BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES AND REGULATIONS OF THE COLORADO OIL AND GAS CONSERVATION COMMISSION BY RED MOUNTAIN RESOURCES, LLC, LOGAN AND JEFFERSON COUNTIES, COLORADO |
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CAUSE NO. 1V
DOCKET NO. 151000664
TYPE: ENFORCEMENT
ORDER: 1V-549
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ORDER
The Colorado Oil and Gas Conservation Commission (“COGCC” or “Commission”) enters this Order pursuant to the Rules and Regulations of the Colorado Oil and Gas Conservation Commission, 2 CCR 404-1(“Rule” or “Rules”), and states as follows:
1. Red Mountain is the operator of record of the State 16-4 # 1 Well (API No. 05-059-06024) in Jefferson County and the Schrader J-15 Well (API No. 05-075-05069), the Kilmer #1 Well (API No. 05-075-05060), the Colorado State J-18 Well (API No. 05-075-05078), the State B-1 Well (API No. 05-075-05083), and the Sherwin #1 Well (API No. 05-075-08293) in Logan County (the “Wells”). (Exhibit 3).
2. COGCC records indicate that Red Mountain posted $60,000 in financial assurance with the Commission. (Exhibit 4).
3. On February 6, 2015, Red Mountain filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the District of Colorado. (Exhibit 5). Glen R. Anstine was appointed trustee on February 6, 2015.
4. On October 7, 2015, James P. Rouse, Hearing Officer in this matter, issued a prehearing order setting October 13, 2015 as the deadline for objections to the relief requested by COGCC Staff.
5. Mr. Anstine was served with the October 7, 2015 prehearing order by electronic mail. Philip Barber and Chris Guttormsson, individuals who are listed as employee contacts for Red Mountain in the COGCC records, were also served with the prehearing order by electronic mail.
6. No objections to the relief requested by COGCC Staff were filed.
7. The trustee for Red Mountain’s bankruptcy does not oppose the relief requested by COGCC Staff. (Exhibit 6).
8. The bankruptcy estate abandoned or sold all of Red Mountain’s operating wells and leases in Colorado. (Exhibits 6 and 7).
9. At the September 14, 2015 Commission hearing, the Commission authorized COGCC Staff to expend Environmental Response Funds for any purpose authorized by the Colorado Oil and Gas Conservation Act to address winterization and stabilization of locations formerly operated by Red Mountain.
II. Findings
Jurisdictional Findings
1. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.
2. The Commission has jurisdiction over the subject matter embraced in this Application, and of the interested parties, and jurisdiction to promulgate the following order pursuant to the Oil and Gas Conservation Act.
Commission Authorization
3. Rule 302 requires all operators to file a Form 1, Registration for Oil and Gas Operations, prior to conducting operations in Colorado. An operator number is assigned to each operator following the submission of a Form 1. Implicit in the COGCC’s acceptance of Form 1s and assignment of operator numbers is the authority to rescind a Form 1, along with the right to conduct operations in Colorado, and revoke an operator number.
4. Rule 709 provides “Whenever an operator fails to fulfill any statutory obligation described herein, and as the Commission undertakes to expend funds to remedy the situation, the Director shall make an application to the Commission for an order calling or foreclosing the operator’s financial assurance.”
5. As Red Mountain is unable to fulfill its statutory obligations regarding the Wells and as the Commission has already undertaken to expend funds to winterize and stabilize locations formerly operated by Red Mountain, the Commission authorizes COGCC Staff to:
a. Foreclose Red Mountain’s existing financial assurance and claim both the principal and any accrued, but undisbursed, interest that may exist;
b. Remediate conditions that threaten to cause, or that actually cause, environmental impacts at oil and gas locations operated by Red Mountain;
c. Plug and abandon any wells operated by Red Mountain;
d. Reclaim all well sites and associated facilities operated by Red Mountain;
e. Take ownership and control of any equipment and appurtenances related to Red Mountain’s operations, if any, but only as to property where ownership will facilitate COGCC Staff’s activities;
f. Dispose of any equipment and appurtenances related to Red Mountain’s operations as COGCC Staff sees fit, provided that any proceeds from the disposition of the assets will be applied to any work undertaken by COGCC Staff;
g. Require Red Mountain to repay any funds expended by the COGCC for any work undertaken by COGCC Staff. Funds resulting from the foreclosure of Red Mountain’s existing financial assurance may be used to repay funds expended by the COGCC;
h. Revoke Red Mountain’s Operator Number (No. 10374); and
i. Rescind Red Mountain’s Form 1 (Document No. 1663724), and revoke Red Mountain’s right to conduct oil and gas operations in the state of Colorado.
ORDER
NOW, THEREFORE, the COMMISSION ORDERS:
1. COGCC Staff is authorized to:
a. Foreclose Red Mountain’s existing financial assurance and claim both the principal and any accrued, but undisbursed, interest that may exist;
b. Remediate conditions that threaten to cause, or that actually cause, environmental impacts at oil and gas locations operated by Red Mountain;
c. Plug and abandon any wells operated by Red Mountain;
d. Reclaim all well sites and associated facilities operated by Red Mountain;
e. Take ownership and control of any equipment and appurtenances related to Red Mountain’s operations, if any, but only as to property where ownership will facilitate COGCC Staff’s activities;
f. Dispose of any equipment and appurtenances related to Red Mountain’s operations as COGCC Staff sees fit, provided that any proceeds from the disposition of the assets will be applied to any work undertaken by COGCC Staff;
g. Require Red Mountain to repay any funds expended by the COGCC for any work undertaken by COGCC Staff. Funds resulting from the foreclosure of Red Mountain’s existing financial assurance may be used to repay funds expended by the COGCC;
h. Revoke Red Mountain’s Operator Number (No. 10374); and
i. Rescind Red Mountain’s Form 1 (Document No. 1663724), and revoke Red Mountain’s right to conduct oil and gas operations in the state of Colorado.
2. Entry of this Order constitutes final agency action for purposes of judicial review as of the date this Order is mailed by the Commission. Otherwise, it is effective upon approval.
3. The Commission expressly reserves its right after notice and hearing, to alter, amend, or repeal any and/or all of the above Order.
ENTERED this _____ day of October, 2015 as of the 26th day of October, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
Julie Murphy, Secretary