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 LOCIN OIL CORPORATION,  RIO BLANCO COUNTY, COLORADO

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CAUSE NO. 1V ORDER NO. 1V-548 DOCKET NO. 151000485 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.         Locin Oil Corporation (“Locin”) (Operator No. 51130) is the operator of record of the Fork Unit 2-6-2-1 Well (API No. 05-103-09221) (“Well”) in Rio Blanco County, Colorado. 

            2.         According to Commission records, the Fork Unit 2-6-2-1 Well was shut-in on August 2011.

3.         On April 17, 2014, Commission Staff inspected the Well (Doc. No. 673501044) and indicated that Locin had not performed a successful Mechanical Integrity Test (“MIT”) within two years of the shut-in date. Staff required Locin to either perform a successful MIT or to plug and abandon the well by May 19, 2014.

4.         On June 24, 2015, Commission Staff issued a Notice of Alleged Violation (“NOAV”) (No. 2618152) to Locin citing a violation of Rule 326.b. (Mechanical Integrity Testing, Shut-in Wells) of the COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”).

5.         On September 27, 2015, Locin plugged and abandoned this Well in accordance with COGCC Rules. Locin submitted a Form 6 (Well Abandonment Report - Subsequent) (Doc. No. 400914014) reporting the plugging procedures on October 8, 2015 and Staff approved the report on October 13, 2015.

            6.         Following factual investigation and legal review of the violations alleged in the NOAV, Hearing Staff now asserts Locin has committed one ten-day violation of Rule 326.b. for failing to either perform a successful MIT or to plug and abandon the Well within two years of the Well’s shut-in date of August 2011.

            7.         Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Hearings Staff calculated a raw penalty of $10,000 for this violation. As a settlement offer, Staff has reduced the penalty amount due to $7,500. The penalty calculation is based on the following:

a. Violation began prior to the June 6, 2014 effective date of HB 14-1356;

b. Daily starting base penalty of $1,000 per day per violation;

c. Statutory limit of not more than 10 days of violation because there was no significant waste of oil and gas resources, damage to correlative rights, or significant adverse impact on public health, safety or welfare, including the environment or wildlife resources;

d. Settlement inducement of 25%;

e. No aggravating factors;

f. No mitigating factors;

g. No pattern of violation; and

h. No gross negligence or knowing and willful misconduct.

AGREEMENT

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

I. Locin is found in violation of Rule 326.b.

II. Locin will be assessed a penalty of $7,500.

III. Locin will pay $7,500 within 30 days after this approved AOC is mailed by the Commission.

RECOMMENDED this 13th day of October, 2015.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By

     David A. Beckstrom, Enforcement Officer

AGREED TO AND ACCEPTED this day of , 2015.

                                                LOCIN OIL CORPORATION

By

Signature of Authorized Company Representative

Print Signatory Name

Title

ORDER

HAVING CONSIDERED the Agreement between the Director and Locin Oil Corporation to resolve the NOAV, the COMMISSION ORDERS:

            1.         Locin is found in violation of Rule 326.b. as described above.

      2.         Locin will be assessed a penalty of $7,500.

3.         Locin will pay $7,500 within 30 days after this approved AOC is mailed 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 or as soon as possible if 35 days prior notice is not feasible. 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 penalties.

5.         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.

6.         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 , 2015 as of the 26th day of October, 2015.

                                                            OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

                                                            By 

                                                                                    Julie Murphy, Secretary