BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

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

AND REGULATIONS OF THE OIL AND GAS )

CONSERVATION COMMISSION BY TIPPS OIL ) ORDER NO. 1V-93

COMPANY, WASHINGTON COUNTY, COLORADO ) (1-219)

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on November 21, 1995 at 8:30 a.m., in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing as required by law, on why Tipps Oil Company was not in violation of Rule Nos. 604.a.4, 902.e. and f. and 907.a. and b. of the Rules and Regulations of the Oil and Gas Conservation Commission, and why it should not invoke the provisions of §34-60-121 C.R.S., as amended, providing for penalties for violations of the Rules and Regulations of the Commission.

FINDINGS

The Commission finds as follows:

1. Tipps Oil 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 September 5, 1995, a Cease and Desist Order was issued for the Marick lease for violation of Rule 902.e. for oil remaining on the pit for more than twenty-four (24) hours which could be construed as an adverse environmental impact, a violation of §34-60-106(2)(d), C.R.S., and for a violation of §34-60-117(1), C.R.S., a waste of natural resource. Notices of Alleged Violation (NOAVs) were issued for the below-listed wells on September 12 and 29, 1995 for violation of Rule 902.e., oil on production pits for greater than twenty-four (24) hours. Field inspections were completed on October 11, 1995, and all leases except the Marick A-1 remained in violation of Rule 902.e. The Marick A-1 remained in violation of the NOAV and the Cease and Desist Order since the petroleum-contaminated soil had not been completely removed. In addition, the Friend No. 1 Well showed evidence of an unreported and unremediated spill measuring approximately three hundred (300) feet by ten (10) feet which is a violation of Rule 907.

Well Name Location Violation

Scheetz No. 1 NW¼ NW¼ Sec. 14-3S-52W 604.a.4, 902.e.&f.

Jefferson No. 1 SW¼ SW¼ Sec 11-3S-52W 604.a.4, 902.e.&f.

Hickert Lease SE¼ SE¼ Sec 10-3S-52W 604.a.4, 902.e.&f.

Anderson Lease NW¼ SW¼ Sec 20-3S-52W 604.a.4, 902.e.&f.

Friend No. 1 SW¼ NE¼ Sec 20-3S-50W 604.a.4, 902.e.&f.

Kejr Lease SW¼ NW¼ Sec 11-2S-56W 604.a.4, 902.e.&f.

Marick A-1 SW¼ NW¼ Sec 10-3S-52W 604.a.4, 902.e.&f.

5. At the time of the hearing, Commission staff presented testimony indicating that numerous attempts have been made to obtain abatement by Tipps Oil Company for the alleged violations. Additional testimony presented indicated that work to close the pits at the Hickert Lease were proceeding as of November 6, 1995 and should be completed by the November 21, 1995 hearing, however, the remaining five (5) leases were not restored within the required abatement period.

6. Commission staff recommended that Tipps Oil Company be required to provide a work plan prepared by a professional, describing how and when remediation will occur on all Tipps wells.

7. Commission staff further recommended that Tipps Oil Company be found in violation for the wells and rules described in Finding 4, that Tipps be ordered to close the pits or bring the sites into compliance and maintained in compliance with the rules and regulations of the Commission, that the Tipps bond be increased from thirty thousand dollars ($30,000) to one hundred sixty three thousand dollars ($163,000) unless Tipps can prove a lower bond is appropriate, and that a fine of sixty thousand dollars ($60,000) be assessed with thirty thousand dollars ($30,000) suspended if all wells are brought into compliance no later than May 20, 1996.

8. Ken Tipps of Tipps Oil Company was present at the hearing, responded to Commission staff recommendations, and presented testimony to the Commission.

9. After Commissioner deliberation, two motions were made and failed, upon which a third motion was made and passed that an order should be issued to find Tipps Oil Company in violation for the wells and rules described in Finding 4, to order Tipps to close all pits or bring all sites into compliance and maintained in compliance with the rules and regulations of the Commission, to increase the Tipps bond from thirty thousand dollars ($30,000) to one hundred sixty three thousand dollars ($163,000) unless within two (2) weeks from the date of the hearing Tipps is able to prove to Commission staff that a lower bond is appropriate, and to assess a fine of sixty thousand dollars ($60,000) with thirty thousand dollars ($30,000) to be suspended should all wells be brought into compliance no later than May 15, 1996.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that Tipps Oil Company is hereby found in violation of Rule No. 604.a.4, inadequate berms around production tanks; 902.e., accumulation of oil on pits for more than twenty-four (24) hours after discovery; and Rule 902.f., inadequate netting, for the below-listed wells:

Well Name Location Violation

Scheetz No. 1 NW¼ NW¼ Sec. 14-3S-52W 604.a.4, 902.e.&f.

Jefferson No. 1 SW¼ SW¼ Sec 11-3S-52W 604.a.4, 902.e.&f.

Hickert Lease SE¼ SE¼ Sec 10-3S-52W 604.a.4, 902.e.&f.

Anderson Lease NW¼ SW¼ Sec 20-3S-52W 604.a.4, 902.e.&f.

Friend No. 1 SW¼ NE¼ Sec 20-3S-50W 604.a.4, 902.e.&f.

Kejr Lease SW¼ NW¼ Sec 11-2S-56W 604.a.4, 902.e.&f.

Marick A-1 SW¼ NW¼ Sec 10-3S-52W 604.a.4, 902.e.&f.

IT IS FURTHER ORDERED, that the Tipps Oil Company shall close all pits or bring all sites into compliance and maintain the sites in compliance with the rules and regulations of the Commission, no later than May 15, 1996.

IT IS FURTHER ORDERED, that the plugging bond shall be increased from thirty thousand dollars ($30,000) to one hundred sixty three thousand dollars ($163,000) unless within two (2) weeks from the November 21, 1995 hearing proof is provided to Commission staff that a lower bond is appropriate.

IT IS FURTHER ORDERED, that Tipps Oil Company shall be assessed a fine of sixty thousand dollars ($60,000), with thirty thousand dollars ($30,000) to be suspended, should all wells be brought into compliance no later than May 15, 1996.

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 , 1995, as of November 21, 1995.

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

December 16, 1995