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 SUNBURST INC., LARIMER COUNTY, COLORADO |
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CAUSE NO. 1V DOCKET NO. 160600163 TYPE: ENFORCEMENT ORDER NO. 1V-597
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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. Sunburst Inc. (“Sunburst”) (Operator No. 83555) is the operator of the Vader #33-15 Well (“Well”) in Larimer County (API #05-069-06404).
2. On January 25, 2016, Commission Staff issued NOAV No. 400967807 to Sunburst for reporting and permitting issues. The NOAV cited violations of the following COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”):
Rule 205A (Hydraulic Fracturing Chemical Disclosure);
Rule 303 (Requirements for Form 2, & Form 2A);
Rule 308A (OGCC Form 5. Drilling Completion Report);
Rule 308B (OGCC Form 5A. Completed Interval Report);
Rule 309 (OGCC Form 7. Operator's Monthly Production Report); and
Rule 316C (OGCC Form 42 Field Operations Notice)
Rule 205A
3. On January 11, 2014, Sunburst completed a hydraulic fracturing treatment for the Well.
4. Rule 205A requires details of the hydraulic fracturing treatments within 60 days of the end of the treatment to the chemical disclosure registry (FracFocus).
5. On March 9, 2016, Sunburst submitted the required information to FracFocus, 728 days after the date the information was required to be reported.
Rule 303
6. Rule 303.a.(1)D requires submittal of a Form 2 (Recompletion Application) for any formation not previously completed before the expiration of the originally approved Form 2.
7. On May 25, 2010, the original Form 2 (Document No. 400055638) was approved, with an expiration date of May 24, 2012.
8. On May 2, 2011, Sunburst submitted a Form 5A - Completed Interval Report (Document No. 1635857) reporting the J-Sand Formation as the completed interval for the Well.
9. On February 4, 2016, Sunburst submitted a Form 5A (Document No. 400872971) reporting the J-Sand Formation as an abandoned completion and reporting the Codell Formation as being completed on January 11, 2014, with a date of first production of March 11, 2014. This indicates that the Codell Formation was completed after the expiration of the approved Form 2, without a Form 2 Recompletion Application being submitted or approved.
Rule 308A
10. On January 18, 2011, Sunburst submitted a Form 5 - Drilling Completion Report (Document No. 2592733) reporting the date of casing setting as September 20, 2010.
11. Rule 308A requires the submittal of a Form 5, Drilling Completion Report within 30 days of the setting of production casing. Sunburst did not submit the necessary Form 5, within 30 days of the setting of production casing.
Rule 308B
12. On August 10, 2015, Sunburst first filed a Form 5A (Document No. 400872971) reporting a completion date for the Codell Formation of March 11, 2014. (This Form was subsequently returned to “Draft” status in the COGCC data base and now has a submittal date of February 4, 2016.)
13. Rule 308B requires the submittal of a Form 5A within 30 days from date of completing a formation.
14. Sunburst did not submit the necessary Form 5A timely. The Form 5A has now been corrected and approved (Document No. 400872971).
Rule 309
15. Rule 309 requires the submittal of a Form 7 - Monthly Report of Operations for every completed formation within 45 days of the end of the reporting month.
16. Sunburst failed to submit accurate and timely Form 7s for the J Sand Formation beginning in October 2014, and failed to submit accurate and timely Form 7s for the Codell Formation beginning January 2014. Form 7s are now current.
Rule 316C
17. Rule 316Ca. requires 48 hours advance written notice with a Form 42 prior to conducting hydraulic fracturing.
18. Sunburst did not submit a Form 42 or provide advance written notice prior to conducting hydraulic fracturing for in the Codell Formation on January 11, 2014.
