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 BLACK HILLS PLATEAU PRODUCTION LLC, MESA COUNTY, COLORADO |
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CAUSE NO. 1V
DOCKET NO. 160300103
TYPE: ENFORCEMENT
ORDER NO. 1V-588
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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. Black Hills Plateau Production LLC (“Black Hills”) (Operator No. 10150) is the operator of record for the WHF / D17 998 Location (“Location”) (Location No. 429734) in Mesa County, Colorado, which is located within the Whittaker Flats Federal Unit on BLM surface with federal minerals underlying.
2. In May 2013, following a public participation period, BLM approved an Environmental Assessment (“EA”) covering Black Hills’ anticipated oil and gas development in the DeBeque Colorado area. The EA includes requirements related to minimizing Black Hills’ environmental impacts throughout development by, among other things, reducing trucking whenever possible including specifically reducing truck traffic around the Pyramid Rock Area of Critical Environmental Concern in order to protect the federally threatened Colorado Hookless Cactus (Sclerocactus glaucus).
3. On November 1, 2013, BLM approved a sundry wherein Black Hills proposed to use a large volume tank (“MLVT”) to store flowback water from the DS3C-19 and DS3C-20 wells at the Location. The sundry stated the specifications under which the tank was to be constructed which included requiring secondary containment sufficient to hold 110% of the volume of the tank.
4. On June 25, 2015, Black Hills submitted a Form 4 – Sundry Notice (Document No. 400859025) to the COGCC requesting that the Form 2A permit for the Location (Document No. 400293677) be modified to allow Black Hills to use a MLVT to store freshwater. The Sundry included a design specification prepared by a professional engineer and a self-certification by Black Hills that it had read and would adhere to the COGCC Policy on the Use of Modular Large Volume Tanks in Colorado.
5. On August 11, 2015, Staff approved Document No. 400859025, specifying as a condition of approval that the MLVT was only to be used to store fresh water, and that no produced water or flowback water could be stored in the MLVT.
6. On or about September 2, 2015, immediately prior to Black Hills’ commencing completions operations, BLM conducted a site inspection of the Location. The BLM authorized officer on Location specifically ordered Black Hills to utilize the MLVT to store flowback water to facilitate the transport of water off Location via third party pipeline, thereby minimizing truck traffic impacting the threatened Colorado Hookless Cactus.
7. By the end of September 2015, Black Hills had constructed the MLVT and installed secondary containment which consisted of a muscle wall and liner reported to be able to contain greater than 110% of the total volume of the MLVT.
8. On October 24, 2015, Black Hills began to store flowback water in the MLVT.
9 On November 9, 2015, during a COGCC inspection, Black Hills informed the COGCC inspector that flowback water was being stored in the MLVT per BLM’s directive.
10. On November 11, 2015, the COGCC Environmental Manager directed Black Hills via email to immediately cease use of the MLVT for storage of produced water/flowback.
11. Black Hills immediately responded to the COGCC Environmental Manager’s email, and requested a conference call between Black Hills, COGCC Staff and BLM to address the conflicting directives and resolve the issues related to the use of the MLVT.
12. On November 13, 2015, Black Hills, BLM and COGCC participated in a conference call where all parties agreed that Black Hills would continue to store E&P Waste in the MLVT. Further, Black Hills would submit a Form 4-Sundry Notice requesting a variance to allow continued use of the MLVT for storing flowback water and stating that all flowback water would be removed from the MLVT no later than December 31, 2015. Black Hills submitted the variance request after the conference call.
13. On November 14, 2015, Black Hills submitted a revised Form 4 - Sundry Notice (Document No. 400937158) requesting a variance to authorize the use of the MLVT to temporarily store flowback water such that the water could subsequently be pumped via third party pipeline to a central facility thereby minimizing truck traffic. Black Hills committed to emptying the MLVT (via third party pipeline) and disassembling it by January 1, 2016.
14. On November 20, 2015, the Director conditionally approved the November 14, 2015 variance request.
15. The MLVT was emptied on December 23, 2015 and disassembled on December 28, 2015, in compliance with conditions contained in the variance request. COGCC confirmed that the MLVT was no longer present on site through a field inspection on January 6, 2016 (Document No. 675202383).
16. On January 13, 2016, Staff issued a Notice of Alleged Violation (“NOAV”) (No. 400859025) to Black Hills.
18. Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Hearings Staff calculated a penalty of $20,000 for this violation. The penalty calculation is based on the following:
a. Class 2 Rule violation;
b. Violation start date November 9, 2015 (date of discovery);
c. Violation end date November 13, 2015 (date Black Hills submitted its initial variance request);
d. Four days of violation;
e. No aggravating factors;
f. Mitigating factors:
i. Black Hills demonstrated prompt, effective and prudent response to the alleged violation; and
ii. Black Hills demonstrated a history of compliance with the Act and Commission rules, orders and permits.
g. No gross negligence or 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 Black Hills agrees to settle the NOAV on the following terms and conditions:
I. Black Hills agrees to an entry of an order finding it in violation of Section 34-60-121(1), C.R.S.
II. Black Hills will be assessed a penalty of $20,000.
III. Black Hills will pay $20,000 within 30 days after the approved AOC is mailed by the Commission.
IV. This agreement resolves all violations alleged in NOAV No. 400859025.
V. Black Hills agrees to the findings of this AOC for the purpose of expeditiously resolving the matter without a contested hearing. Black Hills does not admit or deny any of the factual allegations or legal determinations set forth in this AOC and the NOAV, and any actions taken by Black Hills pursuant to this AOC shall not be construed as evidence of fault or liability.
RECOMMENDED this 3rd day of June, 2016.
OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
By
Kyle W. Davenport, Asst. Attorney General
AGREED TO AND ACCEPTED this ______day of June, 2015.
BLACK HILLS PLATEAU PRODUCTION LLC
By
Signature of Authorized Company Representative
Print Signatory Name
Title
ORDER
HAVING CONSIDERED the Agreement between the Director and Black Hills to resolve the NOAV, the COMMISSION ORDERS:
1. Black Hills is found in violation of Section 34-60-121(1), C.R.S.
2. Black Hills is assessed a penalty of $20,000.
3. Black Hills will pay $20,000 within 30 days after the approved AOC is mailed by the Commission.
4. This Order is effective on the date it is mailed by the Commission. It is binding on the parties and is a final order of the Commission on the date it is approved 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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OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
Julie Murphy, Secretary
CERTIFICATE OF MAILING
On June __, 2016, a true and accurate copy of Commission Order 1V-588 was mailed by first-class mail return receipt requested to the following:
Black Hills Plateau Production, LLC
Attn: Diane O’Neil
1515 Wynkoop Street, Suite 500
Denver, Colorado 80202
By