BEFORE THE OIL AND GAS CONSERVATION COMMISSION

                                                              OF THE STATE OF COLORADO

IN THE MATTER OF THE VIOLATION OF THE RULES               )                    CAUSE NO. 1

AND REGULATIONS OF THE OIL AND GAS                                 )

CONSERVATION COMMISSION BY LEWIS AND CLARK          )                    ORDER NO. 1V-66

EXPLORATION COMPANY, CHEYENNE )                                                                       (1-172)

COUNTY, COLORADO                                                                      )

REPORT OF THE COMMISSION

                        This cause came on for hearing before the Commission on February 22, 1994 at 8:30 a.m., in Room 318, State Centennial Building, 1313 Sherman Street, Denver, Colorado, after giving Notice of Hearing as required by law, on why Lewis and Clark Exploration Company was not in violation of the Rules and Regulations of the Oil and Gas Conservation Commission, including, but not limited to, Rule Nos. 317.b.1., 317.b.3, 324.b.1., and 324.d., and why it should not invoke the provisions of 34-60-121 C.R.S., as amended, providing for penalties for violations of orders of the Commission.

FINDINGS

                        The Commission finds as follows:

                        1.  Lewis and Clark Exploration Company is an interested party in the subject matter of the above‑referenced hearing.

                        2.  Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

                        3.  The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

                        4.  On November 2, 1992, the Director of the Oil and Gas Conservation Commission required that certain wells, including the Champlin-Larsen No. 1-RDD Well located in the SE1/4 SW1/4 of Section 23, Township 15 South, Range 46 West, 6th P.M., the Lowe No. 1 Well located in the NW1/4 NW1/4 of Section 26, Township 15 South, Range 46 West, 6th P.M., and the Lowe No. 2 Well located in the SE1/4 NW1/4 of Section 26, Township 15 South, Range 46 West, 6th P.M., pass mechanical integrity tests by October 31, 1992 or be plugged and abandoned by November 30, 1992.  On May 17, 1993, Mr. Don Hembre of Lewis and Clark Exploration Company informed Commission staff that the Champlin-Larsen No. 1-RDD and the Lowe No. 1 Wells failed mechanical integrity tests.  Verbal plugging instructions were given to Mr. Hembre by Commission staff for both wells.  On November 23, 1993 a registered letter was sent to Lewis and Clark Exploration Company requiring the company to repair or plug the two wells no later than December 27, 1993.  On December 27, 1993, Mr. Hembre requested a meeting with Commission staff to discuss a comprehensive plan for compliance. 

                        5.  Testimony presented at the hearing on February 22, 1994 indicated that for the Champlin-Larsen No. 1 RDD Well and for the Lowe No. 1 Well, Lewis and Clark Exploration Company was in violation of Rule 317.b.3, failure to obtain Director approval for temporarily abandoned status, each for approximately ninety (90) days, and Rule 324.d., failure to repair or plug and abandon a well within six (6) months of failing a mechanical integrity test, each for approximately ninety (90) days.

                        6.  Additional testimony presented indicated that for the Lowe No. 2 Well, Lewis and Clark Exploration Company was in violation of Rule 317.b.1., failure to obtain Director approval for temporarily abandoned status, for approximately three hundred ninety-eight (398) days, Rule 317.b.3, failure to plug and abandon a well which has ceased production or injection or is incapable of production or injection within six (6) months thereafter, and Rule 324.b.1., failure to perform a mechanical integrity test, for approximately four hundred seventy-two (472) days.

                        7.  The Commission should assess a penalty in the amount of ten thousand ($10,000) dollars per well for violations at the Champlin-Larsen No. 1 RDD Well and for violations at the Lowe No. 1 Well.  The penalty amount is calculated by assessing a twice economic benefit to the estimated five thousand ($5,000) dollar cost to properly plug and abandon the well.  This penalty should be payable within thirty (30) days of the date the order is entered.  In addition, Lewis and Clark Exploration Company should be required to plug and abandon both wells by submitting Form 4, Sundry Notice, Intent to Plug within thirty (30) days from the date the order is entered and finalizing work within sixty (60) days from the date the order is entered.

                        8.  Lewis and Clark Exploration Company should be required to perform a mechanical integrity test and if said test fails to either repair or plug and abandon the Lowe No. 2 Well.  Lewis and Clark Exploration Company should be required to submit a Form 4, Sundry Notice, detailing planned procedures to bring the well into compliance within thirty (30) days from the date the order is entered.  Repairing or plugging and abandonment of the Lowe No. 2 Well should be finalized within sixty (60) days from the date the order is entered.  The Commission should waive a penalty in the amount of ten thousand ($10,000) dollars for violations at the Lowe No. 2 Well.  Failure to complete required operations within the specified time should result in the assessment of a penalty of ten thousand ($10,000) dollars.

O R D E R

                        NOW, THEREFORE, IT IS ORDERED, that Lewis and Clark Exploration Company shall be assessed a penalty in the amount of twenty thousand ($20,000) dollars.  The penalty shall be payable within thirty (30) days of the date the order is entered.

                        IT IS FURTHER ORDERED, that Lewis and Clark Exploration Company is hereby ordered to plug and abandon the Champlin-Larsen No. 1 RDD Well and the Lowe No. 1 Well by submitting Form 4, Sundry Notice, Intent to Plug within thirty (30) days from the date the order is entered and finalizing work within sixty (60) days from the date the order is entered.

                        IT IS FURTHER ORDERED, that Lewis and Clark Exploration Company is hereby ordered to perform a mechanical integrity test and if said test fails to either repair or plug and abandon the Lowe No. 2 Well.  Lewis and Clark Exploration Company shall be required to submit a Form 4, Sundry Notice, detailing planned procedures to bring the well into compliance within thirty (30) days from the date the order is entered.  Repairing or plugging and abandonment of the Lowe No. 2 Well shall be finalized within sixty (60) days from the date the order is entered.  The Commission shall waive a penalty in the amount of ten thousand ($10,000) dollars for violations at the Lowe No. 2 Well.  Failure to complete required operations within the specified time shall result in the assessment of a penalty of ten thousand ($10,000) dollars.

                        IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.

                        IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

                        ENTERED this  day of , 1994, as of February 22, 1994.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                               OF THE STATE OF COLORADO

                                                                        By

                                                                             Patricia C. Beaver, Secretary

Dated at Suite 380

1580 Logan Street

Denver, Colorado  80203

February 27, 1994