IN THE MATTER OF ALLEGED VIOLATIONS OF THE          CAUSE NO. 1V
RULES AND REGULATIONS OF THE COLORADO OIL
AND GAS CONSERVATION COMMISSION BY                     ORDER NO. 1V-217
ELM RIDGE RESOURCES, INC.
LA PLATA COUNTY, COLORADO 

ADMINISTRATIVE ORDER BY CONSENT

FINDINGS

1. On April 3, 2001, Colorado Oil and Gas Conservation Commission (COGCC) staff received a complaint (COGCC Complaint Tracking #200015615) from the landowner of an adjacent property stating that water and an “oily” substance had overflowed the drilling pit, flowed down a small drainage, and crossed her property. The drilling pit was associated with the Harmon A #1-A (API #05-067-08194) well operated by Elm Ridge Resources, Inc. (Elm Ridge) located in NW¼ SE¼ of Section 17, Township 33 North, Range 8 West, N.M.P.M.

2. On April 3, 2001, Elm Ridge verbally reported the spill to the COGCC Southwest Colorado field inspector. Elm Ridge stated that the oil had been placed in the drilling pit by an unknown third party.

3. On April 5, 2001, COGCC field inspector conducted an inspection of the subject site. At the time of this inspection an oily emulsion was observed on the pit and oil stained dirt was observed along the pathway of the spill. A Notice of Unsatisfactory Inspection was issued to Elm Ridge.

4. Elm Ridge attempted to remediate the portion of the spill that had impacted the adjacent property, but was denied access by the landowner that is also the person who had made the original complaint.

5. On April 10 and April 11, 2001, COGCC environmental supervisor inspected the site and met with Elm Ridge’s pumper; met with the owner of the adjacent property and collected a sample from her water well for chemical analysis; inspected the pit and the flow pathway of the spill; collected soil and liquid samples for chemical analysis, photographed site conditions, and used a GPS to map the impacted area and to record the sample locations. At the time of the inspections: an oily emulsion and sheen were observed covering the entire surface of the water remaining in the pit; trash, oily soil, and other refuse were observed at the well site; the pit had not been reclaimed and the pit liner was tattered and torn; oily soil and emulsion were observed along the approximately ½ miles traveled by the spill; and the spill followed the course of an ephemeral/intermittent drainage.

6. On April 12, 2001, Elm Ridge sampled the contents of the pit that overflowed. The results of the pit contained total petroleum hydrocarbons (TPH) of 640,000 mg/kg. The closure TPH standard for spill remediation in this area is 1,000 mg/kg.

7. On April 12, 2001, COGCC field inspector issued a Notice of Alleged Violation (NOAV) to Elm Ridge for the unauthorized release of liquids due to pit overflow and for conditions observed during the April 5, 2001 inspection. The NOAV cited violation of: Rule 324A.a., failure to prevent the unauthorized discharge of oil, E&P waste, and chemical substances; Rule 604.c.(3), failure to fence facility to prevent access by unauthorized persons; and Rule 902.c., failure to construct and operate a pit in order to provide for a minimum of two (2) feet of freeboard between the top of the pit wall and the fluid level of the pit. The NOAV specified an abatement date of April 16, 2001 to remove all of the liquids from the pit; to characterize and dispose of liquids at a proper facility; to rebuild berm around the pit to prevent surface water flow into and discharge out of the pit; and to fence the pit to prevent unauthorized dumping.

8. Per return receipt, Elm Ridge accepted this NOAV on April 17, 2001.

9. On April 12, 2001, Elm Ridge’s contractor built a berm around the pit.

10. On April 16, 2001, Elm Ridge’s contractors erected a fence around the pit and completed removal of the oily emulsion and water from the pit.

