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-219
ROCKY MOUNTAIN OPERATING COMPANY,
MESA COUNTY, COLORADO
REPORT OF THE COMMISSION
This cause came on for hearing before the Colorado Oil and Gas Conservation
Commission on January 7. 2002 at 10:00 a.m. at the Greeley Recreation Center,
Room 201, 651 10th Avenue, Greeley, Colorado after giving notice of hearing as
required by law on why Rocky Mountain Operating Company is in violation of Rule
326.b. for the Nichols No. 1-23 Well, and why the Commission should invoke the
provisions of §34-60-122, C.R.S., as amended, providing for penalties for
violations of the Rules and Regulations of the Commission.
FINDINGS
1. On March 21, 2001 Colorado Oil and Gas Conservation Commission (“COGCC”)
staff received a complaint regarding the Nichols No. 1-23 Well located in the
SW¼ NE¼ of Section 23, Township 10 South, Range 97 West, 6th P.M. The complaint
alleged that the well had been sitting idle for “many years”. COGCC staff
conducted an inspection of this well on March 26, 2001 and verified that the
wellsite had apparently been idle for many years. The production facilities have
been removed and the well is incapable of production. A record search verified
that no mechanical integrity test (“MIT”) has been performed on the well for
over five (5) years. A MIT is required on all wells within two (2) years of the
initial shut-in date to maintain a shut-in status.
2. On June 22, 2001 COGCC staff issued a Notice of Alleged Violation (“NOAV”) to
Rocky Mountain Operating Company (“RMO”). The NOAV instructed RMO to perform a
MIT on the well by July 20, 2001. The NOAV cited violation of Rule 326.b., which
states that a MIT shall be performed on each shut-in well within two (2) years
of the initial shut-in date. RMO asked for and received extensions to delay the
MIT until September 10, 2001.
3. On October 15, 2001, COGCC staff offered an Administrative Order by Consent
(“AOC”) to RMO for failure to comply with the NOAV, finding RMO in violation of
Rule 326.b. and assessing a fine of One Thousand dollars ($1,000) for the
violation.
4. On October 17, 2001, COGCC staff was present at the wellsite when a MIT was
attempted on the Nichols No. 1-23 Well. The well failed the MIT and is in
continuing violation of Rule 326.b. which states that all shut-in wells shall
pass a mechanical integrity test. Because of the failed MIT, the well is now in
violation of Rule 326.d. which states ”All wells shall maintain mechanical
integrity. All wells which lack mechanical integrity shall be repaired or
plugged and abandoned within six (6) months of failing a mechanical integrity
test...”
5. On October 26, 2001, a representative from RMO contacted COGCC staff to state
that RMO would not agree to or accept the proposed AOC because the MIT was
delayed due to rig availability.
6. On October 30, 2001 the Director made an application to the Commission for an
Order Finding Violation against RMO for violation of Rule 326.b.(1), proposing a
monetary penalty of Two Thousand dollars ($2,000) be assessed against RMO in
accordance with Rule 523.a.
7. RMO should repair or plug and abandon the well no later than April 17, 2002.
If RMO does not repair or plug and abandon the well by April 17, 2002, COGCC
staff shall be authorized to claim RMO’s financial assurance and plug, abandon
and reclaim the Nichols No. 1-23 Well.
8. This matter was originally docketed for the December 3, 2001 hearing,
however, on the day of the hearing, RMO contacted COGCC staff and requested a
continuance to the January 2002 hearing.
9. At the time of the hearing, COGCC Northwest Engineer Jaime Atkins presented
testimony and exhibits in support of the enforcement action taken against RMO
toward gaining compliance with Rule 326.b.
10. Edward Neibauer, President of RMO presented testimony stating that his
company was unable to comply with the NOAV due to the lack of availability of
rigs to perform a MIT.
ORDER
NOW, THEREFORE IT IS ORDERED, that Rocky Mountain Operating Company shall be
found in violation of Rule 326.b.(1) for the Nichols 1-23 Well located in the
SW¼ NE¼ of Section 23, Township 10 South, Range 97 West, 6th P.M.
IT IS FURTHER ORDERED, that Rocky Mountain Operating Company shall be assessed a
fine of One Thousand dollars ($1,000) for the above violation, payable within
thirty (30) days of the date the order is entered by the Commission.
IT IS FURTHER ORDERED, that Rocky Mountain Operating Company shall repair or
plug and abandon the Nichols No. 1-23 Well by April 17, 2002, unless extenuating
circumstances exist as to why the work cannot be performed and these
circumstances are documented in writing to the Commission’s satisfaction. If
Rocky Mountain Operating Company demonstrates to the Commission’s satisfaction
that extenuating circumstances exist as to why the Nichols No. 1-23 Well cannot
be repaired or plugged and abandoned by April 17, 2002, then Rocky Mountain
Operating Company shall have until May 17, 2002 to perform the work. If the work
is not completed by May 15, 2002, COGCC staff is hereby authorized to commence a
claim on the Thirty Thousand dollar ($30,000) Cashier’s Check posted by Rocky
Mountain Operating Company in order to plug, abandon and reclaim the well.
IT IS FURTHER ORDERED, that if Rocky Mountain Operating Company does not repair
or plug and abandon the well by April 17, 2002, and no extenuating circumstances
exist, a fine of One Thousand dollars ($1,000) for violation of Rule 326.b.(1)
shall be assessed, payable by May 17, 2002 and COGCC staff is hereby authorized
to commence a claim on the Thirty Thousand dollar ($30,000) Cashier’s Check
posted by Rocky Mountain Operating Company in order to plug, abandon and reclaim
the 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/or all of the above orders.
ENTERED this 11th day of January 2002, as of January 7, 2002.
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 January 11, 2002.
(1V#219)