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 PETRO MEX RESOURCES, GARFIELD COUNTY, COLORADO |
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CAUSE NO. 1V
ORDER
NO. 1V-484 |
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. Petro Mex Resources (“Petro Mex”) (Operator No. 10059) is the operator of the Government 6 Well (API No. 05-045-06779) and Government 9 Well (API No. 05-045-06772) in Garfield County.
2. On June 17, 2014, the Commission entered Order 1V-469, which required Petro Mex to pay a penalty of $23,000 by July 23, 2014 for violations of Rules 326.b.(1) (Mechanical Integrity Testing, Shut-in Wells) and 309 (Form 7, Operator’s Monthly Production Report) at the Government 6 and Government 9 Wells. Petro Mex did not pay this penalty by July 23, 2014.
3. Order 1V-469 also required Petro Mex to do one of the following at the Wells by July 16, 2014: 1) pass a MIT and maintain shut-in status; 2) pass a MIT and reestablish production; or 3) plug and abandon the Well. Petro Mex did not complete this corrective action by July 16, 2014.
4. On August 19, 2014, Commission Staff issued a Notice of Alleged Violation (“NOAV”) No. 400667326 to Petro Mex citing violations of Rule 523 (Procedure for Assessing Fines) of the COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”).
5. As of October 27, 2014, Petro Mex has not paid the penalty imposed by Order 1V-469 or completed the corrective action required by Order 1V-469. On August 25, 2014, Petro Mex submitted a Form 6 – Subsequent Report of Abandonment for the Government 9 Well, but has not provided any documentation that similar corrective action has been commenced or completed for the Government 6 Well.
6. Following factual investigation and legal review of the violations alleged in the NOAV, Hearings Staff now asserts Petro Mex has committed two violations of Rule 523 for violating Commission Order 1V-469 by not paying the penalty or completing the required corrective action.
7. Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Hearings Staff calculated a penalty of $169,000 for these violations. Staff does not recommend any adjustments based on aggravating or mitigating factors. However, staff considered Petro Mex’s submission of its Form 7, Monthly Production Reports, and completion of a MIT on the Government 9 Well on July 10, 2014 in the calculation of the penalty.
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 Petro Mex agrees to settle the NOAV on the following terms and conditions:
I. This AOC does not vacate Order 1V-469 in whole or in part.
II. The unpaid $23,000 penalty from Order 1V-469 is due within 5 business days after this AOC is approved by the Commission (November 3, 2014).
III. Petro Mex is subject to a separate $169,000 penalty for the violations of Rule 523 described above.
a. $13,000 of this Order’s penalty is due within 35 days after this AOC is approved by the Commission (December 3, 2014).
b. $70,000 of the penalty is due in seven quarterly payments of $10,000 (those payments will follow the fiscal year for 2015 and 2016).
i. $10,000 due on March 31, 2015.
ii. $10,000 due on June 30, 2015.
iii. $10,000 due on September 30, 2015.
iv. $10,000 due on December 31, 2015.
v. $10,000 due on March 31, 2016.
vi. $10,000 due on June 30, 2016.
vii. $10,000 due on September 30, 2016.
c. $86,000 of the remaining penalty will be suspended pending timely compliance with the penalty payment schedule and corrective action required by this Order. If Petro Mex complies, the suspended portion of the penalty will be vacated. If Petro Mex does not comply, the suspended penalty will be due upon demand by the Director without further action by the Commission.
IV. The suspended $15,000 from Order 1V-469 will remain suspended pending Petro Mex’s compliance with Rule 309 for a year following the date that Order 1V-469 was approved (June 16, 2014). If Petro Mex complies with Rule 309 for a year, the suspended portion of the penalty will be vacated. If Petro Mex does not comply, the suspended penalty will be due upon demand by the Director without further action by the Commission.
V. Petro Mex will complete one of the following corrective actions at the Government 6 Well (API No. 05-045-06779) within 90 days after the approval of this Order. Petro Mex will notify COGCC staff of which option it decides to pursue within 30 days of the approval of this AOC.
a. Pass a MIT to maintain shut-in status. Petro Mex must notify staff 10 days prior to conducting the MIT on a Form 42 and submit a Form 21 within 30 days after the MIT if it is not witnessed by staff. If a MIT is performed and the Well lacks mechanical integrity, the casing repair procedures must be approved by COGCC staff on a Form 4, Sundry Notice, prior to remediation per Rule 317.d.; or
b. Pass a MIT and reestablish production. Petro Mex must notify staff 10 days prior to conducting the MIT on a Form 42 and submit a Form 21 within 30 days after the MIT if it is not witnessed by staff. If a MIT is performed and the Well lacks mechanical integrity, the casing repair procedures must be approved by COGCC staff on a Form 4, Sundry Notice, prior to remediation per Rule 317.d.; or
c. Plug and Abandon the Well. Petro Mex must submit a Well Abandonment Report on Form 6, Notice of Intent to Abandon, for prior approval before immediately proceeding with plugging and abandoning the Well. The Well must be plugged and abandoned within 90 days. The Form 6, Subsequent Report of Abandonment, must be filed within 120 days.
