BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

IN THE MATTER OF EXPENDITURES FROM THE                                  )                    CAUSE NO. 1E

ENVIRONMENTAL RESPONSE FUND FOR THE                                    )

COLORADO OIL AND GAS CONSERVATION COMMISSION               )                    ORDER NO. 1E-4

 

REPORT OF THE COMMISSION

 

This cause came on for an emergency hearing before the Commission at 11:00 a.m. on December 7, 2005, in Suite 801, 1120 Lincoln Street, Denver, Colorado for an order to allow the expenditure of additional funds from the Colorado Oil and Gas Conservation and Environmental Response Fund.  The Commission held this emergency hearing pursuant to its authority under §34-60-108(3), C.R.S. (2004).

 

FINDINGS

 

1.  Since the explosion in the double-wide trailer that occurred on February 12, 2005, Colorado Oil and Gas Conservation Commission (COGCC) staff has worked diligently to ensure that the health, safety and welfare of the residents in the vicinity of the Nick Spatter-Bryce Farm #1 (NSBF #1) (API No. 05-067-05211) Well, which is located in the SW¼ SW¼ of Section 31, Township 33 North, Range 9 West, N.M.P.M. have been protected while they have conducted additional investigations to determine the source of the gas that caused the explosion and now while they develop a strategy for mitigating and remediating the source of the gas and lingering impacts.  A geophysical survey was conducted to look for additional abandoned wells or other conduits for gas migration.  The five (5) methane detection systems installed in the three (3) surrounding residences, the nearby Animas Fire District station, and a water well house are inspected and calibrated on a monthly basis.  Four (4) soil gas surveys have been conducted to determine whether the aerial extent of the gas seepage is changing.  One additional water well in the vicinity has been sampled in response to a landowner’s concerns about potential impact from the gas seepage.  The Colorado Department of Transportation Region 5 has been made aware that in this area high levels of methane have been detected in the right-of-way along both sides of Highway 550 and copies of the soil gas surveys have been supplied to them.

 

2.  Based upon information contained on copies of two (2) old scout cards provided to the COGCC by Southern Ute Indian Tribe personnel, it appeared that there were two (2) orphaned wells in close proximity to the explosion site, the NSBF #1 Well or Bryce #1 Well as it has been called, which was plugged by the COGCC in 1994 and the Bryce 1-X Well, which had also been drilled by Nick Spatter in 1938 to 1942.  Information on the scout card indicated that the Bryce # 1-X Well was located approximately fifteen (15) feet east of the NSBF #1 Well; however, there was no longer any surface indication of this well.  To determine whether the Bryce 1-X Well actually existed, COGCC staff decided to excavate the area east of the NSBF #1 Well.

 

On August 17, 2005 COGCC staff and its contractor excavated the area east of the NSBF #1 Well.  Approximately nineteen (19) feet east of the NSBF #1 Well a 16-inch steel conductor pipe, which was plugged with cement and gravel, a 5½-inch steel pipe, and a wooden stake were unearthed.  COGCC staff believes that this is the Bryce 1-X Well (recently assigned API No. 05-067-090870), which appears to have been drilled to the Mesaverde Formation to a total depth of 4,835 feet.  Very high flammable gas levels were detected throughout the excavation and flammable gas was seeping out of cracks in the cement plug.  The excavation was backfilled, leaving approximately four (4) feet of the conductor pipe uncovered.

 

3.  COGCC staff and its contractors developed plans to return to the site with additional equipment to excavate the gravel terrace deposit around the Bryce 1-X Well conductor pipe down to the bedrock surface to assess the condition of the conductor pipe, and if possible to assess the condition of the borehole and other pipe that might have been left in the hole. 

 

4.  From November 2, through November 4, 2005 COGCC staff and its contractors conducted additional work.  The area around the Bryce 1-X Well was excavated down to bedrock.  The excavation was approximately twenty (20) feet deep, forty (40) feet long, and thirty (30) feet wide.  A fifty (50) foot long ramp was constructed along the north wall of the excavation to allow safe access to the bottom of the excavation.  All of the excavation walls were benched and sloped to allow for safe entry into the excavation.  A contractor provided the excavation equipment operator and the health and safety oversight personnel, both of whom are 40-Hour Hazardous Waste Operator (HAZWOPER) certified.  Health and safety monitoring was conducted throughout the digging and subsequent activities.

