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 EE3 LLC, JACKSON COUNTY, COLORADO |
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CAUSE NO. 1V
DOCKET NO. 151000480
TYPE: ENFORCEMENT
ORDER NO. 1V-552
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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. EE3 LLC (“EE3”) (Operator No. 10450) is the operator of the Grizzly 3-32H Well (API No. 05-057-06523) (“Well” or “Well Site”) in Jackson County.
Drilling Location Violation
2. On July 16, 2014, the Well was spud.
3. The Well was drilled 180.43 feet from Colorado State Highway 14. State Highway 14 is a public road.
4. On December 22, 2014, Colorado Oil and Gas Conservation Commission (“COGCC” or “Commission”) Staff issued NOAV No. 2157853 to EE3 for a violation of the COGCC Rule of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”) Rule 603.a.(1) for drilling the Well less than 200 feet from a public road.
5. NOAV No. 2157853 directed EE3 to submit a variance request letter to the COGCC requesting a variance from Rule 603.a.(1) and obtain a signed waiver from the state agency that maintains State Highway 14 by January 9, 2015.
6. Pursuant to requests from EE3, COGCC staff subsequently extended the corrective action deadline to January 30, 2015.
7. On January 30, 2015, EE3 submitted all required corrective actions to the COGCC.
8. On February 2, 2015, COGCC Staff requested corrections to the variance request submitted by EE3. EE3 submitted the corrected variance request to the COGCC on February 5, 2015.
Site Condition Violations
9. On July 24, 2014, Commission Staff performed an inspection at the Well Site and found the following:
a. that cuttings from drilling at the Well Site and were not properly stored, bermed, or contained;
b. that Best Management Practices (“BMPs”) were not implemented to control stormwater or erosion;
c. that the perimeter berm was not continuous or compacted and that the cuttings were being tracked off location; and
d. that there was erosion into a ditch.
10. The July 24, 2014 inspection required that corrective actions be performed by August 1, 2014. (COGCC Document No. 673400878).
11. On July 30, 2014 COGCC Staff performed a follow-up inspection at the Well Site. Staff found that EE3 had not performed the corrective actions required by the prior inspection. Additionally, cuttings were observed spilling over the side of the cuttings berm. The corrective action deadline was extended to August 13, 2014. (COGCC Document No. 673400947).
12. On September 12, 2014 COGCC Staff performed a third inspection at the Well Site. Staff found that EE3 had performed the corrective actions regarding the stormwater and cuttings issues. (COGCC Document No. 673401107).
13. On February 11, 2015, COGCC performed an inspection of the Well Site and found that issues observed at the July 24 and 30, 2014 inspections had returned. Standing fluids were also observed within the cuttings stockpile. The inspection required corrective actions by March 27, 2014. (COGCC Document No. 673401785).
14. COGCC Staff performed follow-up inspections on March 10, 2014 (COGCC Document No. 669300186); March 10, 2015 (COGCC Document No. 673401899); March 26, 2015 (COGCC Document No. 669300195); May 8, 2015 (COGCC Document No. 669300847); and May 25, 2015 (COGCC Document No. 669300856). Staff found the Well Site to be in a similar condition at each inspection.
15. At the March 10, 2015 inspection, COGCC Staff observed oil in the pump house, free product outside of the pumphouse berm and on top of the berm. Additionally, Staff observed 80 to 100 cubic yards of oily soil had been added to the cuttings pile on the Well Site. Fluids (oil and water) were observed seeping from the pile and pooling at the foot of the pile. It was also observed that the berms around the cuttings had not been maintained since the February 11, 2015 inspection. Sediment was observed entering a roadside ditch and was being transported off location. As a result of this inspection, COGCC Staff’s opinion was that it was no longer proper for EE3 to dispose of cuttings as provided in the Form 2A. The deposition of oily soil on the cuttings pile was now comingled with Exploration and Production (“E&P”) waste and COGCC Staff required that it be disposed of in accordance with Rule 907.
16. On March 13, 2015 COGCC Staff notified EE3 via telephone and email of the observed oil in the pump house and the fluids (oil and water) seeping from the pile and pooling at the foot of the pile.
17. Staff required that EE3 file a Form 19 Spill/Release report and notify the surface owner of the Spill/Release and the ongoing management of the stockpiles.
18. At the March 26, 2015 inspection, COGCC Staff required EE3 to submit a waste management plan by May 1, 2015 that addressed E&P waste and secondary containment on the location. Staff required weekly updates as to the work performed by EE3 at the Well Site. Staff also required that EE3 provide the COGCC with an analysis of the chemical composition of the cuttings pile by May 1, 2015 (COGCC Document No. 669300195).
19. On March 26, 2015 COGCC Staff collected samples from the E&P waste stockpiles and submitted them for analysis. The analysis indicated that constituents analyzed are above Table 910-1 standards.
20. At the May 8, 2015 inspection COGCC Staff noted that E&P waste was not bermed, was being tracked around the Location, and was in contact with free standing stormwater.
21. On May 18, 2015, EE3’s consultant collected samples from the cuttings pile. Analysis of samples indicated that constituents analyzed were above Table 910-1 standards.
22. At the May 25, 2015 inspection, COGCC Staff found that the E&P waste pile was still not contained, with E&P waste being tracked across location by vehicles.
23. On May 17, 2015, EE3 notified the surface owner of reclamation activities at the Well Site.
24. On June 24, 2015, Commission Staff issued a Notice of Alleged Violation (“NOAV”) (No. 200434695) to EE3 citing violations of the COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”); including the following:
a. Rule 907.a.(1) (Management of E&P Waste – Operator Obligations);
b. Rule 907.e.(2) (Management of E&P Waste – Oily Waste); and
c. Rule 1002.f (Site Preparation and Stabilization - Stormwater Management).
