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 THINK OIL, INC., MOFFAT COUNTY, COLORADO |
) ) ) ) ) |
CAUSE NO. 1V
DOCKET NO. 1404-OV-32
ORDER NO. 1V-458 |
ORDER FINDING VIOLATION
(Pursuant to Rule 522.c of the Rules and Regulations of the
Colorado Oil and Gas Conservation Commission, 2 CCR 404-1)
FINDINGS
1. Think Oil, Inc. (“Think”) (Operator No. 87815) is the operator of the Vaughn #1 Well (API # 05-081-05332) and the Silver Et Al #1 Well (API # 05-081-06682) (the “Wells”), located in Moffat County, Colorado.
2. Based on a review of the COGCC’s records, Commission Staff determined that Think failed to provide adequate financial assurance for the Wells.
3. COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”), Rule 706.a (Soil Protection and Plugging and Abandonment) requires financial assurance in the amount of $20,000 for wells equal to, or greater than, 3,000 feet in total measured depth.
4. According to the COGCC’s records, the Wells are deeper than 3,000 feet in total measured depth and Think has posted two financial assurances, one per well, in the amount of only $5,000 each.
5. COGCC records contain the following information with respect to each financial assurance:
COMPANY DETAIL REPORT for Surety ID:
1988-0006
THINK OIL INC - #87815
11094 FITZHUGH RD
AUSTIN , TX 78736
USA
SURETY DETAIL INFORMATION
|
Surety ID: |
1988-0006 |
|
Status: |
ACTIVE |
|
Operator Number: |
87815 |
|
Bond Amount: |
$5,000.00 |
|
Instrument: |
CASH |
|
Instrument Number: |
698595 |
|
Coverage: |
INDIVIDUAL |
|
Bond Type: |
PLUGGING |
|
Limitation: |
0 |
|
Deposit Number: |
166044 |
|
PDPA Number: |
SILVER ET AL #1 |
|
Received Date: |
3/14/1988 |
|
Approved Date: |
6/10/1994 |
|
Maturity Expire Date: |
|
|
FA Provider Number: |
87815 |
|
FA Provider Name: |
THINK OIL INC |
|
Deposit Date: |
3/14/1988 |
|
Release Request Date: |
11/14/2003 |
|
Release Date: |
N/A |
COMPANY DETAIL REPORT for Surety ID:
2002-0003
THINK OIL INC - #87815
11094 FITZHUGH RD
AUSTIN , TX 78736
USA
SURETY DETAIL INFORMATION
|
Surety ID: |
2002-0003 |
|
Status: |
ACTIVE |
|
Operator Number: |
87815 |
|
Bond Amount: |
$5,000.00 |
|
Instrument: |
CERTIFICATE OF DEPOSIT |
|
Instrument Number: |
902000832 (9173) |
|
Coverage: |
INDIVIDUAL |
|
Bond Type: |
PLUGGING |
|
Limitation: |
1 |
|
Deposit Number: |
17774 |
|
PDPA Number: |
0800640051122 |
|
Received Date: |
1/22/2002 |
|
Approved Date: |
1/22/2002 |
|
Maturity Expire Date: |
1/8/2003 |
|
FA Provider Number: |
100137 |
|
FA Provider Name: |
BANK OF COLORADO CRAIG |
|
Deposit Date: |
1/24/2002 |
|
Release Request Date: |
11/14/2003 |
|
Release Date: |
N/A |
6. On January 23, 2014, Commission Staff issued Notices of Alleged Violation (“NOAVs”) Nos. 2540423 and 2540424 to Think citing violations of Rule 706.a.
7. On January 29, 2014, the NOAVs were delivered to Think.
8. The NOAVs required Think to immediately provide additional financial assurance in the amount of $15,000 per well.
9. COGCC Enforcement and Financial Assurance Staff have addressed this matter with Karyn Ponder Parker, widow of R. Craig Ponder, and Ms. Parker’s attorney. Mr. Ponder was apparently the sole and only shareholder of Think.
10. Based on representations made by Ms. Parker’s attorney, since Mr. Ponder’s death in January of 2009, Think has ceased conducting business and has no revenue or assets, except for the two plugging financial assurances.
11. Based on representations made by Ms. Parker’s attorney, Think and Ms. Parker are not opposed to the Commission foreclosing on Think’s two financial assurances and acting to properly plug and abandon the Wells.
12. To date, Think has failed to comply with the NOAVs and respond to the Notice of Hearing.
13. On September 15, 2014, this matter came before the Commission for an Order Finding Violation hearing. Think failed to appear and defend against the allegations made by COGCC Staff.
