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 BILL BARRETT CORPORATION, WELD COUNTY, COLORADO

)

CAUSE NO. 1V

ORDER NO. 1V- 459

DOCKET NO. 1404-OV-38

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. Bill Barrett Corporation (BBC) is the operator of a multi-well pad with 10 wellheads, designated as the “Merritt Pad” (COGCC Location ID 433626).

2. In early February, 2014, BBC was engaged in completion and well stimulation operations at the Merritt Pad, under the onsite supervision of RP Services LLC, its flowback management contractor. Flowback fluids were being stored in temporary, open-topped tanks (“Tanks”).

3. On February 15, 2014, several wells on the Merritt Pad began to transition from flowback of hydraulic stimulation fluids to producing crude oil.

4. BBC directed that the crude oil be stored temporarily in several of the Tanks and periodically trucked to the nearby Circle B Tank Battery (COGCC Location ID 433753), pending completion of a permanent pipeline connection from the Merritt Pad to the Circle B Tank Battery.

5. At approximately 11:20 PM on March 3, 2014, vapors emanating from the Tanks ignited. The probable source of ignition was a pickup truck driven close to the tanks, in violation of BBC’s safety procedures. The ensuing fire flashed back and ignited the oil stored in the tanks, damaging several of the tanks. The fire was extinguished by 3:30 a.m. March 4, 2014

6. BBC shut-in the Merritt Pad and discontinued temporary crude oil storage in the Tanks as an immediate response to the fire. BBC has informed the COGCC Staff that it will adopt and implement a strict policy whereby temporary crude oil storage in open-topped tanks will be prohibited.

7. BBC failed to identify the fire hazard posed by vapors emanating from the Tanks. Accordingly, BBC did not take appropriate precautions to prevent significant adverse environmental impacts to air, water, soil, or biological resources to the extent necessary to protect public health, safety and welfare, as required by COGCC Rule 324A.

8. On April 4, 2014, Commission Staff issued a Notice of Alleged Violation (“NOAV”) (No. 200400969) to BBC for a violation related to matters described above. The NOAV cited violations of the following COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”).

a. Rule 324A.a. Pollution – General

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

a. One 17-day violation of Rule 324A.a. because BBC failed to take adequate precautions to prevent significant adverse environmental impacts to air, water, soil, or biological resources to the extent necessary to protect public health, safety and welfare, including the environment and wildlife resources, taking into consideration cost-effectiveness and technical feasibility to prevent the unauthorized discharge of gas and volatile organic compounds.

10. Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Hearings staff calculated a penalty of $17,000 for this violation. Staff does not recommend any adjustments based on aggravating or mitigating factors.

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 BBC agrees to settle the NOAV on the following terms and conditions:

I. BBC will be assessed a penalty of $17,000.

II. In addition to the penalty assessed above, BBC will conduct a public project pursuant to Rule 523.e which is beneficial to public health, safety and welfare with an out-of-pocket cost to BBC of at least $10,000.

III. BBC will submit a detailed proposal for the public project no later than 30 days after approval of this AOC. Conceptually, the public project will incude:

A. Collection and analysis of the flammability potential (flash point and boiling point) of representative crude oil samples.

B. Coordination through the Weld County Office of Emergency Management to communicate flammability and hazard information to Weld County emergency responders.

C. Communication of the incident investigation findings and lessons learned, including the flammability data, to other operators in the DJ Basin through appropriate trade association and/or other industry vehicles (e.g. COGA EHS Committee; Rocky Mountain EHS Peer Group).

D. Discussions regarding best practices for industry to set-up, manage and operate flowback operations to reduce emission and flammability potential in order to have a safe and “healthy” work environment.

IV. Within 30 days of completion of the public project, BBC will submit a report to the Director. The report will document implementation of the public project, identify out-of-pocket costs incurred by BBC, and describe the benefits achieved by the public project.

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

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

RECOMMENDED this 4^th day of April, 2014.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Peter J. Gowen, Enforcement Officer

AGREED TO AND ACCEPTED this day of April, 2014.

BILL BARRETT CORPORATION

Signature of Authorized Company Representative

Print Signatory Name

Title

ORDER

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

1. BBC is found in violation of Rule 324A..a. as described above.

2. BBC is assessed a penalty of $17,000 for the rule violation described above.

3. In addition to the penalty assessed above, BBC will conduct a public project pursuant to Rule 523.e which is beneficial to public health, safety and welfare with an out-of-pocket cost to BBC of at least $10,000. A detailed proposal for the public project will be submitted to the Director within 30 days of the approval of this AOC.

4. Once the public project is approved by the Director, BBC will assure that it is implemented as approved by the Director.

5. Within 30 days of completion of the public project, BBC will submit a report to the Director. The report will document implementation of the public project, identify out-of-pocket costs incurred by BBC, and describe qualitative and quantitative benefits of the public project.

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

7. 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.

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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ENTERED this 29^th day of April, 2014 as of the 28^th day of April, 2014.

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

Robert J. Frick, Secretary