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
DIVERSIFIED OPERATING CORPORATION,
WELD COUNTY, COLORADO |
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CAUSE NO. 1V
ORDER NO. IV-388 |
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
Well Descriptions
1.
Diversified Operating Corporation (“DOC”) (Operator No. 24461) operates
the wells identified in Table 1.
Table
1.
|
Well |
History |
|
Sooner Unit # 2-21 |
On February 21, 1987, DOC spud
the Sooner Unit #2-21 Well (API No. 05-123-13330), located in the NW¼ NE¼ of
Section 21, Township 8 North, Range 58 West, 6th P.M., and
subsequently completed the well for production of the D Sand Formation. The well has been listed as plugged
and abandoned since November 8, 2000. |
|
Sooner Unit # 1-21A |
On October 19, 1991, DOC spud
the Sooner Unit #1-21A Well (API No. 05-123-15314), located in the NE¼ NE¼ of
Section 21, Township 8 North, Range 58 West, 6th P.M., and
subsequently completed the well for production of the D Sand Formation. The well has been listed as plugged
and abandoned since May 29, 2003. |
|
Seifried # 14-31 |
On September 15, 1985, DOC spud
the Seifried #14-31 Well (API No. 05-123-12579), located in the SE¼ SW¼ of
Section 31, Township 8 North, Range 58 West, 6th P.M., and
subsequently completed the well for production of the D Sand Formation. The well has been listed as plugged
and abandoned since June 28, 2005. |
|
Sooner Unit # 14-16 |
On November 29, 1986, Petroleum
Energy Corporation spud the Sooner Unit #14-16 Well (API No. 05-123-13259),
located in the SE¼ SW¼ of Section 16, Township 8 North, Range 58 West, 6th
P.M., and completed the well for production in the D Sand Formation. Subsequently, the well was sold to
Marathon Oil Company, and finally to DOC, the present operator of the well. As of July 23, 2001, the well has
been listed as plugged and abandoned. |
|
Sooner Unit # 16-13-8 |
On March 15, 2003, DOC spud the
Sooner Unit #16-13-8 Well (API No. 05-123-21379), located in the SW¼ SW¼ of
Section 16, Township 8 North, Range 58 West, 6th P.M., and completed
the well for production in the D Sand Formation.
The well has been listed as plugged and abandoned as of August 5, 2006. |
|
K+E # 2-1 |
On June 28, 2003, DOC spud the K
+ E #2-1 Well (API No. 05-123-21392), located in the NE¼ NE¼ of Section 2,
Township 7 North, Range 60 West, 6th P.M. The well has been listed
plugged and abandoned since July 2, 2003.
|
|
Sooner Unit # 3-28 |
On November 18, 1986, Petroleum
Energy Corporation spud the Sooner Unit #3-28 Well (API No. 05-123-13249),
located in the NE¼ NW¼ of Section 28, Township 8 North, Range 58 West, 6th
P.M., and completed the well in the J Sand Formation. Subsequently, the well was sold to
Marathon Oil Company, and finally to DOC, the present operator of the well. As of August 18, 2001, the well has
been listed as plugged and abandoned. |
|
Chalk # 31-14 |
On March 20, 2008, DOC spud the
Chalk #31-14 Well (API No. 05-123-26661), located in the SE¼ SW¼ OF Section 31,
Township 8 North, Range 59 West, 6th P.M. The well has been listed as dry and
abandoned since March 27, 2008. |
|
Showers # 4-4 |
On June 21, 2002, DOC spud the
Showers #4-4 Well (API No. 05-123-20859), located in the NW¼ NW¼ of Section 4,
Township 7 North, Range 60 West, 6th P.M. The well was listed as plugged and
abandoned as of June 24, 2002. |
|
Showers # 32-14-H |
On November 1, 1999, DOC spud
the Showers #32-14-H Well (API No. 05-123-19693), located in the SE¼ SW¼ of
Section 32, Township 8 North, Range 60 West, 6th P.M., and
subsequently completed the well in the D Sand Formation. The well has been listed as drilled
and abandoned since September 4, 2004. |
|
Showers # 5-2 |
On June 25, 2002, DOC spud the
Showers #5-2 Well (API No. 05-123-20532), located in the NW¼ NE¼ of Section 5,
Township 7 North, Range 60 West, 6th P.M., and subsequently completed
the well for production in the J Sand Formation.
