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 BEEMAN OIL AND GAS LLC, IN LA PLATA COUNTY, COLORADO |
) ) ) ) ) |
CAUSE NO. 1V
ORDER NO. 1V-463
DOCKET NO. 1310-OV-27 |
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. Beeman Oil and Gas LLC, (“Beeman”) (Operator No. 7125) is the operator of record for the wells in La Plata County Colorado, identified in Table 1 below (“Grommett Wells”).
Table 1
|
Well Name |
API # |
NOAV Nos. |
|
Grommett #1 |
05-067-08979 |
200381968 |
|
Grommett #2 |
05-067-08988 |
200382050 |
|
Grommett #3 |
05-067-08989 |
200382055 |
2. The Grommett #1 Well was spud October 15, 2004, and completed on November 21, 2004. The Grommett #2 Well was spud on September 18, 2005, and the Grommett Well #3 on September 15, 2005.
3. Between May 10, 2012 and May 30, 2013, Commission Staff conducted four field inspections of all Grommett Wells. Staff recorded numerous violations in the inspection reports for all the wells, and prescribed detailed corrective actions. After observing on May 30, 2013 that Beeman had not completed corrective actions, Staff issued three NOAVs on June 21, 2013, listed above in Table 1.
4. The NOAVs cited violations of the following COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”). Except where noted, at each of the wells Staff cited Beeman for violations of:
a. Rule 210, Signs and Markers [Grommett #3 was not cited with this violation.]
b. Rule 309, COGCC Form 7, Operators Monthly Production Report
c. Rule 319.b.1., Temporary Abandonment Requirements
d. Rule 326.b.1. Mechanical Integrity Testing: Shut-in Wells
e. Rule 603.j., Drilling and Well Servicing Operations and High Density Area Rules, Statewide Equipment, Weeds, Waste and Trash Requirements [Grommett #3 was not cited with this violation.]
f. Rule 1002, Site Preparation and Stabilization; Soil Removal and Segregation on Non Crop-Land; Protection of Soils; Stormwater Management; Erosion Controls; Self-Inspection, maintenance, and good housekeeping procedures and schedules
g. Rule 1003, Interim Reclamation, General; Interim Reclamation of Areas no Longer in Use
h. Rule 1003.d.2., Interim Reclamation; Drilling Pit Closure on non-crop land [Grommett #1 was not cited with this violation.]
5. On October 25, 2013 Beeman submitted a Form 6 Well Abandonment Report for each of the Grommett Wells. Subsequent Form 6’s were filed on December 5, 2013 indicating the wells were properly plugged and abandoned.
6. On November 14, 2013 Beeman agreed to enter in to a compliance plan (“Compliance Plan”) with Staff that incorporates compliance measures for the Grommett Wells as well as for other wells Beeman operates: the Barbara #2 Well (API No. 05-067-09071), the Doerfer #1-5 Well (API No. 05-083-06653), the Doerfer #2 Well (API No. 050-083-06263), the Gladys #1 Well (API No. 050-067-09099), the Gladys #2 Well (API No. 050-067-09363), the Hubbs #1 Well (API No. 050-067-09070), and the Hubbs #2 Well (API No. 050-067-09390) (collectively the “non-Grommett Wells”). The Compliance Plan is attached as Exhibit A.
7. Beeman has since plugged and abandoned the Grommett Wells and substantially completed all compliance measures identified in the Compliance Plan.
8. Following a factual investigation and legal review of the violations alleged in the NOAV, the COGCC Staff now asserts Beeman has committed the following violations:
a. Beeman violated Rule 210 at the Grommett #1 and Grommett #2 Wells by failing to maintain proper signage at these sites. Staff calculates this as two counts of a ten-day violation.
b. Beeman violated Rule 309 for all Grommett Wells by failing to timely file Operator’s Monthly Production Report, Form 7. Staff calculates this as three counts of a one-day violation.
c. Beeman violated Rule 319.b.1. at all Grommett Wells by temporarily abandoning the wells without ensuring that the holes were cased or left in such a manner as to prevent the migration of oil, gas, water or other substances from the formation in which it originally occurred, and without closing the wells to the atmosphere with a swedge and valve or packer, or other approved method. Staff calculates this as three counts of a ten-day violation.