11. The corrective actions specified in the April 12, 2001 NOAV were completed by the April 16, 2001 abatement date.

12. On April 19, 2001, COGCC environmental supervisor issued a NOAV to Elm Ridge for the unauthorized release of water and oily emulsion from the drilling pit into an ephemeral/intermittent drainage and for conditions observed during the April 10 and April 11, 2001, field inspections. The liquids had traveled approximately ½ miles downstream. A map and photographs of the impacted area were included with the NOAV. Oily soil and emulsion were observed along the course traveled by the spill. The spill was not properly reported to the COGCC or Colorado Department of Public Health and Environment (CDPHE) - Water Quality Control Division (WQCD). An oily emulsion and sheen covered the entire surface of the pit. Trash, oily soil, and other refuse were observed at the well site. The pit had not been reclaimed and the pit liner was tattered and torn. The NOAV cited violation of: Rule 324A.a., failure to prevent the unauthorized discharge of oil, E&P waste, and chemical substances; Rule 902.d., failure to remove any accumulation of oil in a pit within twenty-four (24) hours of discovery; Rule 906.b., failure to report the spill/release; Rule 907.a.(1), failure to ensure that E&P waste is properly managed so as to prevent significant adverse environmental impacts to water, soil, or biological resources and to ensure compliance with allowable concentrations and levels in Table 910-1; Rule 907.a.(2), failure to manage, operate, and construct E&P waste management facilities to protect waters of the state from significant adverse environmental impacts.

The NOAV specified an abatement date of April 30, 2001 to submit a Form 19 Spill/Release Report; to remove the remaining oil and water from the pit; to Submit a Form 27 Site Investigation Remediation Workplan for determining the areal and vertical extent of the impacts at the pit and along the path traveled by the spill; for remediating oil stained soils and vegetation; for collecting confirmation soil samples to verify compliance with Table 910-1; for removing and disposing of pit liner; for collecting soil samples below liner to verify compliance; consulting with surface owners prior to commencing remediation activities; and submitting waste manifests for any materials removed from the affected areas.

13. The return receipt for this NOAV was received by the COGCC on May 15, 2001.

14. On May 1, 2001, the COGCC received a Form 19 and a Form 27 from Elm Ridge, which was one day later than the date specified in the April 19, 2001 NOAV. The other corrective actions required by the April 19, 2001 NOAV were not met by the April 30, 2001 abatement date. Elm Ridge had not removed or disposed of the pit liner; had not collected soil samples from below the pit liner to confirm compliance with Table 910-1 cleanup standards; had not notified or consulted with surface owners; and had not submitted waste manifests for the materials that had been removed from the site.

15. On May 4, 2001, the analytical results for the soil, water, and liquid samples collected on April 10 and April 11, 2001 by the COGCC environmental supervisor were received from the laboratory. The results indicated that the water in the pit had low concentrations of benzene, toluene, ethylbenzene, and xylenes (BTEX), high concentrations of diesel and gasoline range hydrocarbons, and very high concentrations of motor oil range hydrocarbons. The oily emulsion was a mixture of motor oil range hydrocarbons (approximately 50%), water, and probably drilling mud. The soils in many areas along the path of the spill exceeded the Table 910-1 standard of 1,000 milligrams per kilogram (mg/kg) for total petroleum hydrocarbon (TPH) in Sensitive Areas and accumulations of the oily emulsion were also observed. A concentration of 35,000 mg/kg TPH was detected in a soil sample and 590,000 mg/kg TPH was detected in a sample of the oily emulsion collected on the adjacent property. Motor oil range hydrocarbons were the primary constituent of the TPH in the soils and oily emulsion. These concentrations are representative of concentrations in and around the pit, and along the entire ½ mile pathway of the spill and constitute a significant adverse environmental impact to soil and surface water and posed a potential threat to wildlife. The adjacent landowner’s water well had not been impacted by the spill.

