IN THE MATTER OF ALLEGED VIOLATION OF THE
) CAUSE NO. 1
RULES AND REGULATIONS OF THE COLORADO
)
OIL AND GAS CONSERVATION COMMISSION BY
) ORDER NO. 1V-225
BIC PETROLEUM, INC., WELD COUNTY, COLORADO
)
REPORT OF THE COMMISSION
This cause came on for hearing before the Colorado Oil and Gas Conservation
Commission on August 19, 2002 at 10:00 a.m. in Suite 801, the Chancery Building,
1120 Lincoln Street, Denver, Colorado after giving notice of hearing as required
by law on why BIC Petroleum, Inc. is in violation of Rule 326.b. for the
Cottonwood State #1 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 September 9, 2001, Colorado Oil and Gas Conservation Commission (“COGCC”)
staff reviewed production records for the Cottonwood State #1 Well located in
the SE¼ NW¼ of Section 16, Township 9 North, Range 56 West, 6th P.M. COGCC staff
determined that the well has been shut-in since 1998. BIC Petroleum, Inc. (“BIC”)
operates the well.
2. On September 9, 2001, COGCC staff issued a Notice of Alleged Violation (“NOAV”)
to BIC. The NOAV cited a violation of Rule 326.b., failure to perform a
mechanical integrity test within two (2) years of the initial shut-in date. The
corrective action required that BIC perform one of the following options: 1)
return the well back to production, 2) perform a mechanical integrity test
(“MIT”), or 3) plug and abandon the well. The abatement date of this NOAV was
December 14, 2001. The NOAV was sent to the BIC office in Reno, Nevada. This
address was supplied to the COGCC on the Registration for Oil and Gas
Operations, Form 1, on February 10, 1997. The NOAV was returned to the COGCC
office as undeliverable.
3. On January 28, 2002, COGCC staff inspected the well and found that the well
had been temporarily abandoned and incapable of production. The tanks, treater,
and pump had been removed from the site.
4. On March 27, 2002, COGCC staff sent the NOAV to the second address on the
Form 1 in Kimball, Nebraska. The NOAV was sent by certified mail and was
received at the BIC office on April 2, 2002.
5. On April 5, 2002, COGCC staff received a phone call from Mr. Emil Magovac
representing BIC. Mr. Magovac requested and was granted an extension to May 1,
2002 to determine a plan to bring the well into compliance.
6. After May 1, 2002 COGCC staff attempt to contact Mr. Magovac by telephone,
but staff’s calls were not returned.
7. Rule 523. specifies a base fine of One Thousand dollars ($1,000) for a
violation of Rule 326.
8. A monetary penalty of Two Thousand dollars ($2,000) should be assessed
against BIC, in accordance with Rule 523.a. and Rule 523.d., for violation of
Rule 326.b. Aggravating factors in determining the fine recommendation are the
violation was intentional, and the violation resulted in economic benefit to the
violator.
9. BIC should either plug, abandon and reclaim, MIT, or produce the Cottonwood
State #1 Well by September 15, 2002.
10. If BIC does not plug, abandon and reclaim, MIT, or produce the Cottonwood
State #1 Well by September 15, 2002, the Commission should authorize the COGCC
staff to claim BIC’s Five Thousand dollar ($5,000) Certificate of Deposit to
plug, abandon and reclaim the well.
ORDER
NOW, THEREFORE IT IS ORDERED, that BIC Petroleum, Inc. shall be found in
violation of Rule 326.b., for failure to perform a mechanical integrity test
within two (2) years of the initial shut-in date for the Cottonwood State #1
Well located in the SE¼ NW¼ of Section 16, Township 9 North, Range 56 West, 6th
P.M.
IT IS FURTHER ORDERED, that BIC Petroleum, Inc. shall be assessed a total fine
of Two Thousand dollars ($2,000) for the violation listed above, payable within
thirty (30) days of the date the order is entered.
IT IS FURTHER ORDERED, that BIC Petroleum, Inc. shall either plug, abandon and
reclaim, MIT, or produce the Cottonwood State #1 Well by September 15, 2002.
IT IS FURTHER ORDERED, that if BIC Petroleum, Inc. does not plug, abandon and
reclaim, MIT, or produce the Cottonwood State #1 Well by September 15, 2002, the
COGCC staff shall claim the Five Thousand dollar ($5,000) Certificate of Deposit
to plug, abandon and reclaim the well.
IT IS FURTHER ORDERED, that no Applications for Permits-to-Drill, Deepen,
Re-enter or Re-complete, Form 2, and no Change of Operator, Form 10 shall be
issued to BIC Petroleum, Inc. or any other company in which BIC Petroleum, Inc.
principals are affiliated until such time as this order is complied with
including fine payment, and reimbursement of any Environmental Response Funds
expended and posting of financial assurance in an amount to be determined by the
Director.
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 27th day of August, 2002, as of August 19, 2002.
OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
Signed by Patricia C. Beaver, Secretary
Dated at Suite 801, 1120 Lincoln St., Denver, Colorado 80203, August 27, 2002
(1V#225)