 

The bedrock around the conductor pipe was cleared of dirt and gravel using hand shovels.  A small fracture in the sandstone was noted radiating outward from the conductor pipe.  Gas with noticeable pressure was observed seeping from the fracture and from the annular space between the conductor pipe and the borehole through the bedrock.

 

To assess the conditions inside the old conductor pipe, it was hot-tapped.  Using the hole cut into the conductor pipe, it was determined that the cement and 5½-inch casing only extended approximately eight (8) feet down from the top of the conductor pipe.  The old conductor pipe was cut off about three (3) feet above bedrock, and new pipe was welded on to it.  The hole was backfilled and the new conductor pipe extends up to the current ground surface.  There is a bridge, comprised of cobbles and boulders in the borehole at a depth of approximately twenty-two (22) feet below the ground surface, so any other investigation of the condition of the wellbore cannot be made until the hole is cleaned out. 

 

5.  The results of the COGCC’s investigation of this extremely dangerous situation and the experience gained while plugging the NSBF #1 Well indicate that it will be necessary to hire a contractor to provide a drilling rig capable of 24-hour operations to drill out and remove all of the plugs and junk in the Bryce 1-X Well, with the intent of reaching the total depth of the well and then setting appropriate plugs to isolate the gas producing formations, Mesaverde, Pictured Cliffs, and Fruitland, from the shallower zones. The estimated cost for this work is Five Hundred Sixty-Nine Thousand Two Hundred Fifty Dollars ($569,250).

 

6.  Once the borehole is cleared of obstructions, geophysical (compensated density, gamma ray, neutron, resistivity, and spontaneous potential) and caliper logs will be run to determine the condition of the hole, to determine where plugs should be set, and to assess the presence of Fruitland Formation gas that has leaked via the orphaned wells into the shallow aquifers of the Animas Formation.  The estimated cost for this work is Eight Thousand Six Hundred Thirty-Five Dollars ($8,635).

 

7.  Once the gas producing zones are plugged and isolated in the wellbore, the COGCC and third party contractor will assess the possibility of using the upper portion of the Bryce 1-X Well to remediate the gas that has leaked into the Animas Formation aquifers by installing slotted casing in the upper portion of the borehole and connecting it to a vapor recovery system.  The estimated cost for this work is Ninety-Six Thousand Six Hundred Dollars ($96,600).

 

8.  The area impacted by high concentrations of methane in the gravel terrace deposits and methane trapped under the underlying sandstone covers approximately twelve (12) acres.  To remediate these impacts and remove future danger of explosion and fire, this shallow gas must be recovered.  A network of approximately eight (8) 50-foot deep wells will be installed and hooked into a vapor recovery system.  The estimated cost for this work is One Hundred Sixty-One Thousand Five Hundred Sixty Dollars ($161,560).

 

9.  Because of rig availability constraints and state procurement requirements for competitive bids on such a project, work on the Bryce 1-X Well may not begin for several months.  In the interim period, COGCC staff will have a wellhead and vacuum compressor installed on the Bryce 1-X Well, and 600 feet of pipeline laid to tie the gas venting from the Bryce 1-X Well into the Cain 2-31 Well and gathering system.  This is a temporary measure to control the flow of gas that is currently venting out of the Bryce 1-X Well, to prevent the waste of the gas, and to decrease the potential for accidental ignition of the uncontrolled gas emissions.  The estimated cost for this work is Forty-Nine Thousand Two Hundred Dollars ($49,200).

 

10.  Work on the site and impacted properties will continue, including installation of a temporary chain link fence around the Bryce 1-X Well to restrict access to the well; monthly operation and maintenance of the five (5) methane detection systems; periodic soil gas surveys to assess the success of the remediation work, periodic checks on the water treatment systems at the residences and the fire station to ensure that methane is being removed from the water before it enters the buildings; health and safety monitoring that will be required during other activities, project reports; and other ongoing work.  The estimated cost for this work is Seventy-Nine Thousand Two Hundred Dollars ($79,200).

 

11.  Decrease in methane concentrations in the soil, shallow bedrock, and ground water will be the measure for success of our remediation strategy.  In addition to the soil gas surveys mentioned in Finding No. 10, water wells in the impacted area will be sampled and tested on a quarterly basis for methane concentration and field parameters.  This work will begin after the Bryce 1-X Well is plugged and other mitigation measures have been implemented.  The estimated cost for this work is Seven Thousand Dollars ($7,000).

