BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

ORDER FINDING VIOLATION

This cause came on for hearing before the Commission on June 27, 2011, Elbert County Fairgrounds, Ag Building, 95 Ute Avenue, Kiowa, Colorado, after giving notice of hearing as required by law as to why Noel Reynolds is in violation of Rules 706. and 1004., for oil and gas operations at the Touchstone-Weber Heirs #1 Well, located in the NW¼ NE¼ of Section 13, Township 33 North, Range 12 West, N.M.P.M., and why the Commission should invoke the provisions of C.R.S. §34-60-121 (2007), as amended, providing for penalties for violations of the Rules and Regulations of the Commission (2 CCR 404-1).

FINDINGS

1.     On January 16, 1979, the Colorado Oil and Gas Conservation Commission (“COGCC” or “Commission”) approved an Application for Permit-to-Drill (“APD”) submitted by Noel Reynolds (Operator #74500) for the Touchstone-Weber Heirs #1 Well (API No. 05-067-05448) (the “Well”), located in the NW¼ NE¼ of Section 13, Township 33 North, Range 12 West, N.M.P.M., which was subsequently drilled and completed at an excess of 3,000 feet below ground surface. 

2.     On February 23, 2006, the COGCC Staff issued a Notice of Alleged Violation (“NOAV”) #200086290 to Noel Reynolds, which contained alleged violations of the following COGCC rule then in place:

a.   Rule 1004., which requires the operator, upon the plugging and abandonment of a well, to perform final reclamation of the well site and associated production facilities;

The NOAV required certain abatement or corrective actions to be taken by the operator by April 10, 2006. 

3.     Rule 706.a. provides that financial assurance shall be in the amount of $20,000 per well, or a $60,000 statewide blanket for the drilling and operation of less than 100 wells, for wells in excess of 3,000 feet depth, to ensure the protection of the soil, the proper plugging and abandonment of the well, and the reclamation of the site, Noel Reynolds has posted a $30,000 blanket bond for the plugging and abandonment and reclamation of wells and well sites it operates.

4.     Rule 523. specifies a base fine of One Thousand dollars ($1,000) for each day of violation of Rule 1004.  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.

5.     Noel Reynolds should be found in violation of Rule 1004. for its oil and gas operations at the Well and ordered to pay fines as prescribed by Rule 523.  Further, the financial assurance posted by Noel Reynolds, in accordance with Rule 706.a. should be claimed by the COGCC Staff to defray any costs incurred by the oil and gas operations due to land damage and the plugging and abandonment of the Well and reclamation of the site. 

6.     Noel Reynolds violated Rule 1004. because it failed to complete final reclamation of the well site and associated production facilities upon the plugging and abandonment of the Well.  In accordance with Rule 523., the base fine is Ten Thousand dollars ($10,000) for the violation of Rule 302. under these circumstances.

7.     Base fines attributable to the Rule violations at the Well are set forth below, based on the maximum penalty per rule violation:

8.     Noel Reynolds violated Rule 706. because it has not posted the required financial assurance for the Well.  The $30,000 bond posted by Noel Reynolds for the Well should be claimed and the funds used to plug and abandon the Well and reclaim the Well site.

9.     Payment of the fine pursuant to this Order should not relieve the operator from its obligations to complete corrective actions set forth in the NOAV, as may be amended or modified by COGCC Staff.

10.   Noel Reynolds, or its successors or assigns, should be required to remain responsible for complying with this Order, in the event of any subsequent sale of property.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Noel Reynolds is in violation of Rules 706. and 1004., for oil and gas operations at the Well, located in the NW¼ NE¼ of Section 13, Township 33 North, Range 12 West, N.M.P.M., for those acts described herein.

IT IS FURTHER ORDERED, that Noel Reynolds shall be assessed a total fine of Ten Thousand dollars ($10,000) for the Rule violation 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 the $30,000 statewide blanket bond posted by Noel Reynolds for wells and well sites it operates shall be claimed and the funds used to plug and abandon the Well and reclaim the Well site.

IT IS FURTHER ORDERED, that the COGCC Staff shall plug and abandon the Well and perform any necessary reclamation of the well site, and supplement those costs associated with the plugging with funds from the Oil and Gas Conservation and Environmental Response Fund, as may be necessary.

IT IS FURTHER ORDERED, that this Order does not relieve the operator from undertaking and completing abatement or corrective actions that may be required by the Notice of Alleged Violation described above, or any amendments or modifications thereto specified by the COGCC 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 COGCC 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.

ENTERED this            day of July, 2011, as of June 27, 2011.

                                                                        OIL AND GAS CONSERVATION COMMISSION

                                                                        OF THE STATE OF COLORADO

                                   By                                                                            

                                                                                    Robert A. Willis, Acting Secretary

Dated at Suite 801

1120 Lincoln St.

Denver, Colorado 80203