16. On May 7, 2001, COGCC staff sent copies of the laboratory reports for the samples collected on April 10 and April 11, 2001 and a letter summarizing the results to Elm Ridge. In addition the letter approved Elm Ridge’s Form 27 (COGCC Remediation Tracking Number 686), but specified additional corrective actions that were not addressed in the Form 27. The additional corrective actions included, removal and disposal of the pit liner, all other trash in and around the pit, and soils exceeding COGCC standards, and confirmation soil sampling below the pit liner; submitting manifests documenting the transportation and disposal of liquids, soil, and pit liner to COGCC; using laboratory analysis to confirm results obtained by field screening soil sample headspace with an organic vapor analyzer (OVA); providing a written plan describing how erosion would be prevented; obtaining permission from landowners to access impacted areas and reaching agreement with landowners regarding remediation method to be used by May 28, 2001; providing a written explanation of how the oily emulsion on the adjacent property would be removed. The letter specified that Elm Ridge had to agree to this additional work and submit a written workplan to the COGCC by May 15, 2001.

17. On May 11, 2001, COGCC received a written supplement to the Elm Ridge Form 27. This addressed the use of clean topsoil to backfill all excavated areas, use of straw matting to prevent erosion after seeding, and control of noxious weeds on and adjacent to disturbed areas. It did not address removal of pit liner and trash, laboratory analysis of confirmation samples, providing copies of manifests documenting the transportation and disposal of liquids, soil, and pit liner, or obtaining landowner agreements.

18. From approximately May 30 through June 5, 2001 Elm Ridge’s contractor removed the oily soils, emulsion, and vegetation from the adjacent property owners’ land. Excavated material was taken to the well pad for temporary storage. Elm Ridge’s contractor collected five composite soil samples from areas where the impacted soils had been removed, and submitted them to a laboratory for TPH analysis. The analytical results for these samples were all below the Table 910-1 TPH cleanup standard of 1,000 mg/kg for Sensitive Areas.

19. During approximately June 18 through June 20, 2001 Elm Ridge’s contractor removed the pit contents and placed this oily, muddy material on one area of the well pad.

20. On June 19, 2001, COGCC environmental supervisor inspected the landfarm. On June 20, 2001, COGCC environmental supervisor contacted COGCC Elm Ridge’s contractor to require that a fence and berm be placed around the landfarm to prevent access to the area by wildlife and to prevent surface water from coming in contact with the oily material.

21. On June 26, 2001, COGCC environmental supervisor inspected the site and met with an Elm Ridge representative and contractor. The contents of the pit had been completely removed and placed on the well pad to be landfarmed, the landfarm was fenced and bermed, but there was still fragments of the pit liner and other oily trash around the perimeter of the pit.

22. On July 20, 2001, COGCC environmental supervisor called and left a message with Elm Ridge, telling them that the pit liner and other oily refuse still had not been removed from the site and this had to be done before August 1, 2001.

23. On August 1, 2001, COGCC environmental supervisor inspected the site. The pit liner and most of the oily trash had been removed from the site. Clean topsoil had been placed along the path of the spill where impacted soil and vegetation had been removed. Most of the landfarm had been tilled; however there were still areas that had not been tilled and that still had a strong hydrocarbon odor.

24. On August 17, 2001, COGCC environmental supervisor spoke with an Elm Ridge representative and informed him that overall the landfarm was not being adequately maintained and that additional tilling and turning of the oily material was needed to expedite bioremediation and natural attenuation.

25. On August 23, 2001, COGCC environmental supervisor received a complaint from the owner of the land on which the well, pit, and landfarm are located. She stated that Elm Ridge had not contacted her or obtained her permission for the landfarming activities.

26. On August 24, 2001, COGCC environmental supervisor issued a NOAV to Elm Ridge for not notifying, consulting with, or obtaining landowner approval prior to constructing and operating a landfarm. The NOAV cited violation of Rule 906.c. Surface owner notification and consultation. The NOAV specified an abatement date of September 24, 2001 either to consult with and to receive written approval from the landowner to continue the landfarming operations, and to provide a copy of the written approval to the COGCC; or to remove all of the non-native material from the landfarm, to dispose of this material at an appropriate disposal facility, to provide copies of the manifests documenting removal and disposal within seven (7) days of conducting these activities, to collect samples of the soil underlying the landfarm for laboratory analysis of TPH (gasoline, diesel, and motor oil range) to verify that impacted material has been removed, to reclaim pit and landfarm area in accordance with COGCC 1000 Series Rules, and to provide COGCC with a written report documenting activities associated with the removal and disposal of pit contents and confirmation sampling.

