BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES AND REGULATIONS OF THE COLORADO OIL AND GAS CONSERVATION COMMISSION BY SMITH ENERGY LP, MONTEZUMA COUNTY, COLORADO |
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CAUSE NO. 1V
ORDER NO. 1V-376 |
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 December 17, 1983, Amoco Production Company (“Amoco”) spud the Cache Unit #21 Well (the “Well”) (API No. 05-083-06391), which is located in the SE¼ SE¼ of Section 34, Township 35 North, Range 20 West, N.M.P.M. The Well was subsequently sold by Amoco to Smith Energy LP (Operator No. 79907) (“Smith”) on July 1, 1989.
2. On August 15, 2006 COGCC Staff issued Notice of Alleged Violation (“NOAV”) #200095376 to Smith for the following alleged rule violations:
a. Rule 326., which requires a mechanical integrity test (“MIT”) to be performed on all injection wells.
The NOAV required certain abatement or corrective actions to be taken by the operator by February 15, 2007.
3. Rule 523. specifies a base fine of One Thousand dollars ($1,000) for each day of violation of Rule 326. 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, which do not apply here. The COGCC staff asserted the following.
4. Smith should be found in violation of Rule 326. for its oil and gas operations at the Well and pay a fine as prescribed by Rule 523. Further, Smith should be ordered to complete abatement or corrective actions set forth in the NOAV, as may be amended or modified by Staff.
5. Smith violated Rule 326. because it failed to timely perform an MIT on the Well. In accordance with Rule 523., the fine is Ten Thousand dollars ($10,000) for the violation of Rule 326. under these circumstances.
6. Under the terms of this Administrative Order by Consent (“AOC”), it is agreed by parties that Smith will be assessed the fine set forth in Finding No. 5, and that any enforcement proceeding against Smith at the Cache Unit No. 2 Well (under NOAV #200095409) for violating Rule 326. will be consolidated into this settlement.
7. Smith should be assessed a total fine of Ten Thousand dollars ($10,000) for the Rule 326. violation described herein at the Well.
8. Smith does not admit to the alleged violations but 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.
ORDER
NOW, THEREFORE, IT IS ORDERED, that Smith shall be found in violation of Rule 326. at the Cache Unit #21 Well, which is located in the SE¼ SE¼ of Section 34, Township 35 North, Range 20 West, N.M.P.M.
IT IS FURTHER ORDERED, that Smith shall be assessed a total fine of Ten Thousand dollars ($10,000), for the Rule violation set forth above, which shall be payable in two installments (the first $5,000 installment being due within 30 days that this Order is approved by the Commission, and the second, and final, $5,000 installment being due on or before November 15, 2011).
IT IS FURTHER ORDERED that nothing in this AOC shall constitute or be construed as an admission by Smith that it committed any violations of any rules of the COGCC or other applicable law.
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 Smith is fully released from any and all claims for violations of COGCC rules, the Colorado Oil and Gas Conservation Act, or any other rule, law, order, or directive set out or that could have been set out in the Notice of Alleged Violation or this Administrative Order by Consent.
RECOMMENDED this day of August, 2011.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: _________________________________________
Robert A. Willis, COGCC Enforcement Officer
Dated at Suite 801
1120 Lincoln St.
Denver, Colorado 80203
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AGREED TO AND ACCEPTED this _________ day of ___________, 2011.
SMITH ENERGY LP
By: _________________________________________
Signature of Authorized Company Representative
_________________________________________
Print Signatory Name
_________________________________________
Title
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This cause came on for hearing before the Commission on the _______ day of August, 2011, at The Chancery Building, 1120 Lincoln Street, Suite 801, Denver, Colorado, for the approval of this Administrative Order by Consent.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Robert A. Willis, Acting Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203