d. Beeman violated 326.b.1. by not timely performing Mechanical Integrity Tests on shut-in Grommett Wells within two years of the initial shut-in date. Staff calculates this as three counts of a ten-day violation.
e. Beeman violated Rule 603.j. by failing to keep the Grommett Well locations free of weeds, trash, tires and other waste material. As the Grommett #3 was not cited, Staff calculates this as two counts of a one-day violation.
f. Beeman violated Rule 1002 by failing to separate and store the topsoil horizon or the top six inches, whichever is deeper, and mark or document the stockpile locations to facilitate reclamation at the Grommett Well locations. Brush and trees were pushed with topsoil to the perimeter of the location during construction, with no separation of the topsoil. Beeman failed to install stormwater best management practices at the Grommett Well locations, to minimize erosion from unpaved areas. Beeman failed to perform the self-inspection, maintenance, and good housekeeping procedures and schedules to facilitate identification of conditions that could cause breakdowns or failures of best management practices, to effectively manage stormwater. Staff calculates this as three counts of a ten-day violation.
g. Beeman violated Rule 1003.a. by failing to accomplish interim reclamation at the Grommett Well locations, specifically not removing debris and waste materials. Beeman failed by not reclaiming all disturbed areas as early and as nearly as practicable to their original condition. Beeman failed to replace all segregated soil horizons to their original relative positions at the Grommett Well locations, re-contour, till and reseed in the first favorable season following rig demobilization, in order to achieve interim reclamation and stabilization to minimize erosion and allow revegetation. Staff calculates this as three counts of a ten-day violation.
h. Beeman violated Rule 1003.d.2. by failing to ensure soils in the drilling pits at the well locations met the concentration levels of Table 910-1, and failing to properly and timely backfill the pit. As Grommett #2 was not cited for this violation, Staff calculates this as two counts of a ten-day violation.
9. Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Staff has calculated a penalty of $155,000 for these violations. Staff recommends a suspension of twenty-five percent of the total penalty conditioned upon Beeman’s full, complete, and timely compliance with the required corrective actions listed in the NOAVs and in the Compliance Plan (Exhibit A).
10. If Beeman fails to meet this condition, the total penalty of $155,000 will be imposed without further action by the Commission. If Beeman satisfies this condition, the total penalty will be reduced to $116,250. The offer of a twenty-five percent penalty reduction reflects Beeman’s timely performance of corrective action at the non-Grommett well sites, and the mutual benefits to parties of resolving alleged violations at the Grommett and non-Grommett wells without a contested hearing or additional enforcement actions.
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 Beeman agrees to settle the NOAVs for the Grommett Wells on the following terms and conditions:
I. Beeman is found in violation of Rules 210 and 603 for the Grommett #1 and Grommett #2 Wells.
II. Beeman is found in violation of Rules 309, 319.b.1., 326.b.1., 1002, 1003.a. at all Grommett Well locations.
III. Beeman is found in violation of Rule 1003.d.2. at the Grommett #1 and #2 Wells.
IV. Beeman will be assessed a penalty of $155,000 for the rule violations listed above, with a conditional suspension of $38,750. Beeman will pay a total of $116,250, if it timely performs the corrective actions on both the Grommett and the non-Grommett wells, as detailed in the NOAVs and in the Compliance Plan, to the satisfaction of COGCC Staff.
V. The suspended portion of the penalty ($38,750) will be imposed by the Director without further Commission action, upon Beeman’s failure to timely perform, as required by paragraph IV.
VI. Beeman agrees the Director may suspend its Certifications of Clearance without further Commission action, upon 30-days written notice of Beeman’s failure to timely perform, as required by paragraph IV, and an opportunity to cure within those 30 days. The suspension lasts until such time as Beeman comes into full compliance with COGCC Rules, as determined solely by the Director.
VII. Compliance dates identified on the Compliance Plan will only be extended by the Director for good cause.
VIII. Following completion of the corrective actions set forth in the Compliance Plan, in consideration for the incorporation of corrective actions performed on the non-Grommett Wells under this agreement, and conditioned only upon completion of the corrective actions in the Compliance Plan and complete compliance with any and all of the other described terms and conditions of this agreement, the Commission agrees to forever release and discharge Beeman from any alleged violation arising from the inspection reports attached as Exhibit B.
