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 PROSPECT ENERGY LLC, LARIMER COUNTY, COLORADO

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CAUSE NO. 1V

DOCKET NO. 161200403

TYPE:  ENFORCEMENT

ORDER NO: 1V-606

 

ADMINISTRATIVE ORDER BY CONSENT

(Pursuant to Rule 522.e. of the Rules and Regulations of the

Colorado Oil and Gas Conservation Commission, 2 CCR 404-1)

 

FINDINGS

 

1.            Prospect Energy LLC (“Prospect”) (Operator No. 10312) is the operator of the MSSU 30-15 Underground Injection Control Well (API No. 05-069-06305) (“Well”) in Larimer County, Colorado.

2.            Prior to the mechanical integrity test (“MIT”) performed in response to the Notice of Alleged Violation (“NOAV”), the Well’s most recent MIT was in June 2007.

3.            The Well has been shut-in since July 2012.

4.            On February 2, 2016, COGCC Staff issued Warning Letter No. 2193160 to Prospect for violations of Rules 319 and 326 at the Well. The Warning Letter required corrective actions by April 30, 2016, which Prospect did not perform.

5.            On July 21, 2016, Hearthstone Energy LLC entered into an Equity Purchase Agreement with Memorial Production Operating LLC to purchase Prospect. The management and employees of the operator changed with this transfer of ownership.

6.            On August 25, 2016, COGCC Staff issued NOAV No. 401078582 to Prospect for a violation of Rule 326.b. (Mechanical Integrity Test, Shut-in Wells) for the failure to perform an MIT on the Well within two years of the initial shut-in date or within five years after the last successful MIT.

7.            On September 26, 2016, Prospect performed a passing MIT on the Well (Doc. No. 680702791).

8.            Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Hearings staff calculated a penalty of $32,400. The penalty calculation is based on the following:

 

Rule

Class, Impact

Daily Penalty

Start Date

End Date

Days

Total Penalty

326.b.

Class 2, Minor

$2500

7/21/2016

9/26/2016

67

$43,200

Settlement Inducement and Mitigating Factor (-25%)

-$10,800

FINAL PENALTY

$32,400

 

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

b.    Start date of the transfer of ownership and the first date that the new owners could have performed the MIT;

c.    End date of commencement of the corrective actions (performance of a successful MIT);

d.    Settlement inducement;

e.    Mitigating Factor 2 (prompt, effective response) pursuant to Rule 523.c.(3)B(2);

f.     No aggravating factors; and

g.    No pattern of violation, or gross negligence or knowing and willful misconduct.

AGREEMENT

 

      NOW, THEREFORE, based on the Findings and pursuant to Rule 522.e.(1), the Director and Prospect agree to settle the NOAV on the following terms and conditions:

 

  1. Prospect is found in violation of Rule 326.b., as described above.

 

    II.        Prospect will be assessed a penalty of $32,400 for these violations.

 

   III.        Prospect will pay $32,400, by certified check, within 30 days after the approved AOC is mailed by the Commission.

 

RECOMMENDED this 28th day of October, 2016.

 

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

 

By                                                                       

                                                             Britta Beckstead, Asst. Attorney General

 

 

 

 

 

AGREED TO AND ACCEPTED this ____ day of October, 2016.

                                                 

PROSPECT ENERGY LLC                             

 

 

                        By                                                                                          

Signature of Authorized Company Representative

                       

 

                                                                                                                                                           

Print Signatory Name and Title                  

 

ORDER

 

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

 

1.            Prospect is found in violation of Rule 326, as described above.

 

2.            Prospect is assessed a penalty of $32,400 for these violations.

 

3.            Prospect will pay $32,400, by certified check, within 30 days after this Order is mailed by the Commission.

 

4.            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 14 days prior to the pertinent compliance deadline or as soon as possible if 14 days prior notice is not feasible.

 

5.            Failure to pay the penalty or perform the corrective action by the above deadlines is an independent violation that may be subject to additional penalties. 

 

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

 

7.            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, 2016 as of the ___ day of December, 2016.

                                                            OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

 

 

                                                            By                                                                              

                                                                        Julie Murphy, Secretary

CERTIFICATE OF MAILING

 

On ___________, 2016, a true and accurate copy of Order 1V-606 was mailed by certified mail, return receipt requested to the following address:

 

Prospect Energy LLC

Attn: Ward Giltner

880 Wolverine Court

Castle Rock, CO 80108

 

                                                            ____________________________________

                                                                                 Margaret Humecki