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 EXTRACTION OIL & GAS LLC, WELD COUNTY, COLORADO

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CAUSE NO. 1V

 

ORDER NO. 1V-596

 

DOCKET NO. 160700258

 

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.            Extraction Oil & Gas, LLC (“Extraction”) (Operator No. 10459) is the operator of record of the Downtown Directional #1 location (“Location”) (Facility No. 432599) located in Weld County, Colorado.

2.            During an inspection of the Location on January 12, 2016, COGCC staff observed that Extraction failed to install sufficient stormwater and sediment control Best Management Practices (“BMPs”) for the Location. (Doc. No. 682400265)

3.            Also during the inspection, Staff observed that Extraction had commenced a surface disturbance to expand the Location to construct Modular Large Volume Tanks (“MLVTs”) but failed to secure an approved Form 2A (Oil and Gas Location Assessment) before commencing work. (Doc. No. 682400265)

4.            On January 29, 2016, Extraction submitted an amended Form 2A requesting approval to expand the Location. (Doc. No. 400972007)

5.            On February 9, 2016, Extraction submitted a Form 42 (Field Operations Notice) informing Staff that it had completed the installation of the requisite stormwater and sediment control BMPs for the Location on February 8, 2016. (Doc No. 400985740)

6.            On February 12, 2016, COGCC Staff conducted a follow-up inspection of the Location and confirmed that Extraction had installed sufficient stormwater and sediment control BMPs. (Doc. No. 682400354)

7.            On March 24, 2016, COGCC Staff issued Notice of Alleged Violation (“NOAV”) No. 401002330 to Extraction for violations of COGCC Rules of Practice and Procedure, 2 C.C.R. 404-1 (“Rule” or “Rules”):

a.    Rule 303 (Form 2A – Oil and Gas Location Assessment); and

b.    Rule 1002.f. (Stormwater Management).

8.            Following factual investigation and legal review of the violations alleged in the NOAV, Hearing Staff asserts that Extraction has committed the following violations:

a.    One 17-day violation of Rule 303 for failing to secure an approved Form 2A before commencing work on the unpermitted location; and

b.    One 27-day violation of Rule 1002.f. for failing to install sufficient stormwater and sediment control BMPs for the Location. Pursuant to Rule 523 and the COGCC Enforcement and Penalty Policy January 2015 (corrected 4/8/2015), Hearings Staff calculated a penalty of $62,000 for this violation. The penalty calculation is based on the following:

Rule No.

Days of Violation

Start Date

End Date

Class

Impact

Daily Base Penalty

Total Penalty

303

17

1/12/2016

1/29/2016

2

Minor

$2,500

$28,500

1002.f.

27

1/12/2016

2/8/2016

2

Minor

$2,500

$33,500

 

TOTAL:

$62,000

 

 

 

 

c.    Application of the Duration Matrix from the COGCC Enforcement Guidance and Penalty Policy;

 

d.    Rule 1002.f.:

                                                  i.    Violation commenced on January 12, 2016 (the date Staff discovered the violation) and continued until February 8, 2016 (the date Extraction completed the installation of the requisite stormwater and sediment control BMPs for the Location);

                                                ii.    Class 2;

                                               iii.    Minor impact;

                                               iv.    Daily base penalty of $2,500;

e.    Rule 303:

                                                  i.    Violation commenced on January 12, 2016 (the date Staff discovered the violation) and continued until January 29, 2016 (the date Extraction submitted the requisite Form 2A for approval);

                                                ii.    Class 2;

                                               iii.    Minor impact;

                                               iv.    Daily base penalty of $2,500;

f.     No aggravating factors;

g.    No mitigating factors;

h.    No pattern of violation; and

i.      No gross negligence or 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 and Extraction request that the Commission approve the Order set forth below.

 

 

 

RECOMMENDED this         day of August, 2016.

 

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By                                                                              

     Jeremy I. Ferrin, Enforcement Officer

 

AGREED TO AND ACCEPTED this         day of August, 2016.

 

                                                EXTRACTION OIL & GAS, LLC

 

 

 

By                                                                                          

Signature of Authorized Company Representative

                       

                                                                                         

Print Signatory Name

 

                                                                                         

Title

 

 

ORDER

 

HAVING CONSIDERED the Agreement between the Director and Extraction Oil & Gas, LLC to resolve the NOAV, the COMMISSION ORDERS:

 

1.            Extraction is found in violation of Rules 1002.f. and 303.

2.            Penalty:

a.    Extraction is assessed a penalty of $62,000.

b.    Extraction will pay $37,000 within 30 days after this approved AOC is mailed by the Commission.

c.    The remaining $25,000 is suspended given Extraction’s continued best efforts to work on improving and enhancing its stormwater BMPs while taking into consideration site specific conditions. These efforts include improvements and enhancements of those oil and gas locations in Weld County listed below, to be completed on or before September 29, 2016.

Location Name

Location ID

Varra 5-I Pad

430411

Westwind 7-P Pad

159698

Bybee 14-L Pad

442316

Breniman 16-B

439436

Johnson Trust 13-I Pad

443649

Wind 31-P

469018

Fairview 5-I Pad

441811


These enhancements will be consistent with the specifications set forth in the Manual of Stormwater BMPs (Revised: 2015) attached to Extraction’s Stormwater Management Plan (“SWMP”) as submitted to the Colorado Department of Health and Environment (“CDPHE”) (Doc. No. 2193374). Extraction  has worked  and continues to work to establish high standards for its stormwater BMP’s as necessary. Extraction engages in self-evaluation through repeated self-inspections and maintenance to review the stormwater BMP’s at each site. Extraction has also engaged in discussions with the Commission in Extraction’s efforts regarding stormwater BMP’s.

 

3.            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.

4.            This Order is effective as of the date it is mailed by the Commission. It constitutes final agency action for purposes of judicial review.

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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ENTERED this          day of _________, 2016 as of the            day of August, 2016.

           

                                                            OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

 

 

                                                            By                                                                                          

                                                                                    Julie Murphy, Secretary

 

 

 

 

 

CERTIFICATE OF MAILING

 

On [Date], a true and accurate copy of Commission Order 1V-596 was mailed by first-class mail return receipt requested to the following:

 

 

Extraction Oil & Gas, LLC

Attn: Matt Owens

370 17th Street, Ste. 5300

Denver, CO 80202

 

 

 

 

                                                            ____________________________________

                                                                                      Signature