BEFORE THE OIL AND GAS CONSERVAT
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 TATONKA OIL AND GAS
COMPANY, INC.,
MOFFAT
COUNTY, COLORADO |
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CAUSE NO.
1V
ORDER NO.
1V-383
|
ORDER FINDING VIOLATION
The Commission
heard this matter on September 19, 2011, in the Commission Room for the City &
County of Broomfield, City & County Building, One DesCombes Drive, Broomfield,
Colorado, for an order finding violation hearing against Tatonka Oil and Gas
Company, Inc. at certain wells located in Moffat County.
FINDINGS
Culverwell
#10-23-07-94 Well
1.
Tatonka set two conductor pipes on the Culverwell 67N94W pad (Facility No.
313340), located in the NW¼ SE¼ of Section 23, Township 7 North, Range 94 West,
6th P.M. Only one well was permitted for this pad, the Culverwell
#10-23-07-94 Well (the “Culverwell Well”) (API No. 05-081-07364).
2. On December
20, 2010, COGCC Staff issued Notice of Alleged Violation (“NOAV”) #200288524 to
Tatonka for the following alleged rule violations:
a.
Rule 902.a., which requires pits used for exploration and production of oil and
gas shall be constructed and operated to protect public health, safety, and
welfare and the environment, including soil, waters of the state, and wildlife,
from significant adverse environmental, public health, or welfare impacts from
E&P waste, except as permitted by applicable laws and regulations.
b.
Rule 1002.f., which specifies that oil and gas operators shall implement and
maintain Best Management Practices (BMPs) at all oil and gas locations to
control stormwater runoff in a manner that minimizes erosion, transport of
sediment offsite, and site degradation. BMPs shall be maintained until the
facility is abandoned and final reclamation is achieved pursuant to Rule 1004.
Operators shall employ BMPs, as necessary to comply with this rule, at all oil
and gas locations, including, but not limited to, well pads, soil stock piles,
access roads, tank batteries, compressor stations, and pipeline rights of way.
BMPs shall be selected based on site-specific conditions, such as slope,
vegetation cover, and proximity to water bodies, and may include maintaining
in-place some or all of the BMPs installed during the construction phase of the
facility.
c.
Rule 1003.a., which provides that debris and waste materials other than de
minimis amounts, including, but not limited to, concrete, sack bentonite and
other drilling mud additives, sand plastic, pipe and cable, as well as equipment
associated with the drilling, re-entry, or completion operations shall be
removed. All E&P waste shall be handled according to the 900 Series rules. All
pits, cellars, rat holes, and other bore holes unnecessary for further lease
operations, excluding the drilling pit, will be backfilled as soon as possible
after the drilling rig is released to conform with surrounding terrain. On crop
land, if requested by the surface owner, guy line anchors shall be removed as
soon as reasonably possible after the completion rig is released. When permanent
guy line anchors are installed, it shall not be mandatory to remove them. When
permanent guy line anchors are installed on cropland, care shall be taken to
minimize disruption or cultivation, irrigation, or harvesting operations. If
requested by the surface owner or its representative, the anchors shall be
specifically marked, in addition to the marking required below, so as to
facilitate farming operations. All guy line anchors left buried for future use
shall be identified by a marker of bright color not less than four (4) feet in
height and not greater than one (1) foot east of the guy line anchor. In
addition, all well sites and surface production facilities shall be maintained
in accordance with Rule 603.j.
d.
Rule 1003.b., which provides that all disturbed areas affected by drilling or
subsequent operations, except areas reasonably needed for production operations
or for subsequent drilling operations to be commenced within twelve (12) months,
shall be reclaimed as early and as nearly as practicable to their original
condition or their final land use as designated by the surface owner and shall
be maintained to control dust and minimize erosion to the extent practicable. As
to crop lands, if subsidence occurs in such areas additional topsoil shall be
added to the depression and the land shall be re-leveled as close to its
original contour as practicable. Interim reclamation shall occur no later than
three (3) months on crop land or six (6) months on non-crop land after such
operations unless the Director extends the time period because of conditions
outside the control of the operator. Areas reasonably needed for production
operations or for subsequent drilling operations to be commenced within twelve
(12) months shall be compacted, covered, paved, or otherwise stabilized and
maintained in such a way as to minimize dust and erosion to the extent
practicable.
The NOAV required
the following abatement or corrective actions to be taken by Tatonka: mitigate
cited violations of two conductor casings that were capped with no cellar, an
unlined pit with no contents, lack of reclamation work or storm water BMPs on
the pad site, and a permit that had expired on November 27, 2006. These actions
were required to have been completed by February 15, 2011.
3. Rule 523.
specifies a base fine of One Thousand dollars ($1,000) for each day of violation
of Rules 902.a., 1002.f., 1003.a., and 1003.b. 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, damage to
correlative rights, or a significant adverse impact on public health, safety or
welfare or the environment.
