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. 150900554 TYPE:  ENFORCEMENT ORDER NO. 1V-531

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 Camp # 32-25 (API No. 05-123-24453) (“Well”) in Weld County, Colorado. 

            2.         On April 17, 2012, a Bradenhead test indicated hydrocarbons were migrating from one formation to another behind the casing of the Well (Doc. No. 400292402).

            3.         After learning of the results of the Bradenhead test, Colorado Oil and Gas Conservation Commission (“Commission” or “COGCC”) Staff met with Kerr-McGee to discuss necessary corrective actions.

            4.         On September 30, 2014, Kerr-McGee submitted a plan of action to plug and abandon the Well to COGCC Staff.

5.         On October 16, 2014, COGCC Staff issued Notice of Alleged Violation (NOAV) No. 200414053 to Kerr-McGee for a violation of COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”), Rule 326.d. (Mechanical Integrity Testing).

6.         The NOAV required that the Well be repaired so that hydrocarbons were not migrating and successfully pass a mechanical integrity test (“MIT”) or be properly plugged and abandoned.

7.         On October 22, 2014, Kerr-McGee performed an MIT on the Well that demonstrated there were no mechanical integrity issues with the Well.

8.         On October 28, 2014, Kerr-McGee plugged the Well.

            9.         On January 17, 2015, the COGCC re-issued the NOAV for a violation of Rule 317 (General Drilling Rules).

10.       Following a factual investigation and legal review of the violations alleged in the NOAV, Hearing Staff now asserts Kerr-McGee has committed one 10-day violation of Rule 317.e. (General Drilling Rules) for the failure to prevent hydrocarbons from migrating from one formation to another behind the casing of the Well. 

11.       Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Hearings Staff calculated a penalty of $10,000 for this violation. The penalty calculation is based on the following:

NOAV	Rule	Base Penalty	Start Date	End Date	Days	Penalty
200414053	317.e.	$1,000	4/17/2012	10/28/2014	924	$10,000
Total						$10,000

a. The violations began prior to June 6, 2014, the effective date of HB 14-1356, and therefore the penalty for these violations was calculated pursuant to the version of Rule 523 in effect at the time of the violation, with the statutory maximum being applied given the length of non-compliance at this Well.

b. No aggravating factors;

c. No mitigating factors;

d. No pattern of violation; and

e. No gross negligence or knowing and willful misconduct.

12.       On August 10, 2015, Kerr-McGee filed an Answer with the Commission requesting that the penalty be waived given the timely resolution of the NOAV and the absence of aggravating or mitigating factors, Kerr-McGee’s compliance record, and other 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 Kerr-McGee Oil & Gas Onshore LP agrees to settle the NOAV on the following terms and conditions:

I. Kerr-McGee is found in violation of Rule 317.e.

II. Kerr-McGee will be assessed a penalty of $10,000.

III. Kerr-McGee will pay $10,000 within 30 days after this AOC is mailed by the Commission.

RECOMMENDED this 18 day of August, 2015.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By

     Kyle W. Davenport, Assistant Attorney General 

AGREED TO AND ACCEPTED this   __ day of August, 2015.

KERR-MCGEE OIL & GAS ONSHORE LP

                        By

                             Signature of Authorized Company Representative

            ____________                                                        

                       Print Signatory Name

            ____________                                                                                             Title

ORDER

HAVING CONSIDERED the Agreement between the Director and Kerr-McGee Oil & Gas Onshore LP to resolve the NOAV, the COMMISSION ORDERS:

1.         Kerr-McGee is found in violation of Rule 317.e.

2.         Kerr-McGee will be assessed a penalty of $10,000.

3.         Kerr-McGee will pay $10,000 within 30 days after this AOC is mailed by the Commission.

4.         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.

5.         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 September, 2015 as of the 14 day of September, 2015.

                                                            OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

                                                            By 

                                                                                    Julie Murphy, Secretary