 

12.  The Bryce 1-X and the NSBF #1 Wells are located on privately owned property.  COGCC staff will execute a lease agreement with the owner to provide exclusive access to the property for the purpose of conducting the necessary remediation activities.  This lease agreement will be used as an interim measure not only to allow access to the COGCC staff and its contractors for the extensive work that they will need to be conducting, but also to restrict access to this property from any other person or party.  The estimated cost for this lease agreement is Seventeen Thousand Dollars ($17,000).

 

13.  The facts set forth in the foregoing paragraphs Finding No. 1 through Finding No. 12 are the reasons that the Commission finds the immediate issuance of this emergency order is imperative for the preservation of public health and safety; observance of the requirements for notice and hearing pursuant to §§24-4-105 or 34-60-108(2), C.R.S. (2004) would be contrary to the public interest.

 

14.  During the fiscal year, which is from July 1st through June 30th, COGCC staff spends Two Hundred Twenty Thousand Dollars ($220,000) appropriated from the Colorado Oil and Gas Conservation and Environmental Response Fund for plugging and abandoning orphaned oil and gas sites. Eighty Thousand Dollars ($80,000) of this money is available to help pay for the required remediation of the Bryce 1-X Well.  COGCC staff also spends One Hundred Eighty Thousand Dollars ($180,000) of the Colorado Oil and Gas Conservation and Environmental Response Fund for environmental projects to investigate, prevent, monitor, and/or mitigate conditions that threaten to cause, or actually cause a significant adverse impact on public health, safety, or welfare, or adverse environmental impact on any air, water, soil, or biological resource.  The COGCC staff attempts to spend the environmental projects budget in a systematic, efficient manner on appropriate projects throughout the fiscal year.  As a result, there are sufficient funds remaining to cover ongoing work to which COGCC staff and budget are already committed, but there are not sufficient funds to cover the future anticipated activities associated with the investigation, mitigation, and remediation of the significant adverse impacts to public health, safety, and welfare associated with the Bryce 1-X Well.  For Fiscal Year 2005-2006 and subsequent years the legislature appropriated an additional Seventy-Five Thousand Dollars ($75,000) to the COGCC for emergency response funding.  Staff believes that it is best not to use this money for the COGCC’s response to the emergency associated with the Bryce 1-X Well, but rather to keep it available for use in responding to any other emergencies that may occur during Fiscal Year 2005-2006.

 

15.  The total estimated cost for all of the different aspects of this complicated investigation, mitigation, and remediation project is Nine Hundred Eighty-Eight Thousand Four Hundred Forty-Five Dollars ($988,445).  Eighty Thousand Dollars ($80,000) in existing Fiscal Year 2005-2006 appropriations from the Colorado Oil and Gas Conservation and Environmental Response Fund will be used to pay for some of this work.  In accordance with §34-60-124(7), C.R.S., the Commission should authorize the expenditure of an additional Nine Hundred Eight Thousand Four Hundred Forty-Five Dollars ($908,445) from the Colorado Oil and Gas Conservation and Environmental Response Fund balance for the investigation, mitigation, and remediation of significant adverse impacts to public health, safety, and welfare, and to the environment as the result of the conduct of oil and gas operations.

 

16.  Because the likely source of the flammable gas causing this emergency situation is an orphaned gas well(s) a responsible party may not be identified; therefore, the  expenditures from the Colorado Oil and Gas Conservation and Environmental Response Fund will not be reimbursed to the COGCC.

ORDER

 

NOW, THEREFORE IT IS ORDERED, that in accordance with §34-60-124(7), C.R.S., the Colorado Oil and Gas Conservation Commission shall authorize the expenditure of an additional Nine Hundred Eight Thousand Four Hundred Forty-Five Dollars ($908,445) from the Colorado Oil and Gas Conservation and Environmental Response Fund balance for the remediation and mitigation of significant adverse impacts to public health, safety, and welfare, and to the environment as the result of the conduct of oil and gas operations.

 

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.

 

IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this order to be final agency action for purposes of judicial review within thirty (30) days after the date this order is mailed by the Commission.

 

IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this order is not required prior to the filing for judicial review.

 

                        ENTERED this                     day of December, 2005, as of December 7, 2005.

 

                                                                          OIL AND GAS CONSERVATION COMMISSION

                                                                          OF THE STATE OF COLORADO

 

 

                                                                       By                                                                                                                                

                                                                                     Patricia C. Beaver, Secretary

 

 

Dated at Suite 801

1120 Lincoln St.

Denver, Colorado 80203

December 13, 2005