25. On July 16, 2015, COGCC Staff met with representatives of EE3 to discuss remedial activities of the stock pile, including frequency of working the material, addition of nutrients, berming of the stock piles and maintaining storm water controls at the Well Site. COGCC Document No. 2495369 contains a summary of this meeting and a review of the requirements for a draft waste management plan.
26. On August 7, 2015, EE3 submitted a waste management plan to the COGCC in a Sundry Notice.
27. On August 14, 2015, COGCC Staff approved the Sundry Notice submitted by EE3, with comments and conditions of approval (COGCC Document No. 400881645).
28. Following a factual investigation and legal review of the violations alleged in the NOAVs referenced above, COGCC Staff now asserts EE3 has committed the following violations:
|
NOAV |
Well |
Rule |
Act |
Base Penalty |
Start Date |
End Date |
Days of Violation |
Total Penalty |
|
2157853 |
Grizzly3-32H |
603.a.(1) |
New |
$2,500 |
7/16/2014 |
1/30/2015 |
198 |
$52,700 |
|
200434695 |
Grizzly3-32H |
907.a.(1) |
New |
$3,000 |
7/24/2014 |
7/16/2015 |
205 |
$63,000
|
|
200434695 |
Grizzly3-32H |
907.e.(2) |
New |
$3,000 |
7/24/2014 |
7/16/2015 |
297
|
$88,000
|
|
200434695 |
Grizzly3-32H |
1002.f.(2) |
New |
$3,000 |
7/24/2014 |
7/16/2015 |
205 |
$63,300 |
|
TOTAL PENALTY |
$267,000 |
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29. EE3 was not in violation of Rules 907.a.(1) and 1002.f.(2) between September 12, 2014 and February 11, 2015. Days in violation for these violations were thus calculated for two periods as follows:
a. July 24, 2014 through September 12, 2014; and
b. February 11, 2015 through July 16, 2015.
30. Pursuant to Rule 523, Hearings Staff calculated a penalty of $267,000 for these violations. The penalty calculation is based on the following:
a. All violations began after the effective date of HB 14-1356;
b. Duration matrix;
c. No mitigating factors;
d. No aggravating factors; and
e. No pattern of violations or gross negligence/knowing and willful misconduct.
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 EE3 LLC agrees to settle the NOAV on the following terms and conditions:
IX. By December 4, 2015, EE3 will submit a Form 27, Site Investigation and Remediation Workplan, addressing cleanup for Spill/Release No. 400821920. This Workplan will specifically address cleanup of the impacted area, provide a clear delineation of the impacted area, describe the method for final disposal of impacted material (including “soil spoil pile” currently on location), and provide a timeline for completion of work. EE3 will request closure of Spill/Release No. 400821920 with a supplemental Form 19 submitted upon approval of the Form 27.
RECOMMENDED this ____ day of November, 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 November, 2015.
EE3 LLC
By
Signature of Authorized Company Representative
Print Signatory Name
Title
ORDER
HAVING CONSIDERED the Agreement between the Director and EE3 to resolve the NOAV, the COMMISSION ORDERS:
1. EE3 is found in violation of Rules 603.a.(1), 907.a.(1), 907.e.(2), and 1002.f.(2) at the Grizzly 3-32H well as described above.
2. EE3 is assessed a penalty of $267,000 with $167,000 due within 30 days of approval of this Administrative Order by Consent (“AOC”) by the Commission, and $100,000 suspended provided EE3 remains in compliance with Rules 907 and 1002 at the Grizzly 3-32H Well Site for one year after the approval of this Order. If the requirements of this AOC are satisfied, the suspended portion of the penalty will be vacated. If the requirements are not satisfied, the suspended penalty will become due upon demand by the Director without further action by the Commission.
3. By December 4, 2015, EE3 will ensure all cuttings are contained in berms.
4. By December 4, 2015, EE3 will gather and store any cuttings that have been tracked across the Well Site in cuttings management areas.
5. By December 4, 2015, EE3 will submit a revised waste management plan attached to a Form 27 (Site Investigation and Remediation Workplan) detailing how E&P waste is being treated, frequency of treatment, sampling frequency, time schedule, and final disposal of the E&P Waste material. The plan must address the comments provides in COGCC Document No. 400881645.
6. By December 4, 2015, EE3 will assure that stormwater Best Management Practices do not obstruct surface water flow in adjacent ditches.
7. By December 4, 2015, EE3 will submit a Sundry Notice, Form 4, which describes interim reclamation procedures in accordance with Rule 1003.e.(3).
8. By December 4, 2015, EE3 will provide evidence of written notice to the surface owner of onsite land treatment of oily waste (cuttings) in accordance with Rule 907.e.(2)G.
9. By November 18, 2015, EE3 will submit a Form 27, Site Investigation and Remediation Workplan, addressing cleanup for Spill/Release No. 400821920. This Workplan will specifically address cleanup of the impacted area, provide a clear delineation of the impacted area, describe the method for final disposal of impacted material (including “soil spoil pile” currently on location), and provide a timeline for completion of work. EE3 will request closure of Spill/Release No. 400821920 with a supplemental Form 19 submitted upon approval of the Form 27.
10. Payment of the penalty pursuant to this AOC does not relieve the operator of its obligations to complete corrective actions set forth in the NOAVs, as may be amended or modified by COGCC Staff.
11. Compliance dates specified in this Order may be extended only for good cause, as determined at the Director’s sole discretion. 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 daily penalties.
12. 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. For all other purposes, this Order is effective as of the date it is approved by the Commission.
13. 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 December, 2015 as of the 7 day of December, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
Julie Murphy, Secretary