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 CIMARRON OPERATING, INC.,                                         )                 ORDER NO. IV-284

MOFFAT COUNTY, COLORADO                                                                         )   

                This cause came on for hearing before the Commission on April 25, 2005, at 9:00 a.m. at 1120 Lincoln Street, Suite 801, Denver Colorado 80203 after giving Notice of Hearing as required by law, as to why Cimarron Operating, Inc., is in violation of Rules 326.b., 603.j., 902.d., and 906.b.(1). of the Colorado Oil and Gas Conservation Commission and why the Commission should 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.

                1. Cimarron Operating, Inc. ("Cimarron"), as applicant herein, 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 June 28, 2004, Colorado Oil and Gas Conservation Commission ("COGCC") staff received a complaint regarding the Belnap #1 Well ("Well") located in the E½ SE¼ of Section 4, Township 6 North, Range 91 West, 6^th P.M. The complainant alleged that the well had been sitting idle for "many years." The complainant also stated that the well location was covered with weeds and the reserve/drilling pit remains open with oil on the pit.

                5. On July 7, 2004, COGCC staff conducted an inspection of this well. It was verified that the wellsite had been idle for many years. The location and access road were covered with weeds. The reserve pit was open with an estimated five (5) barrels of oil in the pit. A review of the COGCC records indicated that the well had never produced and a mechanical integrity test ("MIT") was required for continued shut-in status.

                6. On August 25, 2004, COGCC staff issued a Notice of Alleged Violation ("NOAV") to Cimarron. The NOAV required Cimarron to conduct an MIT on the well by October 4, 2004. The NOAV also required Cimarron to notify the COGCC forty-eight (48) hours before an MIT was performed on the well so that the MIT could be witnessed by COGCC staff. Additionally, the NOAV required Cimarron to start weed control measures, skim oil from the pit and dispose in an approved repository, and fix and stabilize the pit liner. Cimarron was required to contact COGCC environmental staff regarding the pit and its continued use, and to submit a Spill/Release Report, Form 19, and a Site Investigation and Remediation Workplan, Form 27.

                7. As of November 9, 2004, an MIT had not been conducted. The well location also appeared unchanged from the July 7, 2004 inspection.

                8. On January 12, 2005, COGCC staff offered Cimarron an Administrative Order by Consent ("AOC") by certified mail. Cimarron acknowledged receipt of the AOC on January 15, 2005 and has not agreed to the AOC nor contacted the COGCC staff concerning the AOC.

                9. Cimarron should be found in violation of Rule 326.b., failure to perform a mechanical integrity test within two (2) years of the shut-in date; Rule 603.j., failure to control weeds on the location; Rule 902.d., failure to remove oil from a pit within twenty-four (24) hours, and Rule 906.b.(1), failure to report a spill or file a Spill/Release Report, Form 19 within ten (10) days of discovery.

                10. Rule 523. specifies a base fine of One Thousand dollars ($1,000) for each violation of Rules 326., 603., 902. and 906. A total monetary penalty of Eight thousand dollars ($8,000) for the above-described violations should be assessed against Cimarron in accordance with Rule 523.a.

                11. Cimarron should conduct an MIT or plug and abandon the well, close and reclaim the reserve pit, conduct interim or final reclamation as applicable, control the weeds and remediate the spill on this site within sixty (60) days of the date an order is entered.

                12. If Cimarron does not comply with Finding No. 8 above, COGCC staff should be authorized to make a claim on the Five Thousand dollar ($5,000) plugging bond posted by Cimarron in order to plug, abandon, and reclaim the Belnap #1 Well.

                13. At the time of the hearing, testimony and exhibits in support of the recommended order were presented by COGCC staff. No one was present from Cimarron. After deliberation, the Commission accepted the COGCC staff’s recommended order and proposed fine.

ORDER

                NOW, THEREFORE, IT IS ORDERED, that Cimarron Operating, Inc. shall be found in violation of Rule 326.b., failure to perform a mechanical integrity test within two (2) years of the shut-in date; Rule 603.j., failure to control weeds on the location; Rule 902.d., failure to remove oil from a pit within twenty-four (24) hours, and Rule 906.b.(1), failure to report a spill or file a Spill/Release Report, Form 19 within ten (10) days of discovery on the Belnap #1 Well located in the E½ SE¼ of Section 4, Township 6 North, Range 91 West, 6^th P.M.

                IT IS FURTHER ORDERED, that Cimarron Operating, Inc. shall be assessed a total fine of Eight Thousand dollars ($8,000) for the above four (4) violations described above, payable within thirty (30) days of the date this order is entered by the Commission.

                IT IS FURTHER ORDERED, that Cimarron Operating, Inc. shall conduct a MIT or plug and abandon the well, close and reclaim the reserve pit, conduct interim or final reclamation as applicable, control the weeds and remediate the spill on this site within sixty (60) days of the date this Order Finding Violation is entered.

                IT IS FURTHER ORDERED, that if Cimarron does not comply with this order, COGCC staff shall be authorized to make a claim on the Five Thousand dollar ($5,000) plugging bond posted by Cimarron in order to plug, abandon, and reclaim the Belnap #1 Well.

                IT IS FURTHER ORDERED, that if Cimarron does not comply with this order, COGCC staff shall be authorized to use the Environmental Response to supplement the plugging bond in order to plug, abandon, and reclaim the Belnap #1 Well.

                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/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, 2005, as of April 25, 2005.

OIL AND GAS CONSERVATION COMMISSION

                ; OF THE STATE OF COLORADO

By_____________________________________

                    Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

May 16, 2005