BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
|
IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES AND REGULATIONS OF THE COLORADO OIL AND GAS CONSERVATION COMMISSION BY KINDER MORGAN CO2 COMPANY, MONTEZUMA COUNTY, COLORADO |
) ) ) ) |
CAUSE NO. 1V
ORDER NO. 1V-352
|
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 March 12, 2003, the Colorado Oil and Gas Conservation Commission (“COGCC” or “Commission”) approved an Application for Permit-to-Drill (“APD”), submitted by Kinder Morgan CO2 Company, LP (“Kinder Morgan”) for the Sand Canyon #10 Well (API No. 05-083-06604) (the “Well”), which is located in the SW¼ NW¼ of Section 8, Township 36 North, Range 18 West, N.M.P.M.
2. On October 6, 2002, Kinder Morgan drilled the Well, which was not approved by the COGCC until March 12, 2003. The COGCC Staff became aware of the issue when a delinquent Form 5 drilling completion report was received on July 3, 2007.
3. As of July 3, 2007, Kinder Morgan was also delinquent in submitting a Drilling Completion Report and Interval Completion Report. The COGCC Staff became aware of this violation at the same time it discovered Kinder Morgan had drilled without a permit.
4. On November 2, 2007, COGCC Staff issued a Notice of Alleged Violation (“NOAV”) #200121305 to Kinder Morgan for its operations at the Well. Said NOAV cited violations for the following rules:
a. Rule 303.a., which requires an operator to file with the Director an application on Form 2 for a Permit-to-Drill, pay a filing and service fee established by the Commission, and obtain the Director’s approval before commencement of operations with heavy equipment for the drilling or re-entry of any well;
b. Rule 308A., which requires an operator to transmit to the Director a Drilling Completion Report, Form 5, within thirty (30) days of the setting of production casing, the plugging of a dry hole, the deepening or sidetracking of a well, or any time the wellbore configuration is changed; and
c. Rule 308B., which requires an operator to submit a Completed Interval Report, Form 5A, within thirty (30) days of completing a formation (successful or not), when a formation is temporarily abandoned or permanently abandoned, for a recompletion, reperforation or restimulation, or when a formation is commingled.
Said NOAV required Kinder Morgan to submit an Interval Completion Report, Form 5A, and submit written documentation to explain the reasons for the violation and the procedures that would be implemented to prevent future violations by November 30, 2007.
5. On November 30, 2007, Kinder Morgan submitted a response to the NOAV, explaining that they were under the impression that the Well could be drilled with only a permit issued by the Bureau of Land Management (“BLM”). Kinder Morgan also stated that the errors in filing and compliance with Rule 308A. and Rule 308B. were a result of slow notification that a well has been completed, and lack of necessary information in drilling reports to complete the required forms.
6. In order to prevent future violations, Kinder Morgan implemented several new procedures. First, Kinder Morgan is now aware that they must submit applications to both the BLM and the COGCC for permits to drill wells, and notified all key personnel of this requirement. Second, Kinder Morgan has also delivered COGCC forms to the drilling department for inclusion in their standard morning reports. Finally, the drilling Foreman has been notified of this procedure and will submit the required forms to the regulatory group for processing.
7. Rule 523. specifies a base fine of Five Hundred ($500) dollars for each day of violation of Rules 308A., and 308B., and a base fine of One Thousand dollars ($1,000) for each day of violation of Rule 303. Rule 523.a.(3) specifies that “the maximum penalty for any single violation shall not exceed Ten Thousand dollars ($10,000) regardless of the number of days of such violation,” unless the violation results in significant waste of oil and gas resources, damage to correlative rights, or a significant adverse impact on public health, safety or welfare or the environment.
8. Kinder Morgan violated Rule 303. because it commenced drilling of the Well before the Director of COGCC approved the APD for the Well. The COGCC Staff have calculated a base fine of One Thousand dollars ($1,000), which takes into account the mitigating factor that Kinder Morgan has demonstrated a history of compliance with COGCC rules, regulations and orders and that the violation did not result in a significant waste of oil and gas resources, damage to correlative rights, or a significant adverse impact on public health, safety or welfare or the environment.