14. At the hearing, Enforcement Staff asserted that Think has committed two, 10-day violations of Rule 706.a. for failing to maintain adequate financial assurance with the Commission to ensure the protection of the soil, the proper plugging and abandonment of the Wells, and the reclamation of the well-sites in accordance with Commission Rules.
15. Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Enforcement Staff requested a penalty of $20,000 for these violations. Staff also requested that Think be ordered to immediately provide additional financial assurance in the amount of $15,000 per well. Staff did not recommend any adjustments based on aggravating or mitigating factors.
16. Further, Enforcement Staff requested that, in the event Think fails to pay the penalty and post additional financial assurance, the Commission should authorize COGCC Staff to foreclose the existing $5,000 plugging financial assurances for each well and claim both the principal and any accrued, but undisbursed, interest that may exist, supplemented as may be necessary by funds from the Oil and Gas Conservation and Environmental Response Fund, to plug and abandon the Wells and reclaim the Well sites and associated facilities.
17. Enforcement Staff requested that all equipment and appurtenances related to the Wells become property of the Commission upon initiation of plugging activities. COGCC Staff should be authorized to dispose of such equipment and appurtenances as it sees fit, provided that any proceeds from the disposition of the assets be applied to plugging and abandoning the Wells and reclaiming the Well sites.
18. Enforcement Staff requested that Think, or its successors or assigns, be ordered to remain responsible for complying with this Order, including the penalties imposed, in the event Think is revived or recapitalized or there is a sale of the properties by Think.
19. Enforcement Staff also requested that Think, or its successors or assigns, be ordered to repay any funds expended by the Commission from the Oil and Gas Conservation and Environmental Response Fund in plugging and abandoning the Wells in the event Think is revived or recapitalized or there is a sale of the properties by Think.
20. Last, Enforcement Staff requested that until the fine assessed under Order No. 1V-458 is paid in full and all required abatement and corrective actions are performed, COGCC Staff should be authorized to deny any application for permit-to-drill, any Certificate of Clearance and/or Change of Operator, Form 10, or other permit for conducting oil and gas operations filed by Think, or any related entity in which Think, or its officers or shareholders, has any affiliation, or exercises any control.
21. At hearing, COGCC Staff made an offer of proof in support of the proposed Order Finding Violation, summarizing the key factual findings described above, and proposing a total fine of $20,000 and requesting that Think be ordered to provide additional financial assurance in the amount of $15,000 per well, each requirement due within 30 days after this Order is mailed by the Commission.
22. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.
23. The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.
ORDER
NOW, THEREFORE, THE COMMISSION ORDERS:
1. Think is found in violation of Rule 706.a at the Vaughn #1 well (API# 05-081-05332) and the Silver Et Al #1 well (API# 05-081-06682).
2. Think is assessed a total penalty of $20,000 for these violations.
3. Think will pay $20,000 within 30 days after this Order is mailed by the Commission.
4. Think is also ordered to provide additional financial assurance in the amount of $15,000 per well within 30 days after this Order is mailed by the Commission.
5. If Think fails to pay the penalty and post additional financial assurance within 30 days, COGCC Staff is authorized to foreclose the existing $5,000 plugging financial assurances for each well and claim both the principal and any accrued, but undisbursed, interest that may exist, supplemented as may be necessary by funds from the Oil and Gas Conservation and Environmental Response Fund, to plug and abandon the Wells and reclaim the Well sites and associated facilities.
6. All equipment and appurtenances related to the Wells shall become property of the Commission upon initiation of plugging activities. COGCC Staff is authorized to dispose of such equipment and appurtenances as it sees fit, provided that any proceeds from the disposition of the assets will be applied to plugging and abandoning the Wells and reclaiming the Well sites.
7. Think, or its successors or assigns, will remain responsible for complying with this Order, including the penalties imposed, in the event Think is revived or recapitalized or there is a sale of the properties by Think.
8. Think, or its successors or assigns, shall repay any funds expended by the Commission from the Oil and Gas Conservation and Environmental Response Fund in plugging and abandoning the Wells if Think is revived or recapitalized or there is a sale of the properties by Think.
9. Until the fine assessed under Order No. 1V-458 is paid in full and all required abatement and corrective actions are performed, COGCC Staff is authorized to deny any application for permit-to-drill, any Certificate of Clearance and/or Change of Operator, Form 10, or other permit for conducting oil and gas operations filed by Think, or any related entity in which Think, or its officers or shareholders, has any affiliation, or exercises any control.
10. This Order does not relieve Think from undertaking and completing abatement or corrective actions that may be required by the NOAVs described above, or any amendments or modifications thereto specified by the COGCC Staff.
11. Entry of this Order constitutes final agency action for purposes of judicial review as of the date this order is mailed by the Commission. For all other purposes, this Order is effective as of the date of approval by the Commission.
12. 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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OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
Robert J. Frick, Secretary