BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

ORDER FINDING VIOLATION

                        This cause came on for hearing before the Colorado Oil and Gas Conservation Commission (“Commission” or “COGCC”) at 9:00 a.m. on July 8, 2010, Suite 801, in The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving notice of hearing as required by law on why Barnes Petroleum Corporation is in violation of Rule 302.a., Rule 706, Rule 319.b.(1), and Rule 326.d. for its operations at the Rosener #1 Well, located in the NW¼ NE¼ of Section 8, Township 1 South, Range 59 West, 6^th P.M.

FINDINGS

1.     On January 9, 1991, Barnes Petroleum Corporation (“BPC”) (Operator No. 6420) spud the Rosener #1 Well (API No. 05-001-09001) (the “Well”), located in the NW¼ NE¼ of Section 8, Township 1 South, Range 59 West, 6^th P.M., and, subsequently, completed the Well in the “J” Sand Formation with a total depth of 6356 feet.  The Well has been temporarily abandoned since December 11, 1992, and there is presently no production tubing in the wellbore.  Colorado Oil and Gas Conservation Commission (“Commission” or “COGCC”) records indicate that, on June 7, 2002, the Well passed a mechanical integrity test.  BPC presently operates only one well, the Well, in Colorado, and has posted a $5,000 Individual Plugging Financial Assurance for the Well.

2.     On December 22, 2009, COGCC Staff issued an advisement letter to BPC which requested the operator to comply with Rule 706., by posting an additional $15,000 Individual Plugging Financial Assurance for the Well, and that its failure to do so on or before January 22, 2010 would result in the issuance of a Notice of Alleged Violation (“NOAV”).  The letter was sent in the United States Mail, first class postage prepaid, and the letter was not returned.

3.     On February 19, 2010, COGCC Staff issued an NOAV #1661375 to BPC for alleged violations of COGCC rules, to include:

a.   Rule 302.a., which requires all operators to provide changes of address by submitting Registration for Oil and Gas Operations, Form 1, detailing their change in information.

b.   Rule 706., which requires an operator to provide financial assurance, in the amount of $20,000 per well for wells in excess of 3,000 feet in total measured depth, to the Commission to ensure the protection of soil, the proper plugging and abandonment of the well, and the reclamation of the site in accordance with the 300-Series of drilling regulations, the 900-Series of exploration and production waste management regulations, the 1000-Series of reclamation regulations, and the 1100-Series of flowline regulations.

The NOAV required abatement or corrective action by the operator by filing an updated Form 1 and posting the additional $15,000 financial assurance by March 19, 2010.  This NOAV was sent to the operator’s address of record on February 19, 2010, and returned on March 14, 2010, marked unclaimed and unable to forward.  COGCC records set forth a telephone number for BPC; however, the number is no longer a working telephone number.

4.     Further, Rule 319.b.(1) allows a well to be temporarily abandoned when completed, upon approval of the Director, for a period not to exceed six months, with any requested extension to be approved by the Director.  The operator shall annually submit a Sunday Notice, Form 4, or other form approved by the Director, which states the method the well is closed to the atmosphere and plans for future operation.

5.     Furthermore, Rule 326.d. requires the operator to conduct a mechanical integrity test (“MIT”) within two years of the initial shut-in or abandonment date and every five years thereafter.

6.     On June 7, 2002, BPC performed an MIT on the Well which was observed and approved by the Staff.

7.     On March 29, 2010, the Notice of Hearing, regarding Staff’s request for an Order Finding Violation as to BPC and its operation of the Well, was published in The Daily Journal, a newspaper of general circulation in the city and county of Denver, and on April 7, 2010, said notice was published in the Brighton Standard Blade, a newspaper of general circulation in the county of Adams, where the affected land is situated.

8.     On May 14, 2010, Staff sent the Notice of Hearing, regarding Staff’s request for an Order Finding Violation as to BPC and its operation of the Well, to the last known address of BPC via U.S. Mail, Certified, Return Receipt Requested.  On May 17, 2010, Staff received confirmation from the U.S. Postal Service that it had failed in its attempt to deliver the Notice of Hearing to BPC; on June 18, 2010, the Notice of Hearing was subsequently returned as unclaimed by BPC.

 9.    Having been properly and constructively served, BPC should be found in violation of Rule 302.a., Rule 706, Rule 319.b.(1), and Rule 326.d. for its operations at the Well, and the Commission should authorize the Staff to foreclose the existing $5,000 plugging bond, supplemented as may be necessary by funds from the Oil and Gas Conservation and Environmental Response Fund, to plug and abandon the Well and reclaim the Well site and associated facilities.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Barnes Petroleum Corporation shall be found in violation of the following Rules at the Rosener #1 Well (API No. 05-001-09001), located in the NW¼ NE¼ of Section 8, Township 1 South, Range 59 West, 6^th P.M.:

1.     Rule 302.a., for failure to provide changes of address by submitting Registration for Oil and Gas Operations, Form 1, detailing its change in information.

2.     Rule 319.b.(1), for temporarily abandoning a well for a period exceeding six months, without the approval of the Director, and failing to annually submit a Sunday Notice, Form 4, or other form approved by the Director, which states the method the well is closed to the atmosphere and plans for future operation.

3.     Rule 326.d., for failure to conduct a mechanical integrity test within two years of the initial shut-in or abandonment date and every five years thereafter.

4.     Rule 706., for failure to provide financial assurance, in the amount of $20,000 per well for wells in excess of 3,000 feet in total measured depth, to the Commission to ensure the protection of soil, the proper plugging and abandonment of the well, and the reclamation of the site in accordance with the 300-Series of drilling regulations, the 900-Series of exploration and production waste management regulations, the 1000-Series of reclamation regulations, and the 1100-Series of flowline regulations.

IT IS FURTHER ORDERED, that the COGCC Staff shall foreclose the existing $5,000 plugging bond, supplemented as may be necessary by funds from the Oil and Gas Conservation and Environmental Response Fund, to plug and abandon the Well and reclaim the Well site and associated facilities.

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.

ENTERED this                  day of August, 2010, as of July 8, 2010.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                             OF THE STATE OF COLORADO

                                                                        By                                                                       

                                                                                    Carol Harmon, Secretary