27. On September 26, 2001, Elm Ridge obtained verbal approval from the surface owner to operate the landfarm.

28. A monetary penalty of Ten Thousand dollars ($10,000.00) for violation of Rules 324A.a., 604.c.(3), 902.c., 906.b.(1), 906.c., 907.a.(1), and 907.a.(2) should be assessed against Elm Ridge for these violations in accordance with Rule 523.a. An aggravating factor is that the violations had a significant negative impact , or threat of significant negative impact on the environment or on public health, safety, or welfare.

ORDER

NOW, THEREFORE IT IS ORDERED, that Elm Ridge shall be found in violation Rule 324A.a., Rule 604.c.(3), Rule 902.c., Rule 906.b.(1), Rule 906.c., Rule 907.a.(1), and Rule 907.a.(2), for failure to ensure that E&P waste, water, and chemical substances are properly managed, for failure to prevent access by unauthorized persons, for failure to maintain two feet of freeboard in the pit, for failure to remove oil from pit within twenty-four hours of discovery, for failure to report the release, for failure to notify, consult with, and obtain approval from landowner prior to conducting land treatment activities, and for failure to prevent the unauthorized discharge of an emulsion of motor oil and water into adjacent surface waters, which resulted in a significant adverse environmental impact at the Harmon A #1-A well located in the NW¼ SE¼ of Section 17, Township 33 North, Range 8 West, N.M.P.M., and on adjacent and nearby properties.

IT IS FURTHER ORDERED, that Elm Ridge shall be assessed a total fine of Ten Thousand dollars ($10,000.00) for violation of Rules 324A.a., 604.c.(3), 902.c., 906.b.(1), 906.c., 907.a.(1), and 907.a.(2), payable within thirty (30) days of the date the order is approved by the Commission.

IT IS FURTHER ORDERED, that Elm Ridge shall collect samples of the soil underlying the landfarm for analysis of TPH to verify that impacted material has been removed, reclaim pit and landfarm area in accordance with COGCC 1000 Series Rules, provide COGCC with a written report documenting activities associated with the removal and disposal of pit contents and confirmation sampling.

IT IS FURTHER ORDERED, that Elm Ridge shall submit and agree to in writing a schedule for operating and maintaining the landfarm, including but not limited to, tilling and turning the former contents of the pit at least two times per month; adding soil amendments such as manure, peat, or other organic material to aid in the biodegradation of the oily material, as well as to improve the texture of this extremely clayey material; collecting samples of the former pit contents for chemical analysis of TPH (gasoline, diesel, and motor oil range) once per month to demonstrate the success of the landfarm; conducting any other activities that might be required to enhance the remediation of the former pit contents so as to attempt to reach Table 910-1 cleanup standards by November 31, 2001 so that surface reclamation of the site can be completed before December 15, 2001.

IT IS FURTHER ORDERED, that Elm Ridge shall submit copies of the laboratory results for all sampling conducted to date in response to this matter, maps showing the locations of the samples, and a written description of how and where the samples were collected to COGCC staff.

IT IS FURTHER ORDERED, that Elm Ridge shall submit copies of the laboratory results for all subsequent sampling and the waste manifests documenting disposal of any additional material removed from this site within two weeks of their receipt of these documents.

IT IS FURTHER ORDERED, that Elm Ridge shall backfill the pit and complete site restoration and recontouring within two weeks of the time that the former pit contents reach the Table 910-1 cleanup standards or are removed. Site reclamation must be conducted in accordance with the 900 and 1000 Series Rules.

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 26th day of October 26, 2001.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Dated at Suite 801 Morris Bell, Hearing Officer 1120 Lincoln Street Denver, Colorado 80203 October 26, 2001.

(1V#217)