BEFORE THE OIL AND GAS CONSERVATION COMMISSION
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.
1V-345
PIONEER NATURAL RESOURCES USA, INC.
)
LAS ANIMAS
COUNTY, COLORADO
)
ADMINISTRATIVE ORDER BY CONSENT
(Pursuant to
Rule 522.b.(3) of
the Rules and Regulations of the
Colorado Oil and
Gas Conservation Commission, 2 CCR 404-1)
FINDINGS
1. On August 18, 1995,
a domestic water
well was constructed for Virgil John Dolores and Marilyn Dolores (“Mr. and Mrs.
Dolores”) under Colorado Division of Water Resources Permit No. 188783, Receipt
No. 0386689. The well hereinafter referred to as the "Dolores water well" is
located in the NE¼ SE¼ of Section 35, Township 32 South, Range 68 West, 6th
P.M.
2. On
May 4, 2005,
Glibota Environmental Inc. (“Glibota”), on behalf of Mr. and Mrs. Dolores,
collected a water sample from the Dolores water well. The sample was submitted
to STL Laboratories Inc. for analysis. The results of this baseline sample
showed the quality of the water from the Dolores water well, for the parameters
tested, met the standards for ground water promulgated by the Colorado Water
Quality Control Commission (“WQCC”), Regulation 41, The Basic Standards of
Ground Water Rule 41, 5 CCR 1002-41 (“WQCC Regulation 41”) and listed in
Table 1, Domestic Water Supply - Human Health Standards (“WQCC Table 1”), Table
2, Domestic Water Supply - Drinking Water Standards (“WQCC Table 2”), and the
narrative standards in WQCC Regulation 41.
3. On June 30, 2006, the
Colorado Oil and
Gas Conservation Commission (“COGCC” or “Commission”)
approved an Application
for Permit to Drill the Molokai #13-36 TR Well
(API
#05-071-08837).
The permit required Pioneer Natural Resources USA Inc. (“Pioneer”) to drill a
borehole to 1,050 feet, install surface casing, and cement that casing back to
surface before drilling the well to a total depth of 2,250 feet.
The Molokai
#13-36 TR Well is located in the NW¼ SW¼ of Section 36, Township 32 South, Range
68 West, 6th P.M., approximately 1,550 feet east-southeast from the
Dolores water well.
4. On Tuesday,
July 18, 2006,
Pioneer began drilling the borehole for the surface casing of the Molokai #13-36
TR Well. At approximately 18:45 a mechanical problem shut down the main air
compressor used at the site. Contrary to Pioneer’s standard drilling practice
to pull the pipe back to a safe zone under these circumstances, the drilling
contractor attempted to drill ahead while repairing the compressor. This
resulted in the drill bit becoming stuck in the open, uncased borehole. The
contractor pressurized the drill pipe to 600 pounds per square inch in an
unsuccessful attempt to break the drill bit free. At 19:00 hours the pressure
was bled off the drill pipe and the operation was shut down to wait on tools.
5. On Wednesday,
July 19, 2006,
COGCC Staff received a complaint from Mr. and Mrs. Dolores stating that their
water well had been impacted by activities at the Molokai #13-36 TR Wellsite.
6. On Thursday,
July 20, 2006,
COGCC Staff collected a water sample from the Dolores water well and submitted
it to Evergreen Analytical Inc. for analysis. Fluoride and manganese
concentrations in the water, and the pH, exceeded WQCC Regulation 41 standards
for those constituents. The fluoride concentration was 6.6 milligrams per liter
(“mg/l”), compared to the WQCC Table 1 standard of 4.0 mg/l; the manganese was
0.095 mg/l, compared to the WQCC Table 2 standard of 0.05 mg/l; and the pH of
the sample was 8.92 standard units (“su”), compared to the WQCC Table 2 standard
of 6.5-8.5 su.
7. A local
Pioneer representative in charge of its Raton Basin operations also was at the
Dolores wellsite on July 20, 2006 and met with COGCC Staff. Pioneer decided to
begin providing city water for a cistern and bottled drinking water to the
Dolores household, and placed an employee at the water wellsite to log events at
the well and keep management informed of the situation.
8. On July
20, 2006, COGCC Staff directed Pioneer to shut down and plug and abandon the
Molokai #13-36 TR Well. Pioneer suspended operations on the well the same day
and plugged and abandoned the well as directed by
COGCC Staff.
9. Also on
July 20, 2006,
Pioneer’s hydrologic consultant, Norwest-Applied Hydrology (“NAH”), collected a
water sample from the Dolores water well and sent it to STL Laboratories in
Denver for analysis. Manganese was detected at a concentration of 1.2 mg/l,
which exceeded the WQCC Table 2 standard of 0.05 mg/l. The pH of this sample
was 8.9 su, which exceeded the WQCC Table 2 standard of 6.5-8.5 su. (This
sample was not tested for fluoride.)
