BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES AND REGULATIONS OF THE COLORADO OIL AND GAS CONSERVATION COMMISSION BY SAGA PETROLEUM, L.L.C. WASHINGTON COUNTY, COLORADO

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CAUSE NO. 1V DOCKET NO. 1312-OV-44 ORDER NO. 1V-442

ADMINISTRATIVE ORDER BY CONSENT

(Pursuant to Rule 522.b.(3) of the Rules and Regulations of the

Colorado Oil and Gas Conservation Commission, 2 CCR 404-1)

FINDINGS

            1.         Saga Petroleum LLC (“Saga”) is the operator of the Jones-Dupree #9 Well (“Well”), a secondary recovery injection well (API No. 05-121-10138) in Washington County, Colorado. A 5-year mechanical integrity test (“MIT”) of the Well was due July 26, 2012 pursuant to Rule 326.a(4)A.

2.         In August 2012, Saga became aware that the Well could not hold pressure and pass a MIT. Saga proceeded to make repairs to the Well without submitting a Sundry Notice - Form 4 and obtaining approval before any routine or planned casing repair operations as required by Rule 317.d.

3.         On November 20, 2013, Commission Staff issued Saga Petroleum a Notice of Alleged Violation (“NOAV”), No. 2618002, for the following violation of COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”) at the Jones-Dupree #9 Well:

Rule 317.d (Casing program to protect hydrocarbon horizons and groundwater) for failure to seek authorization to repair casing.

4.         Following a factual investigation and legal review of the violations alleged in the NOAV, the Hearings Staff now asserts Saga Petroleum has committed the following violation:

a.         Rule 317.d (Casing program to protect hydrocarbon horizons and groundwater) for failure to seek authorization to repair the Well casing.

5.         Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Hearings staff calculated a base penalty of $10,000 for this violation. The parties agree that the following mitigating factors apply: 1)  Saga demonstrated prompt, effective and prudent response to the violation, including assistance to any impacted parties; 2) Saga cooperated with the Commission with respect to the violation; 3) Saga made a good faith effort to comply with applicable requirements prior to the Commission learning of the violation; and 4) the cost of correcting the violation reduced or eliminated any economic benefit to Saga. Moreover, no significant impact on the environment or on public health, safety, or welfare occurred due to the violation.

AGREEMENT

NOW, THEREFORE, based on the Findings and pursuant to Rule 522.b.(3) and the Commission’s Enforcement and Penalty Policy, the Director proposes and Saga agrees to settle the NOAV on the following terms and conditions:

I.          Saga will be assessed a penalty of $5,000.

II.         Saga will pay $5,000 within 30 days after this AOC is mailed by the Commission.

III.        Saga will submit Forms 5 and 5A with appropriate third party documentation and submit a letter on company letterhead explaining how this violation will not be repeated.

IV.        Payment of the penalty pursuant to this AOC does not relieve Saga from its obligations to complete corrective actions set forth in the NOAVs, as may be amended or modified by COGCC Staff.

IV.        Saga agrees to the findings of this AOC only for the purpose of expeditiously resolving the matter without a contested hearing.

RECOMMENDED this  6^th  day of December, 2013.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By

Peter J. Gowen, Enforcement Officer 

AGREED TO AND ACCEPTED this ______day of December       , 2013.

                                                                                                                                                                                    SAGA PETROLEUM L.L.C.

                        By

                        Signature of Authorized Company Representative

                        Print Signatory Name

                                    Title

ORDER

HAVING CONSIDERED the Agreement between the Director and Saga to resolve the NOAV, the COMMISSION ORDERS:

            1.         Saga is found in violation of one violation of Rule 317.d as described above.

2.         Saga will be assessed a penalty of $5,000 for the rule violation described above.

3.         Saga will pay $5,000 within 30 days after this AOC is mailed by the Commission.

4.         Saga will submit Forms 5 and 5A with appropriate third party documentation and submit a letter on company letterhead explaining how this violation will not be repeated.

5.         Payment of the penalty pursuant to this AOC does not relieve Saga from its obligations to complete corrective actions set forth in the NOAVs, as may be amended or modified by COGCC Staff.

6.         Entry of this Order constitutes final agency action for purposes of judicial review 30 days after the date this order is mailed by the Commission.

7.         The provisions contained in the above order are effective on the date this matter is heard and approved by the Commission.

8.         The Commission expressly reserves its right after notice and hearing, to alter, amend, or repeal any and/or all of the above orders. 

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The Commission heard and approved this matter on the      16^th day of December, 2013.

ENTERED this 16^th day of December, 2013.

                                    OIL AND GAS CONSERVATION COMMISSION

            OF THE STATE OF COLORADO

                                                By 

                                                            Robert J. Frick, Secretary