9. Kinder Morgan violated Rule 308A. because it failed to submit a Drilling Completion Report to the Director within thirty (30) days of the setting of production casing, the plugging of a dry hole, the deepening or sidetracking of a well. The COGCC Staff have calculated a base fine of Five Hundred dollars ($500), which takes into account the mitigating factor that Kinder Morgan has demonstrated a history of compliance with COGCC rules, regulations and orders and that the violation did not result in a significant waste of oil and gas resources, damage to correlative rights, or a significant adverse impact on public health, safety or welfare or the environment.
10. Kinder Morgan violated Rule 308B. because it failed to submit a Completed Interval Report within thirty (30) days of completing a formation (successful or not), when a formation is temporarily abandoned or permanently abandoned, for a recompletion, reperforation or restimulation, or when a formation is commingled. The COGCC Staff have calculated a base fine of Five Hundred dollars ($500), which takes into account the mitigating factor that Kinder Morgan has demonstrated a history of compliance with COGCC rules, regulations and orders and that the violation did not result in a significant waste of oil and gas resources, damage to correlative rights, or a significant adverse impact on public health, safety or welfare or the environment.
11. For violations of Rules 303., 308A., and 308B., the parties have agreed to a total adjusted fine of Two Thousand dollars ($2,000), which takes into consideration the mitigation factor that Kinder Morgan has demonstrated a history of compliance with COGCC rules, regulations and orders and instituted several new procedures to prevent these types of violations from recurring in their future operations.
12. COGCC Staff specifically reserve the right to proceed as to alleged violation of Rules 303., 308A., and 308B., if this matter is not resolved by this AOC. Nothing within this AOC should be construed as the COGCC Staff waiving their right to prosecute any violation set forth in this AOC in the event that this AOC is not executed by the parties and approved by the Commission of present evidence which alters the days of violation set forth in this AOC.
13. Payment of the fine pursuant to this AOC does not relieve the operator from its obligations to complete corrective actions set forth in the NOAV, as may be amended or modified by Staff.
14. Kinder Morgan should execute this AOC no later than fourteen (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.
15. Kinder Morgan, or its successors or assigns, should be required to remain responsible for complying with this AOC, in the event of any subsequent sale of property.
16. Kinder Morgan agrees to the findings of this AOC only for the purpose of expeditiously resolving the matter without a contested hearing. Notwithstanding the above, Kinder Morgan does not admit to any of the factual or legal determinations made by the Commission herein, and fully reserves its right to contest same in any future action or proceeding other than a proceeding to enforce this AOC.
ORDER
NOW, THEREFORE, IT IS ORDERED, that Kinder Morgan shall be found in violation of the Rules 303., 308A., and 308B. for oil and gas operations at the Sand Canyon #10 Well, located in the SW¼ NW¼ of Section 8, Township 36 North, Range 18 West, N.M.P.M., for those acts alleged in this AOC.
IT IS FURTHER ORDERED, that Kinder Morgan shall be assessed a total adjusted fine of Two Thousand dollars ($2,000) 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 the operator from undertaking and completing abatement or corrective actions that may be required by the Notices of Alleged Violation described in Finding No. 4, above, or any amendments or modifications thereto specified by Staff.
IT IS FURTHER ORDERED, that the operator 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____________, 2010.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By ____
Rob Willis, Enforcement Officer
Dated at Suite 801
1120 Lincoln St.
Denver, Colorado 80203
June 30, 2010
AGREED TO AND ACCEPTED this _________day of_______________, 2010.
KINDER MORGAN CO2 COMPANY
By __________________________________________
Signature of Authorized Company Representative
____________________________________________ Print Signatory Name
____________________________________________
Title
Continued on page 4
Continued from page 3
ORDER NO. 1V-352
==============================================================================================
This cause came on for hearing before the Commission at 9:00 a.m. on September 16, 2010, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for the approval of this Administrative Order by Consent.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Carol Harmon, Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203