IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES AND REGULATIONS OF THE COLORADO OIL AND GAS CONSERVATION COMMISSION BY D J PRODUCTION SERVICES, INC., PHILLIPS COUNTY, COLORADO Cause No. 1V Order No. 1V-237

REPORT OF THE COMMISSION

This cause came on for hearing before the Colorado Oil and Gas Conservation Commission on September 23, 2002 at 10:00 a.m. in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado on why D J Production Services, Inc. is in violation of Rule 326.b. for the Willis F Demmel No. 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 Regulati ons of the Commission.

FINDINGS

1. On April 18, 2002, Colorado Oil and Gas Conservation Commission ("COGCC") staff conducted an onsite inspection of the Willis F Demmel No. 1 Well located in the SE1/4 SE1/4 of Section 35, Township 9 North, Range 44 West, 6th P.M. The inspection determined that the well was not producing and did not have any production equipment.

2. On April 26, 2002 COGCC staff issued a Notice of Alleged Violation ("NOAV") to D J Production Services, Inc. ("D J Production") for the Willis F Demmel No. 1 Well. The NOAV cited violations of Rule 326.b., failure to conduct a mechanical integrity test on a well which has been shut-in more than two (2) years. The NOAV required that a mechanical integrity test be performed on the well by May 31, 2002.

3. Per return receipt, D J Production accepted the NOAV on May 15, 2002.

4. A mechanical integrity test was not performed on the well by the abatement date of May 31, 2002.

5. Rule 523. specifies a base fine of one thousand dollars ($1000) for each violation of Rule 326.b.

6. At the time of the hearing, COGCC staff presented testimony and exhibits in support of the recommended order. No one from D J Production attended the hearing.

7. After deliberation, the Commission finds D J Production is in violation of Rule 326.b. for the Willis F Demmel No. 1 Well.

8. A total monetary penalty of One Thousand dollars ($1,000) for violation of Rule 326.b. should be assessed against D J Production for this violation in accordance with Rule 523.a. for the Willis F Demmel No. 1 Well. A total fine of One Thousand dollars ($1,000) is recommended.

9. D J Production should either plug, abandon and reclaim, perform and pass a mechanical integrity test, or produce the Willis F Demmel No. 1 Well by November 1, 2002.

10. If D J Production does not plug, abandon and reclaim, perform and pass a mechanical integrity test, or produce the Willis F Demmel No. 1 Well by November 1, 2002, the Commission should authorize the COGCC staff to claim D J Production's Thirty Thousand dollar ($30,000) blanket bond to plug, abandon and reclaim the well.

11. The Commission finds that D J Production has demonstrated a pattern of violation through lack of compliance with Order No. 1-97 and with the numerous Orders Finding Violation issued at the September 23, 2002 hearing.

ORDER

NOW, THEREFORE IT IS ORDERED, that D J Production Services, Inc. shall be found in violation of Rule 326.b., failure to conduct a mechanical integrity test for the Willis F Demmel No. 1 Well located in the SE1/4 SE1/4 of Section 35, Township 9 North, Range 44 West, 6th P.M.

IT IS FURTHER ORDERED, that D J Production Services, Inc. shall be assessed a total fine of One Thousand dollars ($1,000) for the above-described rule violation, payable within thirty (30) days of the date the order is entered by the Commission.

IT IS FURTHER ORDERED, that D J Production Services, Inc. shall either plug, abandon and reclaim, perform and pass a mechanical integrity test, or produce the Willis F Demmel No. 1 Well by November 1, 2002. D J Production Services, Inc. shall notify COGCC staff prior to performing any work on the Willis F Demmel No. 1 Well.

IT IS FURTHER ORDERED, that if D J Production Services, Inc. does not perform the work described above by November 1, 2002 and notify COGCC staff that the work has been performed, the COGCC staff shall be authorized to make a claim on D J Production Services, Inc.'s bond to plug, abandon and reclaim the Willis F Demmel No. 1 Well.

IT IS FURTHER ORDERED, that if a claim of the bond is made, the Assistant Attorney General is hereby directed to do whatever is reasonably necessary to obtain and execute a judgment decree against the personal property of D J Production Services, Inc. located on or associated with the well site.

IT IS FURTHER ORDERED, that the Certificate of Clearance, Form 10, which authorizes transportation of oil and gas for this well, is hereby revoked.

IT IS FURTHER ORDERED, that no Applications for Permits-to-Drill and no Change of Operator, Form 10, shall be issued to or approved for D J Production Services, Inc., Jay Pape, or any other company of which Mr. Pape is a principal until such time as compliance with all Orders Finding Violation against D J Production Services, Inc. is secured.

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 day of October 2002, as of September 23, 2002.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Patricia C. Beaver, Secretary

Dated at Suite 801 1120 Lincoln St. Denver, Colorado 80203 October 7, 2002

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