The well has been listed as plugged and abandoned since June 29, 2002. |
|
Sooner Unit # 14-21 |
On February 10, 1987, DOC spud
the Sooner Unit #14-21 Well (API No. 05-123-13276), located in the SE¼ SW¼ of
Section 21, Township 8 North, Range 58 West, 6th P.M., and
subsequently completed the well for production in the D Sand Formation. The well has been listed as plugged
and abandoned as of August 30, 2005. |
|
Showers # 32-11 |
On August 1, 2001, DOC spud the
Showers #32-11 Well (API No. 05-123-20472), located in the NE¼ SW¼ of Section
32, Township 8 North, Range 60 West, 6th P.M. As of September 4, 2004, the well has
been listed as drilled and abandoned. |
|
Seifried # 3-6 |
On November 1, 1999, DOC spud
the Showers #32-14-H Well (API No. 05-123-19693), located in the SE¼ SW¼ of
Section 32, Township 8 North, Range 60 West, 6th P.M., and
subsequently completed the well in the D Sand Formation. The well has been listed as drilled
and abandoned since September 4, 2004. |
|
Frank # 27-16 |
On November 17, 2001, DOC spud
the Frank #27-16 Well (API No. 05-123-20168), located in the SE¼ SE¼ of Section
27, Township 8 North, Range 60 West, 6th P.M. The well has been listed as plugged
and abandoned as of May 21, 2004. |
|
Green #5-3 |
On January 5, 2001, DOC spud the
Green #5-3 Well (API No. 05-123-20102), located in the NE¼ NW¼ of Section 5,
Township 7 North, Range 59 West, 6th P.M. The well has been listed
plugged and abandoned since September 17, 2004.
|
|
Green #5-6 |
On June 11, 2004, DOC spud the
Green #5-6 Well (API No. 05-123-22007), located in the SE¼ NW¼ of Section 5,
Township 7 North, Range 59 West, 6th P.M., and subsequently completed
the well in the D Sand Formation.
The well has been plugged and abandoned since August 26, 2004. |
|
Sooner Unit # 15-21 |
On April 8, 1986, DOC spud the
Sooner Unit #15-21 Well (API No. 05-123-13045), located in the SW¼ SE¼ of
Section 21, Township 8 North, range 58 West, 6th P.M., and completed
the well for production in the D Sand Formation.
The well has been listed as plugged and abandoned as of August 18, 2005. |
|
Sooner Unit # 1-20 |
On November 16, 1987, DOC spud
the Sooner Unit #1-20 Well (API No. 05-123-13655), located in the NE¼ NE¼ of
Section 20, Township 8 North, Range 58 West, 6th P.M.. The well has been listed as plugged
and abandoned as of July 15, 2005. |
|
Sooner Unit # 9-21 |
On September 4, 1992, DOC spud
the Sooner Unit #9-21 Well (API No. 05-123-15996), located in the NE¼ SE¼ of
Section 21, Township 8 North, Range 58 West, 6th P.M., and completed
the well for production in the D Sand Formation.
The well has been listed as plugged and abandoned as of November 18,
2005. |
|
BJC 33-13X |
On August 11, 2001, DOC spud the
BJC #33-13X Well (API No. 05-123-20843), located in the SW¼ SW¼ of Section 33,
Township 8 North, Range 59 West, 6th P.M., and completed the well for
production in the D Sand Formation.
The well has been listed as plugged and abandoned since September 25, 2002. |
Alleged Violation Citations
2.
COGCC Staff conducted inspections at these sites and found alleged Rule
violations. The dates of citation,
Notice of Alleged Violation (“NOAV”) numbers, and alleged Rule violations cited
are identified in Table 2.
Table
2.