10. On
July 23, 2006, a water sample was collected from the Dolores water well by
Glibota on behalf of Mr. and Mrs. Dolores. The analytical data indicated that
WQCC Table 1, WQCC Table 2, and WQCC Regulation 41 narrative standards were
exceeded as follows: fluoride was detected at a concentration of 5.7 mg/l, which
exceeded the WQCC Table 1 standard of 4.0 mg/l;
the pH of
this sample was 8.6 su, which exceeded the WQCC Table 2 standard of 6.5-8.5 su;
and methane was detected
at a concentration of 5.1 mg/l.
The concentration
of methane constituted a violation of the WQCC Regulation 41 narrative standards
that require ground water to be free from pollutants that are in concentrations
shown to be a danger to public health, safety or welfare. After extensive study
the COGCC has determined that dissolved methane at a concentration of 1.1 mg/l
could theoretically allow methane to accumulate to explosive levels in confined
spaces.
11.
Between July 20, 2006 and October 24, 2006, a total of 17 samples were collected
from the Dolores water well: two by Glibota and 15 by NAH for Pioneer. Analyses
of those samples indicated WQCC Table 1 standards for fluoride were exceeded in
two samples; WQCC Table 2 standards for manganese were exceeded in thirteen
samples and for pH in one sample. Methane exceeded WQCC narrative standards in
two samples collected from the Dolores water well during those sampling events.
12.
Starting on October 24, 2006, and continuing into 2007, Pioneer arranged to pay
Glibota to sample the Dolores water well on a regular basis and provide the
laboratory results directly to Mr. and Mrs. Dolores.
13. On
July 28, 2006, COGCC staff issued Notice of Alleged Violation (“NOAV”) #1393099
to Pioneer citing violations of the following rules:
a. Rule
324A.a., which requires an operator to take precautions to prevent significant
adverse environmental impacts to water to the extent necessary to protect human
health, safety and welfare by using cost effective and technically feasible
measures to protect environmental quality and to prevent the unauthorized
discharge of oil, gas, chemical substances, or exploration and production waste;
and
b. Rule 324A.b.,
which prohibits an operator from performing any act or practice in the conduct
of oil and gas operations that constitutes a violation of water quality
standards or classifications established by the WQCC for waters of the state.
14.
The NOAV required
Pioneer to develop a Site Investigation and Remediation Workplan (the “Plan”) to
address water quality impacts, to develop metrics to be used to monitor and
measure effectiveness of the Plan, and to develop secondary goals and objectives
if initial objectives could not be reached. The NOAV also required Pioneer to
complete and submit an investigative report (“Report”) on the cause of the upset
drilling conditions and identification of standard operating practices that
could be implemented to reduce potential for additional upsets.
15.
August 4, 2006,
Pioneer met one of the corrective action deadlines by submitting the Plan. The
Plan included a description of tasks to investigate, monitor and mitigate the
impact to the Dolores water well.
16. On August
16, 2006, Pioneer submitted the Report. The Report stated that some deviations
from standard oil field drilling procedures were found during their
investigation of the incident. In this case the contract drillers continued
drilling operations after a compressor failure and continued to drill while
working on the equipment. The standard practice would be to pull drilling pipe
back to a safe zone which would typically be inside casing or out of the
borehole if casing has not been set.
17. Pioneer had offered to replace the Dolores water well and asked
Mr. and Mrs. Dolores
to select a water
well contractor. On September 5, 2006 Boday Drilling was contracted to replace
the Dolores water well. On September 13, 2006 drilling of the new water well
began and was finished on September 16, 2006 to a total depth of 440 feet. The
well was completed on September 21, 2006. Subsequent water analysis showed the
well to produce good quality, potable water but at a yield lower than the
original water well.
18. To ensure consistent water quality, Pioneer paid for a
water treatment system selected by Mr. and Mrs. Dolores to be installed on their
water well. Mr. and Mrs. Dolores chose a system that includes carbon filtration
and reverse osmosis. Tests conducted for Mr. and Mrs. Dolores by Glibota and
paid for by Pioneer, showed the post-treatment water from the new well meets
Regulation 41 standards for groundwater. Additional
water quality
analysis conducted by Glibota on
Mr. and Mrs. Dolores water
well on
March 7, 2007 and on May 8, 2007, and paid for by Pioneer, verified that
Mr. and Mrs. Dolores
are continuing to
receive water that meets Regulation 41 standards from their water well and
treatment system.
19. Pioneer has performed all requirements of the Plan in a timely manner.
Pioneer continued to implement the monitoring and mitigation described in the
Plan until October 24, 2006 and to the extent allowed by site conditions. Water
quality data for samples collected on October 24, 2006 by NAH on behalf of
Pioneer indicated that most numerical standards were within the WQCC Regulation
41 ground water standards, with only manganese (detected at 0.16 mg/l) exceeding
WQCC Table 2 standards (0.05 mg/l). Further, Pioneer conducted additional
monitoring and mitigation after October 24, 2006, including the installation of
the water treatment system for
Mr. and Mrs. Dolores
described above.
20. Pioneer acknowledges that drilling the borehole for the surface casing of
the initial Molokai #13-36 TR Well resulted in adverse impacts to the water
quality in the Dolores water well beginning on July 19, 2006.
