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 EXTRACTION OIL & GAS LLC, WELD COUNTY, COLORADO

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CAUSE NO. 1V DOCKET NO. 160400142 TYPE:  ENFORCEMENT ORDER NO. 1V-572

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. Extraction Oil & Gas, LLC (“Extraction”) (Operator No. 10459) is the operator of record of the Johnson Trust 13-I Location (“Location”) located in Weld County, Colorado (Location ID 443649).

2. On October 21, 2015, Colorado Oil and Gas Conservation Commission (“COGCC” or Commission”) Staff approved Extraction’s Form 2 (Doc. No. 400689178) and Form 2A (Doc. No. 400689054) permitting the construction of the pad and drilling of nine wells at the Location.

3. The Location is immediately south of the Stoneridge subdivision in the Town of Frederick, Colorado. According to the Facility Layout Drawing (Doc. No. 400943688) there are thirty-one Building Units within a 500-foot radius of the disturbed area, as permitted. The nearest Building Unit is 501 feet from the nearest well or facility on the Location.

4. On October 21, 2016, Staff approved the Form 2A (Doc. No. 400689054) with the following Conditions of Approval (“COA”) and Best Management Practices (“BMP”):

a. “Sound walls and/or hay bales will be used to surround the well site during drilling operations to shield sensitive areas;”

b. “Additional Sound mitigation measures will be considered and implemented pursuant to third party recommendations[;]”

c. “There will be an additional 37’-44’ [sic] in height of sound mitigation provided by the topography change and installation of the temporary sound wall.”

5. On December 4, 2015, Extraction submitted a Form 42 (Doc. No. 400948448) providing 48-hour notice of construction at the Location.

6. On December 19, 2015, Extraction commenced drilling surface casing for the Johnson Trust #9 well (API 05-123-42313) using a surface drilling rig.

7. Staff received ten noise complaints between December 19, 2015 and December 21, 2015 from nearby residents. (Doc. Nos. 200438411, 200438392, 200438389, 200438388, 200438386, 200438384, 200438383, 200438412, 200438413, and 200438417)

8. Extraction suspended drilling operations on December 20, 2015.

9. On December 21, 2015, in response to the above complaints, Staff conducted an inspection of the Location (Doc. No. 674102841) and observed that no sound walls and/or hay bales were installed around the perimeter of the Location.

10. On December 23, 2015, Staff conducted a follow-up site inspection of the Location (See Doc. No. 674102858) and observed that drilling had been suspended and sound walls were being installed.

11. On December 26, 2015, Extraction recommenced surface drilling at the Location.

12. On December 28, 2015, in response to an additional noise complaint (Doc. No. 674102858), Staff conducted a follow-up inspection and observed that the sound walls were not completed.

13. Extraction discontinued surface drilling at the Location on December 29, 2015. (See Doc. No. 674102863)

14. On January 4, 2016, Staff conducted an additional follow-up inspection and observed that construction of the sound wall around the perimeter of the site was completed.

15. On January 6, 2016, Commission Staff issued a Notice of Alleged Violation (“NOAV”) (No. 400961276) to Extraction alleging a violation of Colorado Revised Statute §34-60-121(1) for failing to comply with a Colorado Oil and Gas Conservation (“COGCC” or “Commission”) Oil and Gas Location Assessment (“OGLA”) permit.

16. Following factual investigation and legal review of the violations alleged in the NOAV, Hearing Staff now asserts Extraction has committed a six-day violation of §34-60-121(1), C.R.S.

17. Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Hearings Staff calculated a penalty of $30,000 for this violation. The penalty calculation is based on the following:

a. Current versions of § 34-60-121 C.R.S. and Rule 523;

b. Violation continued for a period of six days, being December 19, 20, and 26 - 29, 2016;

c. Application of the Duration Matrix from the COGCC Enforcement Guidance and Penalty Policy January 2015 (corrected 4/8/2015);

d. Class 2;

e. Moderate impact;

f. Daily base penalty of $5,000;

g. No aggravating factors;

h. No mitigating factors;

i. No pattern of violation; and

j. No gross negligence or knowing and willful misconduct.

AGREEMENT

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

I. Extraction is found in violation of §34-60-121(1), C.R.S.

II. Extraction will be assessed a penalty of $30,000.

III. Extraction will pay $30,000 within 30 days after this approved AOC is mailed by the Commission.

RECOMMENDED this 4th day of March, 2016.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By

     David A. Beckstrom, Enforcement Officer

AGREED TO AND ACCEPTED this day of , 2016.

                                                EXTRACTION OIL & GAS, LLC

By

Signature of Authorized Company Representative

Print Signatory Name

Title

ORDER

HAVING CONSIDERED the Agreement between the Director and Extraction Oil & Gas, LLC to resolve the NOAV, the COMMISSION ORDERS:

1. Extraction is found in violation of §34-60-121(1), C.R.S.

2. Extraction is assessed a penalty of $30,000.

3. Extraction will pay $30,000 within 30 days after this approved AOC is mailed by the Commission.

4. Entry of this Order constitutes final agency action for purposes of judicial review as of the date this order is mailed by the Commission.  For all other purposes, this Order is effective as of the date of approval by the Commission.

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

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

                                                            OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

                                                            By 

                                                                                    Julie Murphy, Secretary