IX. Nothing in paragraph VIII bars the COGCC from filing NOAVs upon discovering new violations (those not listed in the corrective actions that need to be performed, or already identified in the inspections at the non-Grommett wells) at any of Beeman’s well locations in Colorado.
X. Beeman agrees to the findings of this AOC only for the purpose of expeditiously resolving the matter without a contested hearing. Pursuant to Rule 522.b.(3), entering into this AOC by Beeman will not be construed as an admission of the alleged violations for purposes other than entering this AOC. Beeman fully reserves its right to contest the same in any future action or proceeding other than a proceeding to enforce this AOC.
RECOMMENDED this ____ day of April, 2014.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
AGREED TO AND ACCEPTED this ____ day of April, 2014.
BEEMAN OIL AND GAS LLC
By
Signature of Authorized Company Representative
Print Signatory Name
Title
ORDER
HAVING CONSIDERED the Agreement between the Director and Beeman to resolve the NOAV’s, the COMMISSION ORDERS:
1. Beeman is found in violation of Rules 210 and 603 for the Grommett #1 and Grommett #2 Wells.
2. Beeman is found in violation of Rules 309, 319.b.1., 326.b.1., 1002, 1003.a. at all Grommett Well locations.
3. Beeman is found in violation of Rule 1003.d.2. at the Grommett #1 and #2 Wells.
4. Beeman will be assessed a penalty of $155,000 for the rule violations with a conditional suspension of $38,750. Beeman will pay a total of $116,250, if it timely performs the corrective actions on both the Grommett and the non-Grommett wells, as detailed in the NOAVs and in the Compliance Plan, to the satisfaction of COGCC Staff. Beeman will pay $116,250 to the COGCC within 30 days of the date the Commission mails the Order approving this AOC, and the Invoice.
5. The suspended portion of the penalty ($38,750) will be imposed by the Director without further Commission action, upon Beeman’s failure to timely perform, as required by paragraph IV.
6. Beeman agrees the Director may suspend its Certifications of Clearance without further Commission action, upon 30-days written notice of Beeman’s failure to timely perform, as required by paragraph IV, and an opportunity to cure within those 30 days. The suspension lasts until such time as Beeman comes into full compliance with COGCC Rules, as determined solely by the Director.
7. Compliance dates identified on the Compliance Plan may only be extended by the Director for good cause.
8. Following completion of the corrective actions set forth in the Compliance Plan, in consideration for the incorporation of corrective actions performed on the non-Grommett Wells under this agreement, and conditioned only upon completion of the corrective actions in the Compliance Plan and complete compliance with any and all of the other described terms and conditions of this agreement, the Commission agrees to forever release and discharge Beeman from any alleged violation arising from the inspection reports attached as Exhibit B.
9. Nothing in paragraph 8 bars the COGCC from filing NOAVs upon discovering new violations (those not listed in the corrective actions that need to be performed, or already identified in the inspections at the non-Grommett wells) at any of Beeman’s well locations in Colorado.
10. Beeman agrees to the findings of this AOC only for the purpose of expeditiously resolving the matter without a contested hearing. Pursuant to Rule 522.b.(3), this AOC will not be construed as an admission of the alleged violations. Beeman fully reserves its right to contest the same in any future action or proceeding other than a proceeding to enforce this AOC.
11. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
12. 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.