VI. Failure to meet the deadline for the corrective action or payment of the penalty may constitute a new violation subject to additional daily penalties.
VII. Payment of the penalty pursuant to this AOC does not relieve Petro Mex from its obligations to complete corrective actions set forth in the NOAV, as may be amended or modified by COGCC Staff.
RECOMMENDED this 24th day of October, 2014.
OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
By
Jeremy I Ferrin, Enforcement Officer
AGREED TO AND ACCEPTED this 24th day of October, 2014.
PETRO MEX RESOURCES
By
Signature of Authorized Company Representative
Print Signatory Name
Title
ORDER
HAVING CONSIDERED the Agreement between the Director and Petro Mex to resolve the NOAV, the COMMISSION ORDERS:
1. This Order does not vacate Order 1V-469 in whole or in part.
2. The unpaid $23,000 penalty from Order 1V-469 is due within 5 business days after this Order is approved by the Commission (November 3, 2014).
3. Petro Mex is subject to a separate $169,000 penalty for the violations of Rule 523 described above.
a. $13,000 of this Order’s penalty is due within 35 days after this Order is approved by the Commission (December 3, 2014).
b. $70,000 of the penalty is due in seven quarterly payments of $10,000 (those payments will follow the fiscal year for 2015 and 2016).
a. $10,000 due on March 31, 2015.
b. $10,000 due on June 30, 2015.
c.$10,000 due on September 30, 2015.
d. $10,000 due on December 31, 2015.
e. $10,000 due on March 31, 2016.
f. $10,000 due on June 30, 2016.
g. $10,000 due on September 30, 2016.
c. $86,000 of the remaining penalty will be suspended pending timely compliance with the penalty payment schedule and corrective action required by this Order. If Petro Mex complies, the suspended portion of the penalty will be vacated. If Petro Mex does not comply, the suspended penalty will be due upon demand by the Director without further action by the Commission.
4. The suspended $15,000 from Order 1V-469 will remain suspended pending Petro Mex’s compliance with Rule 309 for a year following the date that Order 1V-469 was approved (June 16, 2014). If Petro Mex complies with Rule 309 for a year, the suspended portion of the penalty will be vacated. If Petro Mex does not comply, the suspended penalty will be due upon demand by the Director without further action by the Commission.
5. Petro Mex will complete one of the following corrective actions at the Government 6 Well (API No. 05-045-06779) within 90 days after the approval of this Order. Petro Mex will notify COGCC staff of which option it decides to pursue within 30 days of the approval of this Order.
a. Pass a MIT to maintain shut-in status. Petro Mex must notify staff 10 days prior to conducting the MIT on a Form 42 and submit a Form 21 within 30 days after the MIT if it is not witnessed by staff. If a MIT is performed and the Well lacks mechanical integrity, the casing repair procedures must be approved by COGCC staff on a Form 4, Sundry Notice, prior to remediation per Rule 317.d.; or
b. Pass a MIT and reestablish production. Petro Mex must notify staff 10 days prior to conducting the MIT on a Form 42 and submit a Form 21 within 30 days after the MIT if it is not witnessed by staff. If a MIT is performed and the Well lacks mechanical integrity, the casing repair procedures must be approved by COGCC staff on a Form 4, Sundry Notice, prior to remediation per Rule 317.d.; or
c. Plug and Abandon the Well. Petro Mex must submit a Well Abandonment Report on Form 6, Notice of Intent to Abandon, for prior approval before immediately proceeding with plugging and abandoning the Well. The Well must be plugged and abandoned within 90 days. The Form 6, Subsequent Report of Abandonment, must be filed within 120 days.
6. Failure to meet the deadline for the corrective action or payment of the penalty may constitute a new violation subject to additional daily penalties.
7. Compliance dates specified in this Order may be extended only for good cause, as determined at the Director’s sole discretion. A request for extension must be made, in writing, at least 35 days prior to the pertinent compliance deadline. Failure to receive an extension prior to the compliance deadline or the failure to meet a compliance deadline may constitute a new violation subject to additional daily penalties.
8. Payment of the penalty pursuant to this Order does not relieve Petro Mex from its obligations to complete corrective actions set forth in the NOAV, as may be amended or modified by COGCC Staff.
9. Petro Mex, or its successors, remains responsible for complying with this Order.
10. 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.
11. 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