|
Well |
NOAV Date |
NOAV # |
Alleged Rule Violation(s) |
||||
|
|
306.e |
603.j |
1003.d |
1004.a |
1004.c |
||
|
Sooner Unit # 2-21 |
3/30/2010 |
2001060 |
x |
|
|
x |
|
|
Sooner Unit # 1-21A |
3/30/2010 |
2001059 |
x |
|
|
x |
|
|
Seifried # 14-31 |
3/30/2010 |
2001058 |
x |
x |
|
x |
|
|
Sooner Unit # 14-16 |
3/30/2010 |
2001061 |
x |
|
|
x |
|
|
Sooner Unit # 16-13-8 |
3/30/2010 |
2001062 |
x |
|
|
x |
|
|
K+E # 2-1 |
3/24/2010 |
2001049 |
x |
|
|
x |
|
|
Sooner Unit # 3-28 |
3/24/2010 |
2001057 |
x |
|
|
x |
|
|
Chalk # 31-14 |
3/30/2010 |
2001056 |
x |
|
|
x |
|
|
Showers # 4-4 |
3/30/2010 |
2001051 |
x |
|
|
x |
|
|
Showers # 32-14-H |
3/24/2010 |
2001054 |
x |
x |
|
x |
|
|
Showers # 5-2 |
3/30/2010 |
2001052 |
x |
|
|
x |
|
|
Sooner Unit # 14-21 |
3/30/2010 |
2001055 |
x |
|
|
x |
|
|
Showers # 32-11 |
3/30/2010 |
2001053 |
x |
|
|
x |
|
|
Seifried # 3-6 |
3/17/2010 |
1897381 |
x |
x |
|
x |
|
|
Frank # 27-16 |
3/17/2010 |
1897380 |
|
x |
|
x |
x |
|
Green #5-3 |
10/1/2007 |
200121140 |
|
|
|
x |
|
|
Green #5-6 |
10/1/2007 |
200121145 |
|
|
|
x |
|
|
Sooner Unit # 15-21 |
10/18/2006 |
1237413 |
|
|
|
x |
|
|
Sooner Unit # 1-20 |
10/10/2006 |
1237421 |
|
|
|
x |
|
|
Sooner Unit # 9-21 |
10/10/2006 |
1237416 |
|
|
|
x |
|
|
BJC 33-13X |
5/26/2006 |
12327343 |
|
|
x |
|
|
Cited Rules Summary
3.
Violations cited in Table 2 are explained as follows:
a.
Rule 306.e. (Final Reclamation Consultation) requires that in preparation for
final reclamation and plugging and abandonment, the operator shall use its best
efforts to consult in good faith with the affected surface owner (or the tenant
when the surface owner has requested that such consultation be made with the
tenant). Such good faith
consultation shall allow the surface owner (or appointed agent) the opportunity
to provide comments concerning preference for timing of such operations and all
aspects of final reclamation, including, but not limited to, the desired final
land use and seed mix to be applied.
b.
Rule 603.j. (Statewide Equipment, Weeds, Waste, and Trash Requirements)
requires all locations, including wells and surface production facilities, shall
be kept free of the following: equipment, vehicles, and supplies not necessary
for the use on that lease; weeds; rubbish, and other waste material. The burning or burial of such
material on the premises shall be performed in accordance with applicable local,
state, or federal solid waste disposal regulations and in accordance with the
900-Series COGCC Rules. In addition,
material may be burned or buried on the premises only with the prior written
consent of the surface owner.
c.
Rule 1003.d.(3). (Drilling Pit Closure – Minimum Cover) requires for
drilling pit closure on crop lands, a minimum of 3 feet of backfill cover shall
be applied over any remaining drill pit contents.
As to both crop lands and non-crop lands, during the 2 year period
following drill pit closure, if subsidence occurs over the closed drilling pit
location additional topsoil shall be added to the depression and the land shall
be re-leveled as close to its original contour as possible.
d.
Rule 1004.a. (Final Reclamation – Well Sites and Associated Production
Facilities) requires that upon the plugging and abandonment of a well, all pits,
mouse and rat holes and cellars should be backfilled. All debris, abandoned gathering line
risers and flowline risers, and surface equipment shall be removed within 3
months of plugging a well. All
access roads to plugged and abandoned wells and associated production facilities
shall be closed, graded and re-contoured.
Culverts and any other obstruction that were part of the access road(s)
shall be removed. Well locations,
access roads, and associated facilities shall be reclaimed. As applicable, compaction
alleviation, restoration, and re-vegetation of well sites, associated production
facilities, and access roads shall be performed to the same standards as
established for interim reclamation under Rule 1003. All other equipment, supplies, weeds,
rubbish, and other waste material shall be removed. The burning or burial of such
material on the premises shall be performed in accordance with the 900-Series
Rules. In addition, material may be
burned or buried on the premises only with the prior written consent of the
surface owner. All such reclamation
work shall be completed within 3 months on crop land and 12 months on non-crop
land after plugging a well or final closure of associated production facilities. The Director may grant an extension
where unusual circumstances are encountered, but every reasonable effort shall
be made to complete reclamation before the next local growing season.
e.