Penalty Calculation
19. Following a factual investigation and legal review of the violations alleged in the NOAV referenced above, COGCC Staff now asserts Sunburst has committed the following violations:
|
Rule |
Daily Penalty |
Days of Violation |
Total Penalty |
|
205A |
$200 |
368 |
$4,149 |
|
303.a.(1)D |
$1,000 |
10 |
$10,000 |
|
308A |
$1,000 |
10 |
$10,000 |
|
308B |
$1,000 |
10 |
$10,000 |
|
309 |
$200 |
270 |
$3,860 |
|
316C.a |
$1,000 |
1 |
$1,000 |
|
Total Penalty |
$39,009 |
||
|
Settlement Inducement |
$10,009 |
||
|
Adjusted Penalty |
$29,000 |
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20. Pursuant to § 34-60-121 C.R.S. and Rule 523 and the Commission’s Enforcement and Penalty Policy, Hearings staff calculated a penalty of $29,000 for this violation. The penalty calculation is based on the following:
a. Violations of Rules 303.a.(1)D, 308A, 308B, and 316C.a occurred prior to the effective date of HB 14-1356 with penalties calculated under prior statute;
b. Daily starting base penalty of $1,000 per day of violation;
c. Statutory limit of not more than 10 days of violation because there was no significant waste of oil and gas resources, damage to correlative rights, or significant adverse impact of public health, safety or welfare, including the environmental or wildlife resources;
d. Violations of Rules 205A and 309 under current penalty statute;
e. Class 1 violation for late paperwork for violation of Rule 205A and 309;
f. Class 1 daily base penalty of $200;
g. Application of the Duration Matrix of the Enforcement Guidance and Penalty Policy;
h. Minor impact – all violations;
i. Inability to pay;
j. No aggravating factors;
k. No mitigating factors;
l. No pattern of violation; and
m. No gross negligence or knowing and willful misconduct.
21. Sunburst has submitted financial information for purposes of being considered for its ability to pay under Section V, C of the Enforcement Guidance and Penalty Policy, dated April, 2015. Staff concluded that Sunburst’s financial condition supports its request to have Sunburst’s ability to pay a penalty considered in the calculation of its penalty.
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 Sunburst agrees to settle the NOAV on the following terms and conditions:
I. Sunburst is found in violation of Rule 205A, Rule 303, Rule 308A, 308B, Rule 309, and Rule 316C.
II. Sunburst will be assessed a penalty of $29,000.
III. Sunburst commits to plug and abandon the Well, which is no longer capable of production. In exchange for this commitment, COGCC will suspend all but $1,000 of the penalty.
IV. Sunburst will pay $1,000 within 30 days after this AOC is mailed by the Commission.
V. Sunburst will plug and abandon the Vader #33-15 Well by April 1, 2017. Sunburst filed a Form 6 - Notice of Intent to Abandon on August 26, 2016, and must file a Form 6 – Subsequent Report of Abandonment within 30 days of abandonment.
I. If Sunburst fails to plug and abandon the Well as required by this AOC, the suspended $28,000 portion of the penalty will become due 60 days after written demand by the Director is mailed to Sunburst’s address of record with the COGCC.
RECOMMENDED this 12th day of September, 2016.
OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
By
Scott Schultz, Assistant Attorney General
AGREED TO AND ACCEPTED this day of ___________, 2016.
SUNBURST INC.
By
Signature of Authorized Company Representative
Print Signatory Name
Title
ORDER
HAVING CONSIDERED the Agreement between the Director and Sunburst Inc. to resolve the NOAV, the COMMISSION ORDERS:
1. Sunburst is found in violation of Rule 205A, Rule 303, Rule 308A, 308B, Rule 309, and Rule 316C as described above.
2. Sunburst is assessed a total penalty of $29,000 for the rule violations described above.
3. Sunburst will pay Sunburst will pay $1,000 within 30 days after this AOC is mailed by the Commission.
4. The remaining $28,000 of the penalty is suspended, pending Sunburst’s plugging and abandonment of the Well. If Sunburst plugs and abandons the Well consistent with this AOC and Commission Rules, the suspended $28,000 will be vacated. If Sunburst fails to plug and abandon the Well consistent with this AOC and Commission Rules, the suspended $28,000 penalty will become due 60 days after written demand by the Director is mailed to Sunburst’s address of record with the COGCC.
5. Sunburst will plug and abandon the Vader #33-15 Well by April 1, 2017. Sunburst filed a Form 6 - Notice of Intent to Abandon on August 26, 2016, and must file a Form 6 – Subsequent Report of Abandonment within 30 days of abandonment.
6. 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.
7. Entry of this Order constitutes final agency action for purposes of judicial review as of the date this order is mailed by the Commission. For all other purposes, this Order is effective as of the date of approval by the Commission.
8. 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 _________, 2016.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
Julie Murphy, Secretary
CERTIFICATE OF MAILING
On ___________________, a true and accurate copy of Commission Order 1V--597 was mailed by first-class mail return receipt requested to the following:
Sunburst Inc.
Attn: Jay Jackson
1401 E. Girard Ste. 143
Englewood, CO 80110
____________________________________
Margaret Humecki