BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF EXPENDITURES FROM THE ) CAUSE NO. 1
OIL AND GAS CONSERVATION AND ENVIRONMENTAL )
RESPONSE FUND FOR THE COLORADO OIL AND ) ORDER NO. 1E-8
GAS CONSERVATION COMMISSION )
REPORT OF THE COMMISSION
This cause came on for an emergency hearing before the Colorado Oil and Gas Conservation Commission (“Commission” or “COGCC”) on May 8, 2008, in Suite 801, 1120 Lincoln Street, Denver, Colorado for an order to allow the expenditure of additional funds from the 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. (2007).
1. A previously plugged and abandoned well in southeast Colorado leaked natural gas to the surface resulting in the explosion of a house that was being constructed on top of the site. Three workers were injured during the explosion on April 17, 2007. The Commission issued an order on February 26, 2008 finding there was insufficient evidence to determine that the City of Trinidad was the responsible party and authorizing the COGCC Staff to retain suitable contractors to perform the necessary re-entering and re-plugging operations (Cause No. 1, Order No. 1-125). Pursuant to the Commission’s February 26, 2008 order, the COGCC Staff proposes to re-enter and re-plug the well to mitigate current and ongoing threats to public health and safety and the environment. Existing conditions, proposed actions, and necessary funds are described below in Finding Nos. 2 through 12.
2. The Trinidad MGP #1 Well (API #05-071-06045) is located in the NW¼ NW¼ (Lot 2) of Section 32, Township 33 South, Range 66 West, 6th P.M., Las Animas County, Colorado and was drilled in 1980 for the benefit of the City of Trinidad as part of a federally funded project conducted by the American Public Gas Association. The Trinidad MGP #1 Well is the source of natural gas that caused the explosion described in Finding No. 1, above.
3. According to documents submitted to the Commission, the total drilled depth of the Trinidad MGP #1 Well was 1,605 feet. Surface casing (8⅝” outside diameter (“O.D.”)) was set at a depth of 150 feet and cemented with 125 sacks of cement; production casing (4½” O.D.) was set at 1,122 feet and cemented with 100 sacks of cement. The estimated top of cement is 250 feet, based on a 6¾” hole and a cement yield of 1.2 cubic feet per sack, but it may be lower due to fluid losses to the formation, out of gauge hole, etc. The well was plugged back to 1,371 feet resulting in an open hole completion from 1,122 feet to 1,371 feet. The productive intervals were coals of the Vermejo Formation. The plugged back portion of the hole was in the Trinidad Sandstone. Water was pumped from the well for four years, but commercial gas production was not established.
4. The Trinidad MGP #1 Well was plugged and abandoned on October 8, 1984. Two bridge plugs were set inside the 4½” production casing (one bridge plug at 1,115 feet with five sacks of cement on top and one bridge plug at 240 feet with 15 sacks of cement on top). The plugging was performed by Halliburton Services under the direction of Gustafson Associates, Inc. The production casing was cut off approximately six feet below ground, and a plate was welded onto the top of the production casing.
5. The Trinidad MGP #1 Well continues to leak natural gas to surface. There is a depression approximately 5 feet deep, 20 feet wide, and 25 feet long around the well, which was the crawl space of the house that exploded. The well site is currently enclosed by a six-foot high chain link fence to restrict unauthorized access to the well and provide temporary mitigation of the risk to public safety.
6. COGCC Staff believe that the original plugging operations may have left shallow coal seam(s) exposed above the top of cement in the production casing/wellbore annulus and propose to conduct the following investigations and operations:
a. Determine where the gas is leaking to surface (whether it is coming up inside the production casing, from between the production and surface casing and/or conductor pipe, or outside the casing strings);
b. Excavate around the wellhead to prepare a suitable flat spot to set up the rig safely;
c. Re-enter the production casing;
d. Drill out the upper 15-sack cement plug and bridge plug at 240 feet;
e. Tag the bottom plug at approximately 1,050 feet (5 sacks cement over a bridge plug at 1,115 feet);
f. Run a cement bond log to determine the top of cement behind the production casing;
g. Cut off the production casing above the top of cement, and place an open hole cement plug from that depth (approximately 300 feet) to surface.
7. The estimated cost to conduct these investigations and operations to re-enter and re-plug the Trinidad MGP #1 Well is $90,000.
8. The Commission was appropriated $220,000 in fiscal year 2007-2008 for the Plugging Abandonment and Wellsite Reclamation (“PAWR”) line item. These funds are regularly expended throughout the fiscal year, July 1 through June 30, and have already been allocated for other engineering projects to plug, abandon and reclaim orphan well sites. Funds for the proposed operations at the Trinidad MGP #1 Well are, therefore, not currently available from the PAWR line item.
9. An appropriate source of funding for the work proposed by COGCC Staff is the Emergency Response line item, which was established by the legislature for the first time in fiscal year 2006-2007. This line item gives the Commission access to $1,500,000 from the Oil and Gas Conservation and Environmental Response Fund for the investigation, prevention, monitoring, and mitigation of circumstances caused by or alleged to be associated with oil and gas activities and that require immediate action by the Commission. Immediate action by the Commission is required to re-enter and re-plug the Trinidad MGP #1 Well because of the threat to public health and safety and the environment as set forth by the facts in Finding Nos. 1 through 8, above.
10. In addition, the Commission previously allocated funds ($74,950) from the Emergency Response line item for investigating the cause of the explosion and determining the extent of related environmental impacts at the site (Cause No. 1E, Order No. 1E-5, April 26, 2007). Therefore, the Emergency Response line item has already been considered an appropriate source of funding for work related to this well.
11. The facts set forth in the foregoing Finding Nos. 1 through 8 are the reasons that the Commission finds the immediate issuance of this emergency order is imperative for the preservation of public health, safety, welfare, and the environment and that observance of the requirements for notice and hearing pursuant to §§24-4-105 or 34-60-108(2), C.R.S. (2007) would be contrary to the public interest.
12. In accordance with §34-60-124(7), C.R.S. (2007), the Commission should authorize the expenditure of $90,000 from the $1,500,000 Emergency Response line item for the re-entry, plugging and abandonment of the Trinidad MGP #1 Well.
NOW, THEREFORE, IT IS ORDERED, that in accordance with §34-60-124(7), C.R.S. (2007), the Colorado Oil and Gas Conservation Commission authorizes the expenditure of Ninety Thousand dollars ($90,000) from the One Million Five Hundred Thousand dollars ($1,500,000) Emergency Response line item for the immediate re-entry, plugging and abandonment of the Trinidad MGP #1 Well, located in the NW¼ NW¼ (Lot 2) of Section 32, Township 33 South, Range 66 West, 6th P.M., Las Animas County, Colorado, to minimize the potential for significant adverse impacts to public health, safety, welfare, and the environment.
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 May, 2008, as of May 8, 2008.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
Patricia C. Beaver, Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
May 30, 2008