Rule 1004.c.(2). (Final Reclamation Threshold for Release of Financial
Assurance) requires on non-crop land, reclamation has been performed as per
Rules 1003 and 1004, and disturbed areas have been built on, compacted, paved or
otherwise stabilized in a way as to minimize erosion to the extent practicable,
or a uniform vegetative cover has been established that reflects pre-disturbance
or reference area forbs, shrubs, and grasses with a total percent plant cover of
at least 80% of pre-disturbance or reference area levels, excluding noxious
weeds, as determined by the Director through a visual appraisal. The Director shall consider the total
cover of live perennial vegetation of adjacent or nearby undisturbed land, not
including overstory or tree canopy cover, having similar soils, slope and aspect
of the reclaimed area.
Calculation of Fines
4.
Rule 523.(Procedure for Assessing Fines) specifies a base fine of One
Thousand dollars ($1,000) for each day of violation of Rule 306.e. and a base
fine of One Thousand dollars ($1,000) for each day of violation of Rule 1004.a. 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.
Rule 523.d. specifies that a fine may be decreased by application of
mitigating factors. Applicable
mitigating factors include:
a.
Rule 523.d.(2), the violator demonstrated prompt, effective and prudent
response to the violation, including assistance to any impacted parties.
b.
Rule 523.d.(3), the violator cooperated with the Commission, or other
agencies with respect to the violation.
c.
Rule 523.d.(5), the violator made a good faith effort to comply with
applicable requirements prior to the Commission learning of the violation.
d.
Rule 523.d.(6), the cost of correcting the violation reduced or
eliminated any economic benefit to the violator.
Rule 306.e. (Final
Reclamation Consultation) Violations
6.
Upon further review, Staff determined that DOC had attempted consultation
with surface owners, and follow-up meetings with surface owners were conducted.
7.
Rule 306.e. was cited for 14 sites, though there were only seven surface
owners represented by these sites.
8.
Staff finds that these violations have been resolved pursuant to Rule
523.d.(2) and (3), and recommends that these violations be dismissed.
Rule 603.j. (Statewide
Equipment, Weeds, Waste, and Trash Requirements) Violations
9.
Staff recommends that Rule 603.j. violations be dismissed because these
violations are considered factually duplicative to the requirements of Rule
1004.a., which requires operators to remove all equipment and debris from the
well site for final reclamation.
Rule 1003.d.(3)
(Drilling Pit Closure – Minimum Cover) Violations
10. Staff
recommends that Rule 1003.d. violations be dismissed as upon further review, the
subsidence was minimal and accepted by surface owner. Additionally, DOC brought in fill
material and re-contoured the area.
Rule 1004.c.(2) (Final
Reclamation – Well Sites and Associated Production Facilities) Violations
11. Staff
recommends that Rule 1004.c.(2) violations be dismissed. Citation of Rule
1004.c.(2) was intended to describe concerns over lack of re-vegetation, but
this concern is included in Rule 1004.a. violations.
Rule 1004.a. (Final
Reclamation Threshold For Release Of Financial Assurance) Violations
12. Pursuant
to Rule 523.d.(2) and (6), Staff recommends that fines for Rule 1004.a.
violations be reduced from $10,000 per violation to $2,000 per violation, for a
total fine of Forty Thousand dollars
($40,000) to be attributed to those wells involved in this AOC as identified
in Table 3. The basis for this
reduction is:
a.
DOC has been actively working with surface owners and interacting with
Staff to ensure compliance with reclamation standards pursuant to Rule 523.d.(2)
and (3);
b.
the cost of reclamation on the well sites will eliminate economic benefit
to the violator pursuant to Rule 523.d.(6); and
c.
Staff finds that the $10,000 per violation is excessive for the issues
identified in view of applicable mitigating factors.
d.
DOC has reached substantial compliance with all requested corrective
actions, except for the complete re-establishment of vegetation, which will take
considerable time at these dry land sites.
Table
3.
