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 ENERGY SEARCH COMPANY, ADAMS COUNTY, COLORADO

)

CAUSE NO. 1V

DOCKET NO. 1407-OV-55

ORDER NO. 1V-490

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. Energy Search Company (“Energy Search”) (Operator No. 27635) is the operator of record for the following wells (“Wells”) in Adams County:

Sauvage #3 API# 05-001-08803-00

Wierman #4 API# 05-001-08786-00

Wierman #5 API# 05-001-08787-00

Wierman #6 API# 05-001-08788-00

Kortum #3 API# 05-001-07085-00

Kortum #7 API# 05-001-06190-00

2. In 2013, COGCC Staff (“Staff”) conducted inspections at the Wells as indicated in the table below.

Well	Inspection Date	Document No.
Sauvage #3	12/19/2013	600000490
Wierman #4	12/16/2013	600000438
Wierman #5	12/17/2013	600000442
Wierman #6	12/16/2013	600000437
Kortum #3	12/13/2013	600000414

Rule violations were discovered at each location. Corrective actions were assigned for each well location.

3. On April 16, 2013, COGCC Staff received four complaints from a landowner related to the facilities listed below:

Facility	Complaint No.
Wierman #4	200402861
Wierman #5	200402862
Wierman #6	200402863
Wierman Battery	200402864

The complaints at the Wierman Wells reported that due to equipment failure at the wells, a significant amount of oil spilled onto the surface of the ground. The oil saturated the surface of the ground and appeared to have penetrated below the surface of the ground, contaminating the soil. The complaint at the Wierman Battery reported that the produced water tank overflowed, spilling produced water and oil onto the ground, and leaving the surface and sub-surface of the soil contaminated.

4. On April 22, 2013, Staff performed follow-up inspections at the locations as documented below:

Well	Document No.
Sauvage #3	667500260
Wierman #4	667500248
Wierman #5	667500252
Wierman #6	667500265
Kortum #3	668301706
Kortum #7	668301711

Staff observed that the previous corrective actions had not been performed, and identified additional Rule violations. Staff assigned additional corrective action dates for the violations at each location.

5. Staff reviewed its records and determined that the Kortum #3 and the Kortum #7 were shut-in wells. Rule 326.b.1. requires a mechanical integrity test (“MIT”) to be performed on each shut-in well within two years of the initial shut-in date. Energy Search had not performed required MITs on the Kortum #3 and the Kortum #7.

6. In June 2014, Staff issued Notices of Alleged Violation (“NOAV’s”) to Energy Search as described below:

Well	NOAV	Date
Sauvage #3	200407197	6/10/2013
Wierman #4	200407198	6/10/2013
Wierman #5	200407199	6/10/2013
Wierman #6	200407200	6/10/2013
Kortum #3	200407843	6/23/2013
Kortum #7	200407872	6/23/2013

The NOAVs cited violations of the following COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”) as identified in the following table:

	Violations
	210	326.b	605.d	906.a	907.a.(1)	907.b.(2)	907.e
	Signage	MIT's	Mechanical Conditions	Spills and Releases	Management of E&P Waste	Waste Transportation	Oily Waste
Sauvage #3	X		X		X		X
Wierman #4	X		X		X		X
Wierman #5	X		X	X	X	X	X
Wierman #6			X		X		X
Kortum #3		X
Kortum #7		X
Total	3	2	4	1	4	1	4

7. Following a factual investigation and legal review of the violations alleged in the NOAV, Staff now asserts Energy Search committed the following violations:

a. Two ten-day violations of Rule 326.b.1 because the wells had not passed a mechanical integrity test within two years of the initial shut-in date at Kortum #3 or Kortum #7;

b. Four ten-day violations of Rule 605.d. because valves, pipes and fittings were not inspected or kept securely fastened, resulting in oily waste leaking from the wellhead at Sauvage #3, Wierman #4, Wierman #5, and Wierman #6;

c. One ten-day violation of Rule 906.a. at the Wierman #5, because Energy Search failed to, immediately upon discovery, control and contain all spills/releases of exploration and production waste (“E & P waste”) to protect the environment, public health, safety and welfare and wildlife resources;

d. Four ten-day violations of Rule 907.a.(1) and 907.e. because Energy Search failed to ensure that E&P waste was properly stored, handled, transported, treated, recycled or disposed to prevent threated or actual significant adverse environmental impacts to air water, soil or biological resources or to the extent necessary to ensure compliance with the concentration levels in Table 910-1 at the Sauvage #3, the Wierman #4, the Wierman #5, and the Wierman #6; and

e. One ten-day violation of Rule 907.b.(2) because Energy Search, as a generator of E & P waste apparently transported off-site for the Wierman #5, had not shown it has maintained copies of each invoice, bill or ticket documenting it, for not less than five years, at the Wierman #5 site.

8. Energy Search, now owned and operated by Brett Robuck, the son of its founder, has completed many of the required corrective actions for NOAVs at the Sauvage and Wierman wells (NOAVs 200407197, 200407198, 200407199, and 200407200). The Rule 326.b.(a) violation at the Kortum #7 Well remains unaddressed, due to Mr. Robuck’s plan to plug and abandon all the wells.

9. Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Staff calculated a penalty of $135,000 for these violations.

10. Staff recommends mitigation of the penalty, pursuant to Rules 534.d.(2), (3) and (6) (Mitigating Factors), because Brett Robuck, in light of his father’s failing health, assumed control of Energy Search. All of the violations occurred during his father’s tenure. These rules allow for mitigation if the violator demonstrates prompt, effective and prudent response to the violation, if the violator cooperated with the Commission, and if the cost of correcting the violation reduced or eliminated any economic benefit to the violator.

11. Immediately after assuming control of Energy Search, Brett Robuck corrected signage, directed the excavation of oily soil after physically removing the pump jacks to excavate under them, provided waste manifests for soil disposal, diagrammed completed work, negotiated with the complainants, and complied with Staff requests for documentation.

12. Mr. Robuck also contracted with LT Environmental, which conducted two sets of soil sampling as required by Staff, removing additional soil in-between the sampling to assure compliance with the Table 910-1 Concentration Levels standards.

13. Mr. Robuck filed four Form 27s, Site Investigation and Remediation Workplans on October 2, 2014, which were approved by COGCC on October 21, 2014, and assigned the following Remediation Project Numbers: 8687, 8688, 8689, 8690.

14. Mr. Robuck plans to plug and abandon all the wells subject to the approved Form 27s, which have the following document numbers: 200407197, 200407198, 200407199, and 200407200.

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 Energy Search agrees to settle the NOAV on the following terms and conditions:

I. Energy Search is found in violation of all of the violations listed in paragraph 7.a.-e., listed above.

II. Energy Search is assessed a penalty of $135,000, with $108,000 suspended due to the mitigating factors summarized in the Findings, paragraphs 8, 10 - 14 above, and conditioned as specified below.

III. The $108,000 suspended penalty will remain suspended as long as Energy Search satisfies the following compliance plan requirements by the specified date:

a. Perform all requirements of the approved Form 27’s referenced in paragraph 13 above in a timeframe required by Staff; and

b. For both the Kortum #3 and #7 Wells, either

i. Perform a successful mechanical integrity test for the well by January 30, 2015; or

ii. Plug and abandon the well by January 30, 2015.

IV. If Energy Search satisfies these requirements on time, the suspended penalty will be vacated. If Energy Search fails to perform these requirements on time, the suspended penalty will become due upon demand by the Director without further action by the Commission.

V. 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 satisfy a compliance deadline may constitute a new violation subject to additional daily penalty.

VI. Energy Search will pay $27,000.00, within 35 days after this AOC is mailed by the Commission.

VII. Payment of the penalty pursuant to this AOC does not relieve the operator from its obligations to complete all corrective actions set forth in the NOAVs, as may be amended or modified by COGCC Staff. Energy Search will report its outstanding sampling results to Staff.

VIII. Energy Search agrees to the findings of this AOC only for the purpose of expeditiously resolving the matter without a contested hearing.

It is RECOMMENDED this ____day of November, 2014.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Peter Gowen, Enforcement Officer

AGREED TO AND ACCEPTED this ______day of November, 2014.

Energy Search Energy, Inc.

Signature of Authorized Company Representative

Print Signatory Name

Title

ORDER

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

1. Energy Search is found in violation of all of the violations listed in paragraph 7.a.-e., listed above.

2. Energy Search is assessed a penalty of $135,000, with $108,000 suspended due to the mitigating factors summarized in the Findings, paragraphs 8, 10 - 14 above, and conditioned as specified below.

3. The $108,000 suspended penalty will remain suspended as long as Energy Search satisfies the following compliance plan requirements by the specified date:

a. Perform all requirements of the approved Form 27’s referenced in paragraph 13 above in a timeframe required by Staff; and

b. For the both the Kortum #3 and #7 Wells, either

i. Perform a successful mechanical integrity test for the well by January 30, 2015; or

ii. Plug and abandon the well by January 30, 2015.

If Energy Search satisfies these requirements on time, the suspended penalty will be vacated. If Energy Search fails to perform these requirements on time, the suspended penalty will become due upon demand by the Director without further action by the Commission.

4. 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 satisfy a compliance deadline may constitute a new violation subject to additional daily penalty.

5. Energy Search will pay $27,000.00, within 35 days after this AOC is mailed by the Commission.

6. Payment of the penalty pursuant to this AOC does not relieve the operator from its obligations to complete all corrective actions set forth in the NOAVs, as may be amended or modified by COGCC Staff. Energy Search will report its outstanding sampling results to Staff.

7. Energy Search agrees to the findings of this AOC only for the purpose of expeditiously resolving the matter without a contested hearing.

8. Energy Search, or its successors or assigns, will remain responsible for complying with this AOC and with the corrective actions required by the NOAVs, in the event of any subsequent conveyance of the Location. Energy Search will remain solely responsible for payment of the penalty amount, in the event of any subsequent conveyance of the Location.

9. 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.

10. An application for reconsideration by the Commission of this order is not required prior to filing for judicial review.

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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ENTERED this ___ day of December, 2014 as of the 15^th day of December, 2014.

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

Jill Dorancy, Acting Secretary