BEFORE THE OIL AND GAS CONSERVATION COMMISSION

                                                               OF THE STATE OF COLORADO

 

IN THE MATTER OF ALLEGED VIOLATIONS OF THE                       )                    CAUSE NO. 1V

RULES AND REGULATIONS OF THE COLORADO OIL                   )

AND GAS CONSERVATION COMMISSION BY                                   )                    ORDER NO. IV-273

ENCANA OIL & GAS (USA) INC.,                                                       )

RIO BLANCO COUNTY, COLORADO                                                )

                                                                       

ADMINISTRATIVE ORDER BY CONSENT

 

FINDINGS

 

                       1.  On October 29, 1999, a Colorado Oil and Gas Conservation Commission (“COGCC”) Application for Permit-to-Drill (“APD”), Form 2, was approved for Coastal Oil and Gas to drill the Park Mountain #2-2-3-104 Well (“Well”) located in the SE¼ SE¼ of Section 2, Township 3 South, Range 104 West, 6th P.M.

 

                        2.  The APD for the Well specified the objectives as the Entrada and Dakota Formations. The APD was approved by the COGCC Director for the Entrada and Dakota Formations only. The Well was completed in the Dakota Formation on December 31, 1999 and later sold to EnCana Oil and Gas (USA) Inc. (“EnCana”) on July 1, 2002.

 

                        3.  Encana plugged back the Dakota Formation and recompleted the Well to the Williams Fork Formation on July 7, 2003.

 

                        4.  On April 6, 2004, a Notice of Alleged Violation (“NOAV”) was issued to EnCana for violation of Rule 303.b., recompletion to the Williams Fork Formation without a permit. The NOAV required Encana to submit an Application for Permit to Recomplete, Form 2, and submit a letter detailing the reason for not complying with Rule 303.b. The abatement date for the NOAV was May 1, 2004.

 

                        5.  On May 3, 2004, COGCC staff received from EnCana the Form 2 for recompletion of the Park Mountain #9027 Well (previously known as #2-2-3-104) and a letter explaining their actions. The letter stated that EnCana “did not understand that our data gathering expedition to obtain a permeability measurement in the Williams Fork constituted a recomplete of the Williams Fork which required approval of a State of Colorado Form 2.” They further stated “We simply did not understand that a Form 2 was required from the State for these operations conducted on Federal lands.”

 

                        6. For the unauthorized completion of the William Fork Formation in the Park Mountain #9027 Well, EnCana should be found in violation of Rule 303.b., failure to have an approved Application for Permit to Recomplete to the Williams Fork Formation.

 

7.  Rule 523. specifies a base fine of One Thousand dollars ($1,000) per day for each violation of Rule 303. The time of the violation is approximately three hundred (300) days.

 

                        8.  A monetary penalty of Ten Thousand dollars ($10,000.00) should be assessed against EnCana, in accordance with Rule 523.d., for violation of Rule 303.b. An aggravating factor in determining the fine recommendation under Rule 523.d.(1) is the violation was reckless.

 

                        9. EnCana should plug and abandon the Park Mountain #9027 Well within thirty (30) days of the date the order is approved.

                                                                                   ORDER

 

                       NOW, THEREFORE, IT IS ORDERED, that EnCana Oil and Gas (USA) Inc. shall be found in violation of Rule 303.b., failure to have an approved Application for Permit to Recomplete to the Williams Fork Formation, for the Park Mountain #9027 Well located in the SE¼ SE¼ of Section 2, Township 3 South, Range 104 West, 6th P.M.

 

                        IT IS FURTHER ORDERED, that EnCana Oil and Gas (USA) Inc. shall be assessed a fine of Ten Thousand dollars ($10,000.00) payable within thirty (30) days of the date the order is approved by the Commission for the above violation.

 

                        IT IS FURTHER ORDERED, that EnCana Oil and Gas (USA) Inc. shalll plug and abandon the Park Mountain #9027 Well within thirty (30) days of the date the order is approved.

 

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.

 

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.

 

 

                                                                        Recommended this               day of May, 2004.

 

 

                                                                        OIL AND GAS CONSERVATION COMMISSION

 

 

 

                                                                        By                                                                   

Morris J. Bell, Hearing Officer

Dated at Suite 801                 

1120 Lincoln Street                

Denver, Colorado  80203

May 25, 2004

                        AGREED TO AND ACCEPTED THIS _________DAY OF May, 2004.

 

                                                                                      ENCANA ENERGY RESOURCES INC.

 

 

                                                                        By ____________________________________________

 

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