BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

SIMPLE ADMINISTRATIVE ORDER BY CONSENT (AOC)

I.          Operator Information:

Operator Name: Winn Exploration Co Inc (“Winn” or “Operator”)       

Operator Number: #10404

II.         NOAV Information: 

NOAV  NO. 200355369

Date of NOAV: July 18, 2012

Issued by: Arthur Koepsell

III.        Summary of Alleged Violations:

Winn Energy commenced construction of a dual purpose, drilling and skim pit at the Slanovich 34-27  location without an approved Form 15 as required  as a Condition of Approval on the Form 2A (Doc # 400286309).  The Form 2A Condition of Approval stated:

Due to the likely hood of oil being received in the pit and exceeding 10,000 ppm TPH an approved Pit Permit (Form 15) will be required prior to pit construction. The Form 15 shall include a pit management plan how oil will be managed in the pit.

Construction of the pit commenced on or around June 26, 2012.   Noncompliance with a Condition of Approval of a permit is a violation of  § 34-60-121 C.R.S. Winn Energy submitted a Form 15 on July 2, 2012, approximately seven days after commencing construction of a pit, resulting in a seven day violation.

IV.       Fine Calculation

A.        Section 34-60-121 (1) C.R.S. specifies a base fine for permit violations as $1,000 per day, further stating the maximum penalty for any single violation shall not exceed $10,000 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. Staff does not allege that the violation resulted 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.

B.        COGCC Staff has calculated a base fine of Seven Thousand dollars ($7,000) for the violation as follows:

$1,000 per day x 7 days, or $7,000

            C.        The following mitigating factors will be applied in calculating the fine:

1.    The violator self-reported the violation.

2.    The violator demonstrated prompt, effective and prudent response to the violation, including assistance to any impacted parties.

3.    The violator cooperated with the Commission, or other agencies with respect to the violation.

V.        Settlement of NOAV

The parties agree to resolve the subject NOAV as follows:

1.         The parties agree that Operator violated Section 34-60-121 (1) C.R.S.by failing to comply with a Condition of Approval of a Form 2A by failing to obtain an approved Form 15 (Pit Permit) prior to commencement of construction of its dual purpose drilling and skim pit at the Slanovich 34-27  location.

2.         Operator shall pay a fine calculated as follows:

            Base Fine                                          $7,000

            Mitigating Factors Reduction         $3,500

            Final Fine                                          $3,500

            3.         Pursuant to Rule 522.c.(3), Operator agrees to the findings of this AOC for the purpose of expeditiously resolving the matter without a contested hearing, and agreement to this AOC shall not constitute an admission of the alleged violation for any other purpose. 

6.         Payment of the fine shall be within 30 days of the date this AOC is approved by the Commission.

7.         The COGCC Staff offer to resolve the subject NOAV pursuant to this Simple Administrative Order by Consent shall be withdrawn unless Operator approves and executes this Simple AOC no later than 30 days after receipt of the NOAV.  The COGCC staff reserves the right to pursue the full base fine if this AOC is not approved and executed as provided above.

Operator                                                                                 COGCC Staff

                               , Authorized Officer                           Peter J. Gowen, Enforcement Officer                                         

Date:                           2012.                                             Date: July 26, 2012

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The Commission heard this matter on August 20, 2012, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, and approved this Administrative Order by Consent. It is now a binding Order of the Commission.

ENTERED this _____ day of August 2012, as of the   20^th  day of August, 2012.  

                                                                        OIL AND GAS CONSERVATION COMMISSION

                        OF THE STATE OF COLORADO

                        By____________________________________

                                                                                    Robert J. Frick, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203