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 BONANZA CREEK ENERGY OPERATING COMPANY LLC, WELD COUNTY, COLORADO

)

)

)

)

 

CAUSE NO. 1V

DOCKET NO. 170500187

TYPE:  ENFORCEMENT

ORDER NO. 1V-627

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

Bonanza Creek Energy Operating Company LLC (“Bonanza Creek”) is the operator of the State Antelope 44-41-12HNB well (“Well”) (API # 05-123-36599) in Weld County, Colorado.

 

Pursuant to Rule 308A., as in effect at the time of the drilling of this well, Bonanza Creek was required to submit a Form 5, Drilling Completion Report (“Form 5”), within thirty (30) days of the setting of production casing for Well.  The production casing for the -00 wellbore was set on April 12, 2013, and the production casing for the -01 wellbore was set on April 20, 2013. 

 

Bonanza Creek submitted a preliminary Form 5 for the -00 wellbore on March 18, 2013 which was incomplete and could not be approved.  Bonanza Creek failed to submit a Form 5 for the -01 wellbore and, on November 11, 2013, COGCC staff requested that Bonanza Creek submit the Final Form 5 for the -01 wellbore.  The Final Form 5 was not submitted until July 8, 2015.  Additional COGCC staff requests to Bonanza Creek for missing information were not addressed until February 29, 2016, when a Form 4, Sundry Notice, was submitted with the required information needed to approve the Form 5 for the -00 wellbore.

 

On February 17, 2017, Commission Staff issued a Notice of Alleged Violation (“NOAV”) (No. 401212624) to Bonanza Creek for violations related to the matters described above.  The NOAV cited a violation of COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”), Rule 308A (COGCC Form 5. Drilling Completion Report). 

 

 

Through the enforcement process, COGCC Staff identified additional wells operated by Bonanza Creek with forms that could not be approved.

 

PENALTY CALCULATION

 

Pursuant to Rule 523 and the Commission's Enforcement and Penalty Policy, Hearings Staff calculated a penalty of $20,000 for these violations. The penalty calculation is based on the following:

 

Rule

Days

Start Date

End Date

Daily Penalty

Total Penalty

308A

8

2/21/2016

2/29/2016

$2,500

$20,000

 

a.                Class 2, Minor violations; 

b.                Settlement inducement;

c.                Hearings Staff supports a suspended penalty in light of Bonanza Creek ability to pay, per Section V.C. of the Enforcement Guidance and Penalty Policy, dated April, 2015.  Bonanza Creek filed for Chapter 11 Bankruptcy on January 4, 2017.  Bonanza Creek has expressed that money spent on a penalty will slow Bonanza Creek’s ability to return to compliance under the terms of this AOC.  Bonanza Creek’s bankruptcy filing and financial condition supports its request to have its ability to pay a penalty considered in calculation of the penalty assessed in this Order.

d.                Start date of one-year prior to the issuance of the NOAV and end date of the submission the required information needed to approve the Form 5 for the -00 wellbore to COGCC;

e.                No aggravating or mitigating factors; and

f.                 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) and the Commission’s Enforcement and Penalty Policy, the Director and Bonanza Creek agree to request that the Commission enter the Order set forth below.

 

RECOMMENDED this 23rd day of March, 2017.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

By_____________________________________

Jeremy I. Ferrin
Enforcement Officer

 

AGREED TO AND ACCEPTED this ____ day of March, 2017.

BONANZA CREEK ENERGY OPERATING COMPANY LLC

 

By__________________________________________

Dean Tinsley
VP, Operations and Engineering

 

 

ORDER

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

Penalty

1.            Bonanza Creek is found in violation of Rule 308A, as described above.

2.            Bonanza Creek is assessed a penalty of $20,000.

3.            Bonanza Creek will pay $10,000, by certified check, within 30 days after this Order is mailed by the Commission.

4.            The remaining $10,000 is suspended provided that Bonanza Creek complies with the compliance plan outlined below.  If the requirements of this AOC are satisfied, the suspended portion of the penalty will be vacated.  If the requirements are not satisfied, the suspended penalty will become due upon demand by the Director without further action by the Commission.

Definitions

5.            The term “Subject Forms” in this AOC refers only to “in process” Forms 5, 5A, 7 and 10 submitted by Bonanza Creek between May 1, 2013 and November 30, 2016, as listed on Exhibit A.

