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
P & M PETROLEUM MANAGEMENT LLC, BACA,
WASHINGTON, AND WELD COUNTIES, COLORADO |
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CAUSE NO. 1V
ORDER NO. 1V-394
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ORDER FINDING VIOLATION
(Pursuant to Rule 522.b.(3) of the Rules and Regulations of the
Colorado Oil and Gas Conservation Commission, 2 CCR 404-1)
The Commission heard this matter on August 20,
2012, at the offices of the Colorado Oil and Gas Conservation Commission, 1120
Lincoln Street, Denver, Colorado, upon application by Staff for an Order Finding
Violation against P & M Petroleum Management LLC for a violation of Rule 706.
FINDINGS
1.
P & M Petroleum Management LLC (“P & M”) is an interested party in the
subject matter of the above‑referenced hearing.
3.
Due notice of the time, place and purpose of the hearing has been given
in all respects as required by law.
3.
The Commission has jurisdiction over the subject matter embraced in said
Notice, and of the parties interested therein, and jurisdiction to promulgate
this Order pursuant to the Oil and Gas Conservation Act.
4.
Rule 706 requires that operators provide financial assurance to the
Commission to ensure the protection of the soil, the proper plugging and
abandonment of the well, and the reclamation of the site in accordance with the
300 Series of drilling regulations, the 900 Series of E&P waste management, the
1000 Series of reclamation regulations, and the 1100 Series of flowline
regulations. Rule 706.a requires that the financial assurance required by this
rule shall be in the amount of $10,000 per well for wells less than 3,000 feet
in total measured depth and $20,000 per well for wells greater than or equal to
3,000 feet in total measured depth, except that Rule 706 allows an operator to
submit a statewide blanket financial assurance in the amount of $60,000 for the
drilling and operation of less than 100 wells, or $100,000 for the drilling and
operation of 100 or more wells.
5.
Rule 706.c requires that all oil and gas wells, excluding domestic gas
wells, with financial assurance posted prior to May 1, 2009 for federal land and
April 1, 2009 for all other land, must have financial assurances in compliance
with Rule 706 in place on July 1, 2009.
6.
P & M operates four wells in Colorado. One well has a measured total
depth under 3,000 feet, and the three others have a measured total depth greater
than 3,000 feet. P & M’s current applicable Blanket Plugging Financial Assurance
instrument requirement under Rule 706c. is $60,000. P & M has a $30,000 Blanket Plugging
Financial Assurance instrument posted under the previous Rule 706.
7.
On November 17, 2009, COGCC Staff sent a demand letter to P & M regarding
the operator’s noncompliance with Rule 706, requiring P & M to provide a
cumulative statewide blanket financial assurance in the amount of $60,000.
COGCC Staff required that P & M provide
additional financial assurance in the amount of $30,000, to supplement an
initial $30,000 bond, by December 17, 2009.
8.
On December 21, 2010, COGCC Staff issued Notice of Alleged Violation
(“NOAV”) No. 01662811 to P & M for its failure to provide additional financial
assurance in the amount of $30,000 pursuant to Rule 706.
9.
On July 30, 2012, COGCC Staff sent Notice of Hearing of this matter to P
& M, along with a proposed Administrative Order by Consent (AOC).
10.
Rule 523.c. specifies a base fine of $1,000 per day for violations of
Rule 706. It appears that the
violation alleged occurred for a period of more than ten days, however, staff is
not alleging that the violations resulted in significant waste of oil and gas
resources, damage to correlative rights, or a significant adverse impact on
public health, safety or welfare, including the environment or wildlife
resources. Accordingly, the maximum
penalty for any single violation shall not exceed $10,000 regardless of the
number of days of such violation.
COGCC Staff has calculated a base fine of $10,000 for violation of this Rule.
11.
As of the date of hearing, P & M remains delinquent in providing the
required financial assurance required by Rule 706. COGCC Staff requests that P &
M be found in violation of Rule 706 for its noncompliance with Commission
financial assurance requirements.
ORDER
NOW, THEREFORE, IT IS
ORDERED, that P & M Petroleum Management LLC is found in violation Rule 706 for
failure to provide financial assurance in the form of a
statewide blanket financial assurance instrument in the
amount of $60,000 for its four active wells.
IT IS FURTHER ORDERED,
that P & M Petroleum Management LLC shall be assessed a total adjusted fine for the Rule 706 violation set
forth above in an amount to be determined at the next Commission meeting.
IT IS FURTHER ORDERED,
that P & M Petroleum Management LLC shall provide an additional $30,000
financial assurance (for a total of $60,000) in a form consistent with the
Commission’s 700 Series Rules, within 30 days of the date of this Order. Failure
to do so may result in Commission Staff withholding approval of any requested
permits or other approvals requested by P & M Petroleum Management LLC, until
such time as the full amount of required financial assurance is posted with 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 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 this order shall be effective immediately.
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.
Dated this 30th
day of August, as of August 20, 2012.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
Robert J. Frick, Secretary