BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES AND ) CAUSE NO. 1V
REGULATIONS OF THE COLORADO OIL AND GAS CONSERVATION)
COMMISSION BY WILLIAMS PRODUCTION RMT CORPORATION, ) ORDER NO. IV-274
GARFIELD COUNTY, COLORADO )
ADMINISTRATIVE ORDER BY CONSENT
1. On February 22, 2004, Williams Production RMT Corporation (”Williams”) lost control of the PA 324-33 Well located in the SE¼ SW¼ of Section 33, Township 6 South, Range 95 West, 6th P.M. following production casing cementing operations. Natural gas was uncontrollably vented to the atmosphere, endangering the employees and the general public. The natural gas ignited and burned for several hours damaging the rig substructure. The loss of control was in violation of Rule 317.a. which states that “The operator shall take all necessary precautions for keeping a well under control while being drilled or deepened” and Rule 327. which states that “The operator shall take all reasonable precautions, in addition to fully complying with Rule 317. to prevent any oil, gas or water well from blowing uncontrolled …”. Williams should be found in violation of Rules 317.a. and 327. for failure to keep the well under control at all times during the drilling process.
2. The PA 324-33 Well is located within the area covered by Commission Order No. 139-38 (the “Order”). During the drilling process, Williams failed to perform a surface casing shoe integrity test as required by the Order which states that “The operator shall perform a surface casing shoe integrity test on all wells drilled within applicable lands. Each surface casing shoe integrity test shall be designed to test the drilled out surface casing shoe to a pressure equivalent to the hydrostatic pressure exerted by a full column of mud at the maximum mud weight anticipated during the drilling of the well plus an additional one-half (1/2) pound per gallon.” Williams should be found in violation of the Order for failure to comply with the Order.
4. On May 11, 2004 staff issued a Notice of Alleged Violation (“NOAV”) to Williams for failure to maintain control of the well, report kicks and lost circulation zones and perform a surface casing shoe integrity test citing Rules 317.a., 327., Order No. 139-38 and the Notice attached to the Application for Permit-to-Drill as described above in Finding Numbers 1 through 3. The NOAV had an abatement deadline of May 28, 2004 and required Williams to explain why the loss of well control occurred, file an Accident Report, Form 22 and a Loss of Well Control Report, Form 23 documenting the incident and explain what will be done differently in the future to prevent re-occurrence. The NOAV was hand-delivered by COGCC staff to Williams.
5. Rule 523. specifies a base fine of One Thousand dollars ($1,000.00) per day for each violation of Rules 317. and 327.
6. A monetary penalty of Thirty Thousand dollars ($30,000.00) should be assessed against Williams in accordance with Rule 523.a. and Rule 523.d., for violation of Rules 317.a. & 327., Commission Order No. 139-38 and the Notice to All Operators Drilling Williams Fork Formation Wells in Garfield County, Surface Casing Depth and Modification of Leakoff Test Requirements. Aggravating factors in determining the fine recommendation are that under Rule 523.d.(2) the violation had a threat of significant negative impact on the public safety and under Rule 523.d.(5) the violation resulted in or threatened to result in significant loss or damage to public or private property. Mitigating factors in determining the fine recommendation are that under Rule 523.d.(1) the violator self-reported the violation and under Rule 523.d.(3) the violator cooperated with the Commission with respect to the violation.
ORDER
NOW, THEREFORE, IT IS ORDERED, that Williams Production RMT Corporation shall be found in violation Rules 317.a. and 327., Order No. 139-38 and the Notice to All Operators Drilling Williams Fork Formation Wells in Garfield County, Surface Casing Depth and Modifications of Leakoff Test Requirements attached to the Application for Permit-to-Drill as described above for failure to prevent a loss of well control on the PA 324-33 Well located in the SE¼ SW¼ of Section 33, Township 6 South, Range 95 West, 6th P.M. and for failure to perform a surface casing shoe integrity test and for failure to report loss of circulation zones and gas kicks.
IT IS FURTHER ORDERED, that Williams Production RMT Corporation shall be assessed a fine of Thirty Thousand dollars ($30,000.00) payable within thirty (30) days of the date the order is approved by the Commission for the above violations.
IT IS FURTHER ORDERED, that Williams Production RMT Corporation shall explain why the loss of well control occurred, file an Accident Report, Form 22 and a Loss of Well Control Report, Form 23 documenting the incident and explain what will be done differently in the future to prevent re-occurrence within thirty (30) days of the date the order is approved by the Commission
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.
Recommended this day of May, 2004.
OIL AND GAS CONSERVATION COMMISSION
By
Morris J. Bell, Hearing Officer
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
May 25, 2004
AGREED TO AND ACCEPTED THIS _________DAY OF ___________, 2004.
WILLIAMS PRODUCTION RMT CORPORATION
By ____________________________________________
___________________________________________
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