6.            “Batch” is a set number of wells, specified on Exhibit A, for which Subject Forms (or attachments) will be reviewed or submitted pursuant to the following schedule:

Batch

Batch Due Date

Batch 1

June 1, 2017

Batch 2

July 1, 2017

Batch 3

August 1, 2017

Batch 4

September 1, 2017

Batch 5

October 1, 2017

Batch 6

November 1, 2017

Batch 7

December 1, 2017

 

7.            “Batch Due Date” is the date before which Bonanza Creek will perform the actions required by this AOC. 

8.            “Form Tracking Spreadsheet” is a spreadsheet provided by COGCC Staff, the initial version of which is attached as Exhibit A, to track Subject Forms and document the Parties actions pursuant to this AOC.

Compliance Plan

9.            On or before the Batch Due Date, Bonanza Creek will review the Forms 5 and 5A in each Batch using the following guidelines and Bonanza Creek will take the following actions:

a)    Determine the information that is either incorrect or missing in order for the Form 5 and 5A to be processed.

b)    If data fields need correction, these corrections will be noted in the Form Tracking Spreadsheet for each form.  COGCC staff will make those corrections to the forms.

c)    If attachments or logs are missing, a Form 4 will be filed with the missing attachment, and the Form 4 document number will be noted in the Form Tracking Spreadsheet.  A good faith effort will be made to provide third party verification of cement jobs and obtain missing logs.  Operations summaries are acceptable.

d)    Determine if a Form 5 or Form 5A was never submitted for a well.  A missing form will be submitted with the next Batch and the document number noted in the Form Tracking Spreadsheet.

10.         If COGCC staff determines that incorrect attachments or logs were originally submitted with a form, COGCC staff will delete them and update the Form Tracking Spreadsheet to identify them by document number.  If COGCC staff identifies missing attachments or logs, staff will note these in the Form Tracking Spreadsheet.  Bonanza Creek will file a Form 4 with the necessary attachment or logs and the Form 4 document number will be noted in the Form Tracking Spreadsheet.

11.         If COGCC determines that a Form 5 or Form 5A was never submitted for a well, COGCC will notify Bonanza Creek who will file the missing form with the next Batch and note the document number in the Form Tracking Spreadsheet. 

12.         On or before the Batch Due Date, Bonanza Creek will review the related Form 7(s) for the wells in the respective Batch.  Missing or corrected Form 7 reporting will be submitted to the COGCC and noted in the Form Tracking Spreadsheet by the Batch Due Date. 

13.         On or before the Batch Due Date, Bonanza Creek will review the related Form 10(s) for the wells in the respective Batch.  Corrections to submitted Form 10s will be noted in the Form Tracking Spreadsheet and COGCC will correct the forms.  If there has been no Form 10, Certificate of Clearance, ever submitted for a well, that form will be submitted and the document number noted in the Form Tracking Spreadsheet.

14.         COGCC reserves the right to request that Bonanza Creek submit specific Subject Forms within 14 days of a good faith, written request from COGCC, where the timely submission of such forms is critical to fulfill COGCC's statutory mandate, §34-60-102(1)(a), C.R.S. Situations that may require these requests include, but are not limited to, evaluation of collision and fracture stimulation interference or potential impacts to correlative rights.

15.         If Bonanza Creek does not meet the corrective action requirements outlined in this AOC, the COGCC reserves the right to demand payment of the suspended penalty, issue NOAVs, and/or seek a penalty or compliance actions pursuant to Rule 522 and 523.

16.         For Subject Forms filed after February 28, 2016, the statute of limitations as set forth in § 34-60-115, C.R.S., is tolled from February 26, 2016 through February 1, 2018.

17.         Compliance dates specified in this Order may be extended 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.

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

19.         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 May, 2017, as of the 1sth day of May, 2017.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

 

 

                                                      By                                                                              

                                                                  Peter J. Gowen, Acting Secretary

 

 

 

 

CERTIFICATE OF MAILING

 

On ___________________, 2017, a true and accurate copy of Order 1V-627 was mailed by first-class mail, return receipt requested to the following addresses:

 

Bonanza Creek Energy Operating Company LLC

Attn: Brian Dodek

410 17th Street Suite #1400

Denver, CO  80202

 

 

                                                      ____________________________________

                                                                              Margaret Humecki