|
Well |
Staff Recommended Fine |
||||
|
|
306.e |
603.j |
1003.d |
1004.a |
1004.c |
|
Sooner Unit # 2-21 |
$ - |
|
|
$2,000.00
|
|
|
Sooner Unit # 1-21A |
$ - |
|
|
$2,000.00
|
|
|
Seifried # 14-31 |
$ - |
$ - |
|
$2,000.00
|
|
|
Sooner Unit # 14-16 |
$ - |
|
|
$2,000.00
|
|
|
Sooner Unit # 16-13-8 |
$ - |
|
|
$2,000.00
|
|
|
K+E # 2-1 |
$ - |
|
|
$2,000.00
|
|
|
Sooner Unit # 3-28 |
$ - |
|
|
$2,000.00
|
|
|
Chalk # 31-14 |
$ - |
|
|
$2,000.00
|
|
|
Showers # 4-4 |
$ - |
|
|
$2,000.00
|
|
|
Showers # 32-14-H |
$ -
|
$ - |
|
$2,000.00
|
|
|
Showers # 5-2 |
$ - |
|
|
$2,000.00
|
|
|
Sooner Unit # 14-21 |
$ - |
|
|
$2,000.00
|
|
|
Showers # 32-11 |
$ - |
|
|
$2,000.00
|
|
|
Seifried # 3-6 |
$ - |
$ - |
|
$2,000.00
|
|
|
Frank # 27-16 |
|
$ - |
|
$2,000.00
|
$ - |
|
Green #5-3 |
|
|
|
$2,000.00
|
|
|
Green #5-6 |
|
|
|
$2,000.00
|
|
|
Sooner Unit # 15-21 |
|
|
|
$2,000.00
|
|
|
Sooner Unit # 1-20 |
|
|
|
$2,000.00
|
|
|
Sooner Unit # 9-21 |
|
|
|
$2,000.00
|
|
|
BJC 33-13X |
|
|
$ - |
|
|
|
Total |
|
|
|
$40,000.00 |
|
13. If this
matter is not resolved by this AOC, COGCC Staff specifically reserve the right
to bring this matter for hearing by the Commission. Nothing within this proposed AOC
should be construed as the COGCC Staff waiving its right to prosecute any
violation set forth in this AOC or to present evidence which alters the days of
violation set forth in this AOC.
14.
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 COGCC Staff.
15. DOC
should execute this AOC no later than May 15, 2012 for recommendation to the
Commission for expedited approval.
Fines may increase if this matter is not recommended for expedited approval.
16.
DOC, 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.
17.
DOC agrees to the findings of this AOC only
for the purpose of expeditiously resolving the matter without a contested
hearing. Pursuant to Rule 423.c.(3),
entering into this AOC by DOC shall not be construed as an admission of
the alleged violations. DOC fully reserves
its right to contest the same in any future action or proceeding other than a
proceeding to enforce this AOC.
ORDER
NOW, THEREFORE, IT IS ORDERED, that Diversified Operating
Corporation shall be found in violation of Rule 1004.a., for failure to properly
reclaim and re-contour the location upon the plugging and abandonment of the
below-listed wells:
|
Well |
API # |
|
Sooner Unit # 2-21 |
05-123-13330 |
|
Sooner Unit # 1-21A |
05-123-15314 |
|
Seifried # 14-31 |
05-123-12579 |
|
Sooner Unit # 14-16 |
05-123-13259 |
|
Sooner Unit # 16-13-8 |
05-123-21379 |
|
K+E # 2-1 |
05-123-21392 |
|
Sooner Unit # 3-28 |
05-123-13249 |
|
Chalk # 31-14 |
05-123-26661 |
|
Showers # 4-4 |
05-123-20859 |
|
Showers # 32-14-H |
05-123-19693 |
|
Showers # 5-2 |
05-123-20532 |
|
Sooner Unit # 14-21 |
05-123-13276 |
|
Showers # 32-11 |
05-123-20472 |
|
Seifried # 3-6 |
05-123-19693 |
|
Frank # 27-16 |
05-123-20168 |
|
Green #5-3 |
05-123-20102 |
|
Green #5-6 |
05-123-22007 |
|
Sooner Unit # 15-21 |
05-123-13045 |
|
Sooner Unit # 1-20 |
05-123-13655 |
|
Sooner Unit # 9-21 |
05-123-15996 |
IT IS FURTHER ORDERED,
that Diversified Operating Corporation shall be assessed a total fine of
Forty Thousand dollars ($40,000) 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 Notice of Alleged Violations
described in Finding No. 2 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 May 15, 2012.
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 2nd day
of May, 2012.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
Peter J. Gowen, Enforcement Officer
Dated at
Suite 801
1120 Lincoln
Street
Denver,
Colorado 80203
AGREED TO AND ACCEPTED this _________day of May, 2012.
DIVERSIFIED OPERATING CORPORATION
By:
___________________________________________
Signature of Authorized Diversified Operating Corporation Representative
___________________________________________
Print Signatory Name
___________________________________________
Title of Signatory
============================================================================
This Administrative
Order by Consent was heard by the Commission on the
29th
day of May, 2012, at the, Suite 801, in
The Chancery Building, 1120 Lincoln Street, Denver, Colorado,
and approved.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORAD
By____________________________________
Peter J. Gowen, Acting Secretary