13. An application for reconsideration by the Commission of this order is not required prior to the filing for judicial review.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By Robert J. Frick, Secretary
Exhibit A – Beeman Oil & Gas, LLC
Compliance Plan
April 8, 2014
|
Well Name |
Corrective Action |
Deadline for Corrective Action |
|
Grommett #1 Well |
Control weeds |
Complete |
|
Repair ruts in access road |
Complete |
|
|
Grommett #2 Well |
Control weeds |
Complete |
|
Remove tree and brush piles from initial construction |
Complete |
|
|
Repair ruts in access road |
Complete |
|
|
Clean up and remove dry cement and evaporated cement fluid from wellhead and south of wellhead |
Complete |
|
|
Clean up and remove drill cuttings at site |
Complete |
|
|
Grommett #3 Well |
Control weeds |
Complete |
|
Remove tree and brush piles from initial construction |
Complete |
|
|
Repair ruts in access road |
Complete |
|
|
Clean up and remove cement residue and material |
Complete |
|
|
Clean up and remove drill cuttings observed at site |
Complete |
|
|
Barbara #2 Well |
File Operator's Monthly Production Report |
Complete |
|
Doerfer #1-5 Well |
Control weeds and grasses around tanks |
Complete |
|
Well must be either: 1) put on production or 2) perform MIT within two (2) years of the initial shut-in date or 3) P&A |
05/15/14 |
|
|
Shut-in and temporarily abandoned wells must be properly reported on |
Complete |
|
|
File Operator's Monthly Production Report |
Complete |
|
|
Submit Forms 5 and 5a along with production records |
Complete |
|
|
Remove jugs and containers or store on spill prevention |
Complete |
|
|
Remove unused parts/equipment/debris |
Complete |
|
|
Cover bare wires or reconnect to mover with insulators |
Complete |
|
|
Clean up oily soils at wellhead |
Complete |
|
Doerfer #2 Well |
Install sign to comply with Rule 210.b; include functioning emergency contact |
Complete |
|
Remove drums and bucket |
Complete |
|
|
Control grasses and weeds around equipment |
Complete |
|
|
Clean up oily soils at wellhead |
Complete |
|
|
Repair or remove fence, electric motor |
Complete |
|
|
Install berms |
Complete |
|
|
Oil drums at wellhead need removed or placed on secondary containment |
Complete |
|
|
Label empty tank as empty |
Complete |
|
|
Use or remove extra pumping units stored off production area |
Complete |
|
|
Remove empty unlabeled tank near pumping unit if not intended for use |
Complete |
|
|
Remove unused hoses, parts, fittings if not needed for subsequent operations |
Complete |
|
|
Close top to oily/oil filled buckets and other containers with lid or screen; store containers on spill prevention |
Complete |
|
|
Stop active leak from separator; clean up stained soils/oil on ground |
Complete |
|
|
Clean up oil inside tank berms |
Complete |
|
|
Clean up stained soils at wellhead |
Complete |
|
|
Fix or remove post and wire fencing |
Complete |
|
|
Paint crude oil tank dark green or obtain variance |
05/15/14 |
|
|
Gladys #1 Well |
File Operator's Monthly Production Report |
Complete |
|
Stop venting well or report venting (with volumes) with demonstrated need and authorization to vent for extended periods of time while producing well per Rule 912 |
06/15/14 |
|
|
Gladys #2 Well |
File Operator's Monthly Production Report |
Complete |
|
Fix leaks at wellhead and at gear box; prevent further releases |
Complete |
|
|
Hubbs #1 Well |
File Operator's Monthly Production Report |
Complete |
|
Fix leak at tank loadout inside berms, clean up release and stained soils inside berms |
Complete |
|
|
Hubbs #2 Well |
Fill in ruts on access road; adequately maintain road |
Complete |
|
File Operator's Monthly Production Report |
Complete |
|
|
Stop venting or report venting at inactive pumping unit (hose to wellhead disconnected, gas flowing to atmosphere) |
06/15/14 |
Exhibit B – Beeman Oil & Gas, LLC
Inspection Reports Released and Discharged by the COGCC
|
Well Name |
Inspection Report Document No. |
|
Grommett #1 Well API No. 05-067-08979 |
661700333 667700148 668200011 669400288 669400690 |
|
Grommett #2 Well API No. 05-067-08988 |
661700334 667700149 668200019 669400289 669400691 |
|
Grommett #3 Well API No. 05-067-08989 |
661700332 667700150 668200025 669400290 669400692 |
|
Barbara #2 Well API No. 05-067-09071 |
661700286 667700153 667700284 669400189 669400334 |
|
Doerfer #1-5 Well API No. 05-083-06653 |
664000497 667700157 667700280 |
|
Doerfer #2 Well API No. 050-083-06263 |
664000496 667700156 667700279 |
|
Gladys #1 Well API No. 050-067-09099 |
661700307 667700176 669400336 |
|
Gladys #2 Well API No. 050-067-09363 |
661700306 667700177 |
|
Hubbs #1 Well API No. 050-067-09070 |
661700284 667700154 667700265 669400187 669400335 |
|
Hubbs #2 Well API No. 050-067-09390 |
661700285 667700155 667700266 669400188 669400376 |