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 KERR MCGEE OIL & GAS ONSHORE LP, WELD COUNTY, COLORADO

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CAUSE NO. 1V

DOCKET NO. 150500261

 

ORDER NO. 1V-502

 

TYPE: ENFORCEMENT

 

ADMINISTRATIVE ORDER BY CONSENT

(Pursuant to Rule 522.e.(1) of the Rules and Regulations of the

Colorado Oil and Gas Conservation Commission, 2 CCR 404-1)

 

FINDINGS

 

1.            Kerr McGee Oil & Gas Onshore LP (“Kerr McGee”) (Operator No. 47120) is the operator of the KMG 16-24i Well (API No. 05-123-37996), Barefoot 32N-25HZ Well (API No. 05-123-39193), and Barefoot 32C-25HZ Well (API No. 05-123-39187) in Weld County.

 

A.   KMG 16-24i Well

 

2.            The KMG 16-24i Well was spud on March 14, 2014. The Well’s Form 2, Application for Permit to Drill (“APD”), was submitted on July 1, 2013 (Doc. No. 400437623).

 

3.            Pursuant to Rule 318A.e.(4)[1] of the Rules and Regulations of the Colorado Oil and Gas Conservation Commission, 2 CCR 404-1 (“Rule” or “Rules”), all Greater Wattenberg Area wells for which a APD is submitted on or after May 1, 2013 require groundwater sampling. An initial groundwater sample must be taken within 12 months prior to setting conductor pipe in the well. The results of this sampling must be submitted to COGCC within 90 days of collecting the samples.

 

4.            Kerr McGee did not submit results of sampling for the KMG 16-24i Well within the required time period or file a Sundry Notice seeking an exception from these requirements.

 

5.            On September 3, 2014, COGCC Staff issued Notice of Alleged Violation (“NOAV”) No. 200411687 to Kerr McGee for a violation of Rule 318A.e.(4) (Groundwater Baseline Sampling and Monitoring) at the KMG 16-24i Well for failure to take the initial groundwater sample required for GWA wells with APDs submitted after May 1, 2013.

 

6.            On September 29, 2014, Kerr McGee submitted a schedule for groundwater sampling at the KMG 16-24i Well and a description of how compliance with Rule 318A.e.(4) will be achieved for future wells (Doc. No. 2533836).

 

B.   Barefoot 32C-25HZ and Barefoot 32N-25HZ Wells (“Barefoot Wells”)

 

7.            On January 12, 2015, COGCC received a complaint regarding road conditions on the access roads leading to the Barefoot Wells (Doc. No. 200421435).

8.            On January 14, 2015, COGCC Staff inspected the Barefoot Wells to investigate the complaint (Inspection Reports, Doc. No. 673801670 for the Barefoot 32N-25HZ Well, Doc. No. 67301665 for the Barefoot 32C-25HZ Well). Staff observed that vehicles had transferred mud from both locations onto Weld County Road 13. At both locations, a vehicle tracking pad had been placed on the lease road to the location, but the pad had been filled in by mud and debris – causing the transfer of mud onto the county road.

9.            On January 15, 2015, COGCC Staff inspected the Barefoot Wells and observed that the mud-tracking issues had been corrected.

10.         On January 28, 2015, COGCC Staff issued NOAV Nos. 200422240 & 200422221 to Kerr McGee for two violations of Rule 1002.f.(2)F (Vehicle Tracking Control Practices) at the Barefoot Wells for the failure to control potential sediment discharges from operational roads, well pads, and other unpaved surfaces.

C.   Violations and Penalty Amount

 

11.         Following a factual investigation and legal review of the violations alleged in the NOAVs referenced above, COGCC Staff now asserts Kerr McGee has committed the following violations:

 

NOAV No.

Well Name

Rule

Act

Class, Impact

Days of Violation

Daily Penalty

Total Penalty

200411687

KMG 16-24i

318A.e.(4)

Old

NA

1

$1,000

$1,000

200422240

Barefoot 32C-25HZ

1002.f.(2)F

New

Class 2, Minor

1

$2,500

$2,500

200422221

Barefoot 32N-25HZ

1002.f.(2)F

New

Class 2, Minor

1

$2,500

$2,500

TOTAL PENALTY

$6,000

 

12.         Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Hearings Staff calculated a penalty of $6,000 for these violations. The penalty calculation is based on the following:

 

a.    The Rule 318A.e.(4) violation was calculated as a single day violation, because it was impossible for the operator to take the initial sample before setting conductor pipe after the well had already been drilled;

b.    No aggravating or mitigating factors;

c.    No pattern of violations.

13.         The violation of Rule 318A.e.(4) began before the effective date of HB 14-1356 (June 6, 2014). The penalty for this violation is calculated pursuant to the version of Rule 523 in effect at the time of the violation. The violations identified at the Barefoot Wells began after the effective date of HB 14-1356. The penalty for these alleged violations is calculated pursuant to HB 14-1356, with reference to the revised Rule 523 as guidance.

 

AGREEMENT

 

      NOW, THEREFORE, based on the Findings and pursuant to Rule 522.e.(1) and the Commission’s Enforcement and Penalty Policy, the Director proposes and Kerr McGee agrees to settle the NOAV on the following terms and conditions:

 

  1. Kerr McGee is found in violation of Rules 318A.e.(4) and 1002.f.(2)F, as described above.

 

  1. Kerr McGee will be assessed a penalty of $6,000.

 

   III.        Kerr McGee will pay the $6,000 penalty within 30 days after the approved AOC is mailed by the Commission. 

 

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

 

RECOMMENDED this ____ day of April, 2015.

 

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

By                                                                       

Britta Beckstead, Assistant Attorney General

 

AGREED TO AND ACCEPTED this ______day of April, 2015.

                                                                                                                                                                                                KERR MCGEE OIL & GAS ONSHORE LP

                             

                        By                                                                                          

                        Signature of Authorized Company Representative

                       

                                                                                                                                                           

Print Signatory Name and Title

                      

ORDER

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

 

  1. Kerr McGee is found in violation of Rules 318A.e.(4) and 1002.f.(2)F, as described above.

 

  1. Kerr McGee is assessed a penalty of $6,000.

 

  1. Kerr McGee will pay the $6,000 penalty within 30 days after the approved AOC is mailed by the Commission.  Failure to pay the penalty by the deadline is an independent violation that may be subject to additional penalties.

 

4.    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.

5.    The provisions contained in the above order are effective on the date this matter is heard and approved by the Commission.

6.    The Commission expressly reserves its right after notice and hearing, to alter, amend, or repeal any and/or all of the above orders. 

===================================================================ENTERED this _____ day of May, 2015 as of the ____ day of May, 2015.

                                                            OIL AND GAS CONSERVATION COMMISSION

            OF THE STATE OF COLORADO

 

 

            By                                                                                          

                                                                        Julie Murphy, Secretary



[1] Citing the version of the Rules in effect as of February 1, 2014 – prior to the Clean-up Rulemaking, which had an effective date September 30, 2014.