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 BP AMERICA PRODUCTION COMPANY, ARCHULETA AND LA PLATA COUNTIES, COLORADO

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CAUSE NO. 1V DOCKET NO. 160100075 TYPE:   ENFORCEMENT ORDER NO. 1V-557

ADMINISTRATIVE ORDER BY CONSENT

(Pursuant to Rule 522.e.(1) of the Rules and Regulations of the

Colorado Oil and Gas Conservation Commission, 2 CCR 404-1)

FINDINGS

1. BP America Production Company (“BP America”) (Operator No. 10000) is the operator of the Seibel B 2 Well (API No. 05-007-06320) (“Well”) in Archuleta County and a produced water flowline located at NWNW Sec 22, T34N R9W (Spill Release Point ID: 443095) (“Flowline”) in La Plata County, Colorado.

A. Seibel B 2 Well

2. On May 26, 2015, COGCC Staff issued a Warning Letter (No. 1857594) for the failure to provide a Form 42, Field Operations Notice, prior to spudding the Phillips A #3R Well (API No. 05-067-09799).

3. On August 26, 2015, BP America spud the surface casing wellbore of the Seibel B 2 Well without providing prior notice to COGCC as required by Rule 316C, as well as the conditions of approval on the Well’s Form 2, Application for Permit to Drill.

4. On September 24, 2015, COGCC Staff issued a Notice of Alleged Violation (“NOAV”) (No. 200437370) to BP America citing violations of Rule 316C (Form 42, Field Operations Notice) of the COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”) for the failure to provide advance written notice to COGCC prior to spudding the surface casing of the Well.

5. On October 9, 2015, BP America submitted a response to the NOAV, including documentation of a change in internal procedures regarding the submission of Form 42 notices (Doc. No. 02193013).

B. Flowline Release

6. On August 31, 2015, the landowner notified BP America of a produced water spill due to a release from the Flowline. BP America responded the same day, shut-in the Flowline, and began clean-up operations. BP America also notified COGCC Staff of the release.

7. On August 31, 2015, COGCC Staff inspected the spill site and observed that the release had flowed into a pasture along a natural depression and two cows were in the pasture at the time of the release. (Doc. No. 674900752). A water ditch to the southeast of the release flows into the same pasture. The release also impacted a right of way adjacent to La Plata Country Road 303.

8. On September 1, 2015, BP America filed a Form 19, Spill/Release Report, which indicated that between 5 and 100 barrels of produced water had been released and waters of the state, livestock, and a public byway had been threatened (Doc. No. 400893645).

9. On September 14, 2015, COGCC Staff issued NOAV No. 200437191 to BP America citing violations of Rule 1102 (Operations, Maintenance, and Repair) for the failure to take reasonable precautions to prevent failures, leakage, and corrosion of pipelines.

10. On October 8, 2015, BP submitted a leak prevention plan (Doc. No. 2315633). This plan indicated that the August 31, 2015 flowline leak was caused by sessile microbial induced corrosion. BP plans to chemically treat the Flowline to avoid this issue in the future.

C. Total Violations and Penalty Calculation

11. Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Staff calculated a penalty of $12,500 for these violations. The penalty calculation is based on the following:

NOAV No.	Rule	Class	Impact	Daily Penalty	Start Date	End Date	Days	Total Penalty
200437370	316C	Class 2	Minor	$2,500	8/26/2015	8/27/2015	1	$2,500
200437191	1102	Class 2	Moderate	$10,000	8/31/2015	9/1/2015	1	$10,000
	TOTAL PENALTY							$12,500

a. Violations beginning after the effective date of HB 14-1356 (June 6, 2014) and revised Rules 522/523 (March 2, 2015);

b. The daily penalty amount was increased from the base penalty provided by Rule 523 to make the penalty appropriate to the nature of the violation and based on consideration of the totality of the circumstances;

c. No aggravating or mitigating factors; and

d. No pattern of violation or gross negligence/knowing and willful misconduct.

AGREEMENT

NOW, THEREFORE, based on the Findings and pursuant to Rule 522.e.(1) and the Commission’s Enforcement and Penalty Policy, the Director proposes and BP America agrees to settle the NOAVs on the following terms and conditions:

I. BP America is found in violation of Rules 316C and 1102, as described above.  

II. BP America will be assessed a penalty of $12,500.

III. BP America will pay $12,500 within 30 days after the approved AOC is mailed by the Commission.

IV. BP will continue to implement the new Form 42 policies pursuant to Doc. No. 02193013, submitted on October 9, 2015 at all of the wells it operates.

V. BP America will continue to implement the corrective action requirements of Remediation Project No. 9271 and the leak prevention plan submitted on October 8, 2015 (Doc. No. 2315633), as may be amended or modified by COGCC Staff.

VI. Payment of the penalty pursuant to this AOC does not relieve the operator from its obligations to complete corrective actions set forth in the NOAVs and Remediation Project No. 9271, as may be amended or modified by COGCC Staff.

RECOMMENDED this 10^th day of December, 2015.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By

     Britta Beckstead, Assistant Attorney General

AGREED TO AND ACCEPTED this ___ day of December, 2015.

BP AMERICA PRODUCTION COMPANY

                        By

                             Signature of Authorized Company Representative

                            Print Signatory Name and Title

ORDER

HAVING CONSIDERED the Agreement between the Director and BP America to resolve the NOAV, the COMMISSION ORDERS:

1. BP America is found in violation of Rules 316C and 1102, as described above. 

2. BP America will be assessed a penalty of $12,500.

3. BP America will pay $12,500 within 30 days after this Order is mailed by the Commission.

4. BP will continue to implement the new Form 42 policies pursuant to Doc. No. 02193013, submitted on October 9, 2015 at all of the wells it operates.

5. BP America will continue to implement the corrective action requirements of Remediation Project No. 9271 and the leak prevention plan submitted on October 8, 2015 (Doc. No. 2315633), as may be amended or modified by COGCC Staff.

6. Compliance dates specified in this Order may be extended only for good cause, as determined at the Director’s sole discretion. A request for extension must be made, in writing, at least 14 days prior to the pertinent compliance deadline or as soon as possible if 14 days prior notice is not feasible.

7. Failure to receive an extension prior to or meet a compliance deadline, including a penalty payment deadline, may constitute a new violation subject to additional penalties.

8. Entry of this Order constitutes final agency action for purposes of judicial review 30 days after the date this Order is mailed by the Commission. For all other purposes, this Order is effective as of the date it is approved by the Commission.

9. The Commission expressly reserves its right after notice and hearing, to alter, amend, or repeal any and/or all of the above Order. 

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ENTERED this ___ day of January, 2016 as of the ___ day of January, 2016.

                                                OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

By 

                                                                          Julie Murphy, Secretary