BEFORE THE OIL
AND GAS CONSERVATION COMMISSION
OF
THE STATE OF COLORADO
IN THE MATTER OF
ALLEGED VIOLATIONS OF THE RULE AND REGULATIONS OF THE COLORADO OIL AND GAS CONSERVATION
COMMISSION BY ENCANA OIL & GAS (USA) INC., GARFIELD COUNTY, COLORADO
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CAUSE NO. 1V
TYPE: ENFORCEMENT
ORDER NO. 1V-280
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REPORT OF THE COMMISSION
This cause came on for hearing before the Colorado Oil
and Gas Conservation Commission on November 29, 2004 at 9:00 a.m. in Suite 801,
the Chancery Building, 1120 Lincoln Street, Denver, Colorado after giving
Notice of Hearing as required by law, as to why EnCana Oil & Gas (USA) Inc.
is in violation of certain rules and regulations of the Colorado Oil and Gas
Conservation Commission (“COGCC”) and why the Commission should invoke the provisions
of §34-60-121, C.R.S., as amended, providing for penalties for violations of
the Rules and Regulations of the Commission.
FINDINGS
1.
On March 3, 2002, COGCC Application for Permit-to-Drill (“APD”), Form 2, was
approved for AEC Oil & Gas (USA) to drill the Shideler # 32-4C1 (H31) (“Well”)
located in the SE¼ NE¼ of Section 31, Township 7 South, Range 92 West, 6th P.M.
This APD expired on March 10, 2003.
2.
On November 24, 2003, a Sundry Notice, Form 4, was submitted by EnCana Oil
& Gas (USA) Inc (“EnCana”), successor operator to AEC Oil & Gas (USA), to
change the well name to the Shideler # 31-1 (H31) and to move the well location.
The Form 4 was returned without approval and stated the name change had been
made to the Well.
3.
On December 11, 2003 a new APD was submitted for the Well. This APD was
approved on December 23, 2003.
4.
On January 9, 2004, a Sundry Notice, Form 4, was submitted by EnCana stating
the Well had been spudded on December 18, 2003 which was five (5) days prior to
the approval of the APD.
5.
On July 1, 2004, a Drilling Completion Report, Form 5, a Completed Interval
Report, Form 5A, a Certification of Clearance, Form 10 and the Well logs were
submitted to the COGCC. The Form 5 stated the Well had been spudded on December 18, 2003.
6.
On July 20, 2004, a Notice of Alleged Violation (“NOAV”) was issued to EnCana
for violation of Rule 303.a.1., not obtaining the Director’s approval before
commencement of operations with heavy equipment, Rule 308A., not submitting the
Drilling Completion Report, Form 5 within thirty (30) days of setting the
production casing, Rule 308B., not submitting the Completed Interval Report,
Form 5A within thirty (30) days of completing a formation, and Rule 312., not
submitting a Certification of Clearance, Form 10 within thirty (30) days of
initial sales of oil or gas. The NOAV required EnCana to submit a letter
detailing the reasons for spudding the well prior to permit approval and why
the three (3) forms were delinquent. The abatement date for the NOAV was August
3, 2004.
7.
On August 3, 2004, COGCC staff received from EnCana a letter in response to
the NOAV. The letter explained the reasons for spudding the Well prior to APD
approval and why the three (3) forms were delinquent.
8. At the time of the hearing, Morris Bell, COGCC
Operations Manager, presented testimony and exhibits in support of the COGCC
staff’s recommended order.
9. Joel Fox, Petroleum Engineer for EnCana, testified
that there were no safety violations, no correlative rights violations, no
environmental impacts and no waste caused by the spudding of the Shideler #
31-1 (H31) Well prior to the issuance of the APD. He testified that EnCana has
recently modified its processes to avoid future occurrences.
10.
After deliberation, the Commission found EnCana in violation of Rule 303.a.1.,
not obtaining the Director’s approval before commencement of operations with
heavy equipment, Rule 308A., not submitting the Drilling Completion Report,
Form 5 within thirty (30) days of setting the production casing, Rule 308B.,
not submitting the Completed Interval Report, Form 5A, within thirty (30) days
of completing a formation, Rule 312., not submitting a Certification of
Clearance, Form 10 within thirty (30) days of after initial sales of oil or gas,
and Rule 317.c., not posting the APD at the rig, for the Shideler # 31-1 (H31)
Well.
11. Mr. Bell described the recommended base fine
amounts and the number of days that EnCana should be found in violation under Rule
523. which specifies a base fine of One Thousand dollars ($1,000) per day for
violation of Rule 303., and Five Hundred dollars ($500) per day for violation
of Rule 308. He recommended that EnCana be found in
violation of Rule 303.a.1. from December
18, 2003 until December 23, 2004 for five (5) days of violation; Rule 308A.
from February 1, 2004 until July 1, 2004 for one hundred fifty-one (151) days
of violation Rule 308B. from April 1, 2004 until July
1, 2004 for fifty-five (55) days of violation; Rule 312. from March
12, 2004 until July 1, 2004 for one hundred ten (110) days of violation and
Rule 317.c. for five (5) days of violation.
12. Mr. Bell recommended that a monetary penalty of Five Thousand dollars ($5,000) be assessed against EnCana, in accordance with Rule 523.d., for violation of
Rule 303.a.; that a monetary penalty of Five Thousand dollars ($5,000) be
assessed against EnCana, in
accordance with Rule 523.d., for violation of Rule 308A.; that a monetary
penalty of Five Thousand dollars ($5,000) be assessed against EnCana, in accordance with Rule 523.d., for violation of
Rule 303B.; that a monetary penalty of Five Thousand dollars ($5,000) should be
assessed against EnCana, in
accordance with Rule 523.d., for violation of Rule 312.; that a monetary penalty
of Five Thousand dollars ($5,000) be assessed against EnCana, in accordance with Rule 523.d., for violation of
Rule 317.c. He testified that the aggravating factors in determining the fine
recommendation were that under Rule 523.d.(1) the violation was reckless and under
Rule 523.d.(6) the violation involved recidivism. Mr. Bell recommended that EnCana
be fined a total of Twenty-five Thousand dollars ($25,000) for the five (5) violations.
13.
EnCana’s attorneys recommended that, based on the legal definitions of reckless
and recidivism, the Commission remove the aggravating factors from its final
order.
14.
After deliberation, the Commission accepted the staff’s recommended fine, with
the exception of the aggravating factors, which should be removed from the
final order.
ORDER
NOW,
THEREFORE, IT IS ORDERED, that EnCana Oil & Gas (USA) Inc. shall be found
in violation of Rule 303.a.1., not obtaining the Director’s approval before
commencement of operations with heavy equipment; Rule 308A., not submitting the
Drilling Completion Report, Form 5 within thirty (30) days of setting the
production casing; Rule 308B., not submitting the Completed Interval Report,
Form 5A, within thirty (30) days of completing a formation; Rule 312., not
submitting a Certification of Clearance, Form 10, within thirty (30) days of
after initial sales of oil or gas; and Rule 317.c., not posting the Application
for Permit-to-Drill, Form 2 at the rig site.
IT
IS FURTHER ORDERED, that EnCana Oil & Gas (USA) Inc. shall be assessed a total fine of Twenty-five Thousand dollars
($25,000) payable within thirty (30) days of the date the order is entered by
the Commission for the above violations.
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.
ENTERED this day of December,
2004, as of November 29, 2004.
OIL
AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By______________________________________
Patricia
C. Beaver, Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
December 20, 2004