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 XTO ENERGY INC., LA PLATA COUNTY, COLORADO

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CAUSE NO. 1V DOCKET NO. 160600199 TYPE:   ENFORCEMENT ORDER NO. 1V-590

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. XTO Energy Inc. (Operator No. 100264) is the operator of a produced water flowline located at SESW Sec 3, T34N R8W (Spill Release Point ID: 445071) (“Flowline”) in La Plata County, Colorado.

2. On March 3, 2016, XTO discovered a produced water spill due to a release from the Flowline. XTO responded the same day, shut-in the Flowline, and began clean-up operations. XTO also notified Colorado Oil and Gas Conservation Commission (“Commission” or “COGCC”) Staff of the release.

3. On March 4, 2016, XTO filed a Form 19, Initial Spill/Release Report, which stated the spill occurred because the outlet line of the separator failed due to freezing. XTO also stated that approximately 70 barrels of produced water had been released. (Document No. 401000435).

4. On March 8, 2016, COGCC Staff inspected the spill site and observed that the release had flowed from the location into Lone Hollow Creek, where it commingled with snow melt. (Document Nos. 674900962 and 401000435). Lone Hollow Creek constitutes Waters of the State.

5. On March 25, 2016, XTO filed a Form 19, Supplemental Spill/Release Report, which stated that XTO had taken action which would prevent non-flowing water from sitting in a line and freezing. XTO also submitted analytical results and completed all other corrective actions. (Document No. 401011214).

6. On March 28, 2016, COGCC Staff conditionally approved XTO’s spill closure request. Staff provided that should future conditions at the site indicate that contaminant concentrations in soils exceed COGCC standards or if ground water is found to be significantly impacted, then further investigation and/or remediation activities may be required at the site. (Document No. 401011214).

7. On April 1, 2016, COGCC Staff issued NOAV No. 401012690 to XTO citing violations of COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”) including a violation of Rule 1102 (Operations, Maintenance, and Repair) for the failure to take reasonable precautions to prevent failures, leakage, and corrosion of pipelines.

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

Rule	Class	Impact	Daily Penalty	Start Date	End Date	Days	Total Penalty
1102	Class 2	Moderate	$10,000	3/3/2016	3/4/2016	1	$10,000
TOTAL PENALTY							$10,000

a. Violations beginning after the effective date of HB 14-1356 (June 6, 2014) and revised Rules 522/523 (March 2, 2015);

b. The daily penalty amount was increased from the base penalty provided by Rule 523 to make the penalty appropriate to the nature of the violation and based on consideration of the totality of the circumstances;

c. No aggravating factors;

d. Mitigating factors:

i. XTO self-reported the violation;

ii. XTO demonstrated prompt, effective and produce response to the alleged violation; and

e. No pattern of violation or gross negligence/knowing and willful misconduct.

AGREEMENT

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

I. XTO is found in violation of Rule 1102, as described above.  

II. XTO will be assessed a penalty of $10,000.

III. XTO will pay $10,000 within 30 days after the approved AOC is mailed by the Commission.

IV. XTO agrees to the findings of this AOC for the purpose of expeditiously resolving the matter without a contested hearing.  XTO does not admit or deny any of the factual allegations or legal determinations set forth in this AOC and the NOAV.

RECOMMENDED this 8 day of July, 2016.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By

     Kyle W. Davenport, Assistant Attorney General

AGREED TO AND ACCEPTED this ___ day of July, 2016.

XTO ENERGY INC.

                        By

                             Signature of Authorized Company Representative

                            Print Signatory Name and Title

ORDER

HAVING CONSIDERED the Agreement between the Director and XTO to resolve the NOAV, the COMMISSION ORDERS:

1. XTO is found in violation of Rule 1102, as described above. 

2. XTO is assessed a penalty of $10,000.

3. XTO will pay $10,000 within 30 days after this Order 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 Order. 

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ENTERED this ___ day of July, 2016 as of the __ day of July, 2016.

                                                OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

By 

                                                                          Julie Murphy, Secretary

CERTIFICATE OF MAILING

On July __, 2016, a true and accurate copy of Commission Order 1V-590 was mailed by first-class mail return receipt requested to the following:

XTO Energy Inc.

Attn: Kelly Kardos

382 CR 3100
Aztec, NM  87410

            By