IN THE MATTER OF ALLEGED VIOLATIONS OF THE CAUSE NO

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-191
CASCADE OIL, CHEYENNE COUNTY, COLORADO

REPORT OF THE COMMISSION

This cause came on for hearing before the Colorado Oil and Gas Conservation Commission on February 15, 2000 at 8:30 a.m. at the Holiday Inn, Trinidad, 3125 Toupal Drive, Trinidad, Colorado after giving Notice of Hearing as required by law on why Cascade Oil is not in violation of Rule 326.b.(1), failure to perform a mechanical integrity test within two (2) years of the initial shut-in date for the Hoffman #6-2 Well located in the SW¼ NW¼ of Section 6, Township 15 South, Range 5 West, 6th P.M.

FINDINGS

1. Cascade Oil 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 and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4. Cascade Oil is the operator of the Hoffman #6-2 Well located in the SW¼ NW¼ of Section 6, Township 15 South, Range 44 West, 6th P.M. This well has not produced since December, 1994.

5. The Hoffman #6-2 Well was inspected by Colorado Oil and Gas Conservation Commission (“COGCC”) staff on May 17, 1999. The inspection found the well temporarily abandoned with equipment on location. COGCC staff required Cascade Oil to perform a mechanical integrity test (“MIT”), produce or plug and abandon the well.

6. On May 25, 1999, a Notice of Alleged Violation (“NOAV”) was issued to Cascade Oil, alleging violations of Rule 326.b.(1), requiring a MIT to be performed on wells shut-in within two (2) years of the initial shut-in date. The NOAV required Cascade Oil to perform a MIT or plug and abandon the well by December 1, 1999. The NOAV was mailed to Cascade Oil’s last known address and was never claimed.

7. As of January 1, 2000, a MIT had not been performed on this well and the well has not been plugged and abandoned. The location of Cascade Oil and its owner Douglas C. Schafer are unknown. Cascade Oil’s failure to bring the Hoffman #6-2 Well into compliance with Rule 326.b.(1) threatens to cause significant adverse environmental impact.

8. At the time of the hearing on February 15, 2000 COGCC staff presented testimony and exhibits in support of the above findings. COGCC staff further testified that notice of the hearing was sent via certified mail to Cascade Oil and to Norwest Bank, provider of Cascade Oil’s financial assurance posted with the COGCC.

9. In accordance with Rule 522.c.(1), the Director requests the Commission issue an Order Finding Violation for Rule 326.b.(1) requiring Cascade Oil to perform certain work, assessing a fine of One Thousand dollars ($1,000.00) and authorizing COGCC staff to commence a claim on the bond should said work not be performed.

ORDER

NOW, THEREFORE, IT IS ORDERED that Cascade Oil shall be found in violation of Rule 326.b.(1), requiring a mechanical integrity test to be performed on wells shut-in within two (2) years of the initial shut-in date.

IT IS FURTHER ORDERED that Cascade Oil shall be assessed a fine of One Thousand dollars ($1000) for the violation of Rule 326.b.(1), payable within thirty (30) days of the date the order is entered by the Commission.

IT IS FURTHER ORDERED that Cascade Oil shall perform a mechanical integrity test, produce, or plug and abandon the Hoffman #6-2 Well no later than April 1, 2000.

IT IS FURTHER ORDERED that if Cascade Oil does not comply with the order, COGCC staff shall be authorized to commence a claim on the Five Thousand dollar ($5,000) plugging bond and proceed to plug, abandon and reclaim the Hoffman #6-2 Well.

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

RECOMMENDED this 13th day of March, 2000, as of February 15, 2000.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dated at Suite 801 Patricia C. Beaver, Secretary 1120 Lincoln Street Denver, Colorado 80203 March 13, 2000.

(1V#191)