacted Mr. Squires by telephone and he indicated no action had been taken to gain compliance for the well. COGCC staff offered to utilize the Environmental Response Fund (ERF) to properly plug and abandon the well. Mr. Squires refused staff's offer.

6. 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.

7. At the time of the hearing, Mr. Jack Squires and witnesses on his behalf presented historical data regarding the well and its use.

8. After deliberation, the Commission directed the Commission staff to utilize the ERF to properly plug, abandon and reclaim the J. Fred Hill No. 1 Well located in the NEĽ SEĽ of Section 1, Township 32 North, Range 7 West, N.M.P.M.

9. The Commission also found the Mr. Jack Squires would not be a responsible party in this matter.

ORDER

NOW THEREFORE, IT IS ORDERED, that a violation of Rule 209., failure to seal or separate the Fruitland Coal seam gas and water and prevent the intermingling of their contents with other strata, exists for the J. Fred Hill No. 1 Well located in the NEĽ SEĽ of Section 1, Township 32 North, Range 7 West, N.M.P.M.

IT IS FURTHER ORDERED, that Commission staff is authorized to utilize the Environmental Response Fund to properly plug, abandon and reclaim the above-described well.

IT IS FURTHER ORDERED, that Mr. Jack Squires shall not be deemed a responsible party in this matter.

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 9th day of October, 1997, as of September 16, 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 October 9, 1997

(1V#129)