BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF ALLEGED VIOLATIONS OF THE                         )     CAUSE NO. 1V

RULES AND REGULATIONS OF THE COLORADO OIL                       )

AND GAS CONSERVATION COMMISSION BY                                      )     ORDER NO. 1V-335

STEPHENS ENERGY COMPANY LLC                                                  )              

ROUTT COUNTY, COLORADO                                                                 )     

ADMINISTRATIVE ORDER BY CONSENT

(Pursuant to Rule 522.b.(3) of the Rules and Regulations of the

Colorado Oil and Gas Conservation Commission, 2 CCR 404-1)

FINDINGS

                        1.  On June 4, 2008, the staff (“Staff”) of the Colorado Oil and Gas Conservation Commission (“COGCC” or “Commission”) inspected oil and gas operations of Stephens Energy Company LLC (“Stephens”) at the Breeze State #11-8 (API #05-107-06223) well site, located in the NE¼ SW¼ of Section 8, Township 6 North, Range 89 West, 6^th P.M.   The well had been completed on May 15, 2005.

                        2.  Staff observed the former reserve pit, which had not been closed, with oil floating on liquids in the pit, insufficient freeboard, and insufficient fencing.  Additionally, the well site location was poorly maintained (insufficient storm-water best management practices (“BMPs”) to combat erosion) and contained excessive trash, equipment, or supplies.

                        3.  On June 9, 2008, Staff issued Notice of Alleged Violation (“NOAV”) #200190657 to Stephens (Operator #10092) for violation of the following Rules: 

                        4.  The NOAV required Stephens, within 24 hours, to remove all oil from the pit, draw-down the fluid level, and dispose of the water in an approved manner.  It also required Stephens to perform the following actions by August 9, 2008: close the pit, maintain two feet of freeboard in the pit until closure, complete interim reclamation (of former reserve pit), and install storm-water BMPs to combat well site erosion.   

                        5.  Stephens complied with the requirement to remove oil from the pit immediately.  Stephens also immediately established the two feet of freeboard in the pit required by Rule 902.c. and the NOAV.  After further investigation, Rule 903. was determined not applicable to this site and was removed as an alleged violation.

                        6.  Stephens met the abatement deadline (August 9, 2008) for closing the pit, maintaining two feet of freeboard until pit closure, completion of interim reclamation and installation of storm-water BMPs.  The BMPs in place have been constructed to avoid erosion from the well site.  The pit will be seeded later in October in order to take advantage of the precipitation.  Stephens has met all requirements requested by Staff.   

                        7.  Irrespective of compliance with NOAV requirements, Stephens should be found in violation of the following rules and assessed the base fine established by Rule 523.c. for each violation:

                        8.  Payment of the fine pursuant to this Administrative Order by Consent does not relieve Stephens from its obligations to complete abatement or corrective actions set forth in the NOAV, as may be amended or modified by Staff, to the extent such actions are not completed upon the execution of this Administrative Order by Consent.

                        9.  Stephens agrees to pay the total fine set forth in Finding No. 7 to resolve this matter without the necessity of an extended contested hearing before the Commission.  However, Stephens does not admit liability or fault for the rule violations set forth in this AOC.  Staff acknowledges that Stephens responded promptly and in good faith to satisfy the concerns of Staff and the NOAV.

                        10.  Stephens should execute this Administrative Order by Consent no later than 14 days after the date it is executed by Staff for recommendation to the Commission for expedited approval.  Fines may increase if this matter is not recommended for expedited approval.      

ORDER

                        NOW, THEREFORE, IT IS ORDERED, that Stephens Energy Company LLC shall be found in violation of Rules, 902.c., 902.d, 603.j, and 1003.b at the Breeze State #11-8 (API #05-107-06223) well site, located in the NE¼ SW¼ of Section 8, Township 6 North, Range 89 West, 6^th P.M.

IT IS FURTHER ORDERED, that Stephens Energy Company LLC shall be assessed a total fine of Four Thousand dollars ($4,000) for the Rule violations set forth above, which shall be payable within thirty (30) days of the date the order is approved by the Commission.

IT IS FURTHER ORDERED, that this Administrative Order by Consent does not relieve Stephens Energy Company LLC from undertaking and completing abatement or corrective actions that may be required by Notice of Alleged Violation #200190657 or any amendments or modifications thereto specified by Staff, to the extent such actions are not completed upon the execution of this Administrative Order by Consent.

IT IS FURTHER ORDERED, that Stephens Energy Company LLC shall execute this Administrative Order by Consent no later than fourteen (14) days after the date it is executed by the Staff for recommendation of expedited approval by the Commission.  

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.

                        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.

RECOMMENDED this                  day of October, 2008.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                                                                                                                                                                                            By ___________________________________

Carol Harmon

Enforcement Officer

Dated at Suite 801

1120 Lincoln St.

Denver, Colorado 80203

October 16, 2008 

                        AGREED TO AND ACCEPTED this _________day of_______________, 2008.

                                    STEPHENS ENERGY COMPANY LLC

                                    By __________________________________________

                                                Signature of Authorized Company Representative

                                    ____________________________________________                                                Print Signatory Name

                                    ____________________________________________

                                                Title

============================================================================

                        This cause came on for hearing before the Commission at 8:30 a.m. on December 9, 2008, in the Terrace Room at the Sheraton Hotel, 1550 Court Place, Denver, Colorado, for the approval of this Administrative Order by Consent.

                        ENTERED this________    day of December, 2008, as of December 9, 2008

                                                                        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

December 18, 2008