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 WEST HAWK ENERGY (USA) LLC, RIO BLANCO COUNTY, COLORADO
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CAUSE NO. 1V
ORDER NO. 1V-386
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ORDER CALLING FINANCIAL ASSURANCE INSTRUMENT
The Commission heard this matter on December 12, 2011, at the Weld County Administration Building, 1150 O Street, Greeley, Colorado 80631 upon staff request for an order finding violation hearing against West Hawk Energy (USA) LLC authorizing a call or foreclosure of all remaining financial assurance instruments held on behalf of West Hawk.
FINDINGS
1. On August 8, 2011, the Commission issued Order No. 1V-378 finding that West Hawk Energy (USA) LLC (“West Hawk”) (Operator #10189) had committed numerous rule violations at certain wells and imposed fines for those violations as compiled below:
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Well Name/Number |
Rule Violations |
Fines Imposed |
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Figure Four Ranch #499-12-48 |
319.b.(1), 319.b.(2), 319.b.(3), 603.j., 706., 707., 1002.f.(2), 1003.b., and 1003.e.(2) |
$90,000 |
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Figure Four Ranch #499-12-67 |
308A., 319.b.(1), 319.b.(2), 319.b.(3), 603.j., 902.d., 1002.a.(3), 1003.a., 1003.b., 1003.d.(2), and 1203.a.(13) |
$110,000 |
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Figure Four Ranch #499-12-74 |
308A, 319.b.(1), 319.b.(2), 319.b.(3), 706., 707., 902.a., 902.b., 902.c., 902.d., 1002.a.(3), 1003.b., and 1003.d.(2) |
$140,000 |
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Figure Four Ranch #499-13-22 |
308A., 319.b.(1), 319.b.(2), 319.b.(3), 603.j., 706., 707., 1002.a.(3), 1002.f.(2), 1003.b., and 1003.e.(2). |
$120,000 |
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Figure Four Ranch #499-14-22 |
308A., 319.b.(1), 319.b.(2), 319.b.(3), 706., 707., 902.a., 902.c., 902.d., 1002.a.(3), 1003.b., 1003.d.(2), and 1203.a.(13) |
$130,000 |
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Figure Four Ranch #499-14-27 |
319.b.(1), 319.b.(2), 706., 707., 902A., 1002.a.(3), 1003.b., 1003.d.(2), and 1203.a.(13) |
$90,000 |
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Figure Four Ranch #499-14-67 |
308A., 319.b.(1), 319.b.(2), 319.b.(3), 706., 707., 902.a., 902.c., 902.d., 1002.a.(3), 1003.b., and 1003.d.(2) |
$130,000 |
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Figure Four Ranch #499-14-83 |
308A., 319.b.(1), 319.b.(2), 319.b.(3), 324A.a., 603.j., 706., 707., 907A., 1003.a., 1003.b., and 1003.e.(2) |
$130,000 |
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Total Imposed Fines |
$940,000 |
2. On September 19, 2011, the Commission issued Order No. 1V-385 pursuant to Docket No. 1100-OV-30, finding a pattern of violation against West Hawk, pursuant to Rule 525.b. for the rules violations for which West Hawk was fined under Order No. 1V-378 on August 8, 2011.
3. On October 7, 2011, Pursuant to Rule 522.c. and Rule 709, Commission staff filed a Notice of Hearing for an Order Finding Violation, calling or foreclosing the remaining $5,000 West Hawk financial assurance bond for purposes of assisting in the recovery of costs associated with the proper plugging and abandonment of the former West Hawk wells. The matter was docketed for the Commission hearing on October 31, 2011.
4. On October 24, 2011, the COGCC was contacted by Gonzalo Torres Machiavello, former President and CEO of West Hawk. On October 26, 2011, Mr. Machiavello met with COGCC staff and discussed the previous orders entered against West Hawk, and the current proceeding. Mr. Machiavello stated that West Hawk Energy (USA) LLC has been dissolved and is no longer a going concern. This matter was continued at the request of West Hawk to the December 12-13, 2011 Commission hearing.
5. Commission records reveal West Hawk has an active surety instrument with the Commission as follows:
COMPANY DETAIL REPORT
for Surety ID: 2006-0121
WEST HAWK ENERGY (USA) LLC - #10189
999 18TH STREET SUITE 3000
DENVER , CO 80202
USA
SURETY DETAIL INFORMATION
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Surety ID: |
2006-0121 |
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Status: |
ACTIVE |
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Operator Number: |
10189 |
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Bond Amount: |
$5,000.00 |
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Instrument: |
CERTIFICATE OF DEPOSIT |
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Instrument Number: |
010-007-0744508 |
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Coverage: |
INDIVIDUAL |
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Bond Type: |
PLUGGING |
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Limitation: |
1 |
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Deposit Number: |
19694 |
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PDPA Number: |
0800640051201 |
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Received Date: |
8/31/2006 |
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Approved Date: |
9/5/2006 |
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Maturity Expire Date: |
11/30/2006 |
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FA Provider Number: |
100894 |
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FA Provider Name: |
JPMORGAN CHASE BANK, NA (DENVER) |
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Deposit Date: |
9/8/2006 |
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Release Request Date: |
N/A |
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Release Date: |
N/A |
6. Rule 709 provides whenever an operator fails to fulfill any statutory obligation, and the Commission undertakes to expend funds to remedy the situation, the Director shall make application to the Commission for an order calling or foreclosing the operator's financial assurance.
7. The Commission takes administrative notice of the rule violations for which West Hawk has been found liable under Order No. 1V-378 and Order No. 1V-385, and finds that such violations justify foreclosing West Hawk’s financial assurance instrument pursuant to Rule 709.
8. Staff has represented to the Commission that the proceeds from the West Hawk financial assurance instrument are needed to defray costs of properly plugging and abandoning the West Hawk Wells.
9. On November 22, 2011, Gonzalo Torres Machiavello and his legal counsel met with Commission staff in a prehearing conference. At that time Mr. Machiavello offered his full cooperation and assistance in this matter.
ORDER
NOW, THEREFORE, IT IS ORDERED that the financial assurance instrument referenced above held on behalf of West Hawk, shall be called and foreclosed to the fullest extent allowed by law.
IT IS FURTHER ORDERED, that the proceeds from the calling of the West Hawk financial assurance instrument are authorized to be applied to cover costs of proper plugging and abandonment of the former West Hawk Wells.
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 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 16th day of December, 2011, as of December 12, 2011.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
Peter J. Gowen, Acting Secretary
Dated at Suite 801
1120 Lincoln St.
Denver, Colorado 80203
December 16, 2011