21. Based on the above findings, COGCC Staff recommends
that Pioneer be found in violation of the following rules at the Molokai #13-36
TR Wellsite:
a. Rule
324A.a., for failure to take precautions to prevent significant adverse
environmental impacts to water resources to the extent necessary to protect
public health, safety and welfare; and
b. Rule
324A.b., for performing an act or practice that constituted a violation of WQCC
water quality standards.
22.
Rule 523. specifies a base fine of One Thousand dollars ($1,000) for each day of
violation of Rule 324A.a. Pioneer failed to take precautions to prevent
significant adverse impacts to water resources at the Molokai #13-36 TR Well.
Adverse impacts to water quality were first observed on July 19, 2006. Pioneer
effectively removed the source of the adverse impacts to water quality by
plugging and abandoning the Molokai #13-36 TR well on July 21, 2006. For
purposes of this AOC, COGCC Staff have calculated a base fine of Three Thousand
dollars ($3,000), based on three days of violation of Rule 324Aa.
If the NOAV is not
resolved by consent, COGCC Staff reserve the right to present evidence
demonstrating that the duration of the violation was more than three days.
23.
Rule 523. specifies a base fine of One Thousand dollars ($1,000) for each day of
violation of Rule 324A.b. Thirteen samples from the Dolores water well taken
over a 97-day period (July 20-October 24, 2006) contained manganese
concentrations in excess of WQCC Table 2 standards, which is a violation of Rule
324A.b. During that time period, WQCC Table 2 standards for pH and WQCC Table 1
standards for fluoride were exceeded at least six days (July 20-24 and September
26, 2006). During that time period, the WQCC narrative standard for methane was
exceeded for at least three days (July 23-24 and October 24, 2006). For
purposes of this AOC, COGCC Staff have calculated a base fine of Fourteen
Thousand dollars ($14,000), based on fourteen days of violation of Rule 324A.b.
If the NOAV is not
resolved by consent COGCC reserves the right to present evidence that the base
fine should be higher than $14,000 based on the number of different WQCC
standards that were exceeded by different groundwater constituents, and the
frequency and duration of those violations.
24. A total base fine of Seventeen Thousand dollars ($17,000) should be
assessed against Pioneer for violations of Rule 324A.a. and Rule 324A.B. that
resulted in impacts to the Dolores water well.
25. In accordance with Rule 523.d. the calculated base fine can be reduced if
there are mitigating factors.
The mitigating
factors in this matter are as follows: (1) Pioneer responded promptly to the
violations, and investigated and remediated environmental impacts, (2) Pioneer
cooperated with the COGCC with respect to the violations, and (3) the costs of
correcting the violation reduced or eliminated the economic benefit to Pioneer.
Based on these mitigating factors, the
total base fine of Seventeen Thousand dollars ($17,000) should be
reduced by twenty
percent (20%), resulting in a recommended fine of Thirteen Thousand, Six Hundred
dollars ($13,600). If
the NOAV is not resolved by consent, COGCC reserves the right seek the full
amount of the base fine without reduction for the factors described above or any
other facts or circumstances.
26.
Rule 523.a.(3) specifies that “the maximum penalty for any single violation
shall not exceed Ten Thousand dollars ($10,000) regardless of the number of days
of such violation,” unless the violation results in significant waste of oil and
gas resources or “a significant adverse impact to public health, safety, or
welfare.” Pioneer does not admit liability for causing significant adverse
impact on public health, safety or welfare. However, to resolve this matter
without the necessity of an extended contested hearing, Pioneer agrees to pay
the adjusted fine amount set forth in Finding No. 25.
ORDER
NOW, THEREFORE IT IS ORDERED, that Pioneer
Natural Resources USA, Inc. shall be
found in
violation Rule 324A.a. for not taking adequate precautions to prevent
significant adverse environmental impacts to water resources, as described
above, at the Molokai #13-36 TR Wellsite located in the NW¼ SW¼ of Section 36,
Township 32 South, Range 68 West, 6th P.M.
IT IS FURTHER ORDERED, that
Pioneer Natural Resources USA, Inc. shall be found in violation Rule 324A.b. for
violating the Water Quality Control Commission’s Basic Standards for Ground
Water, as
described above, at the Molokai #13-36 TR Wellsite.
IT IS FURTHER ORDERED, that
Pioneer Natural
Resources USA, Inc. shall be assessed a total fine of Thirteen Thousand, Six
Hundred dollars ($13,600) for the violations described above, which shall be
payable within 30 days of the date this order is entered by 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 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.
RECOMMENDED this ______
day of December, 2009.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: ___________________________________
Carol Harmon
Hearings Manager
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
AGREED TO AND ACCEPTED THIS _________DAY OF ________, 20____.
PIONEER NATURAL RESOURCES USA, INC.
By: __________________________________
Authorized Company Representative
_____________________________________
Print Full Name
_____________________________________
Print Title
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This cause came on for hearing before the Commission at 9:00 a.m. on February
22, 2010, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver,
Colorado, for the approval of this
Administrative Order by Consent.
ENTERED this __________ day of March, 2010, as of February 22, 2010.
OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Carol Harmon, Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
March 9, 2010