4. Tatonka
violated Rule 902.a. because it constructed a pit without a liner and
without contents. The COGCC Staff have calculated a base fine of Ten
Thousand dollars ($10,000) for the violation of Rule 902.a.
5. Tatonka
violated Rule1002.f. because it failed to properly implement best
management practices at the pad site. The COGCC Staff have calculated a base
fine of Ten Thousand dollars ($10,000) for the violation of Rule 1002.f.
6. Tatonka
violated Rule 1003.a. because it failed to remove debris and waste
materials from the location. The COGCC Staff have calculated a base fine of
Ten Thousand dollars ($10,000) for the violation of Rule 1003.a.
7. Tatonka
violated Rule 1003.b. because it failed to properly reclaim the
location. The COGCC Staff have calculated a base fine of Ten Thousand
dollars ($10,000) for the violation of Rule 1003.b.
Eldon Gerber
#07-24-07-92 Well
8. On December
22, 2006, Tatonka spud the Eldon Gerber #07-24-07-92 Well (the “Eldon Gerber
Well”) (API No. 05-081-07359), located in the SW¼ NE¼ of Section 24, Township 7
North, Range 92 West, 6th P.M.
9. On May 25,
2010, COGCC Staff issued NOAV #200288526 to Tatonka for its operations for the
following rule violations:
a.
Rule 326.b.(1), which requires a Mechanical Integrity Test (“MIT”) to be
performed on each shut-in well within 2 years of the initial shut-in date. A
MIT shall be performed on each shut-in well on 5 year intervals from the date
the initial MIT was performed. If, at any time, surface equipment is removed or
the well becomes incapable of production, a MIT must be performed within 30
days. The MIT for a shut-in well shall be:
i.
Isolation of the wellbore with a bridge plug or similar approved isolating
device set 100 feet or less above the highest perforations and a pressure test
with liquid or gas at a pressure of not less than 300 psi surface pressure or
any equivalent test or combination of test approved by the Director
ii.
Following the performance of the initial MIT for shut-in wells, additional
tests, other than the 5 year interval test, may be required.
iii.
Not
less than 10 days prior to the performance of any MIT required by this rule, any
person required to perform the test shall notify the Director, in writing, or
the scheduled date on which the test will be performed.
iv.
All
wells shall maintain mechanical integrity. All wells which lack mechanical
integrity shall be repaired or plugged and abandoned within 6 months of failing
a MIT or of a determination through any other means that the well lacks
mechanical integrity, and the well site reclaimed in accordance with Rule
1004.a. All injection wells which fail a MIT, or which are determined through
any other means to lack mechanical integrity, shall be shut-in immediately.
b.
Rule 902.a., as referenced above.
c.
Rule 1002.f.(2), which requires oil and gas operators shall implement and
maintain Best Management Practices (BMPs) at all oil and gas locations to
control stormwater runoff in a manner that minimizes erosion, transport of
sediment offsite, and site degradation. BMPs shall be maintained until the
facility is abandoned and final reclamation is achieved pursuant to Rule 1004.
Operators shall employ BMPs, as necessary to comply with this rule, at all oil
and gas locations, including, but not limited to, well pads, soil stock piles,
access roads, tank batteries, compressor stations, and pipeline rights of way.
BMPs shall be selected based on site-specific conditions, such as slope,
vegetation cover, and proximity to water bodies, and may include maintaining
in-place some or all of the BMPs installed during the construction phase of the
facility.
d.
Rule 1003.a., as referenced above.
e.
Rule 1003.b., as referenced above.
f. Rule
1003.d.(2), which provides that all drilling fluids shall be disposed of in
accordance with the 900 Series rules. Operators shall ensure that soils meet
the concentration levels of Table 910-1, above. After the drilling pit is
sufficiently dry, the pit shall be backfilled. Materials removed from the pit
for drying shall be returned to the pit prior to the backfilling. No more than
de minimis amounts may be incorporated into the surface materials. The
backfilling of the drilling pit will be done to return the soils to their
original relative positions so that the muds and associated solids will be
confined to the pit and not squeezed out and incorporated in the surface
materials. Closure and reclamation of drilling pits shall occur no later than
six (6) months after drilling and completion activities conclude, weather
permitting.
The NOAV required
the following abatement or corrective actions to be taken by Tatonka: mitigate
cited violations of a pit that is not in compliance with COGCC rules, a well
head, capped, and shut in with no ability to produce well, a open cellar around
the well head, a rat hole that has not been filled in, lack of a MIT to maintain
shut in status, erosion channels around the edge of the pad in several spots,
lack of storm water BMPs, and a lack of interim reclamation on the pad site.
These actions were required to have been completed by February 15, 2011.
10. Rule 523.
specifies a base fine of One Thousand dollars ($1,000) for each day of violation
of Rules 326.b.(1), 902.a., 1002.f(2), 1003.a., 1003.b., and 1003.d.(2). 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, damage to correlative rights, or a significant adverse impact on
public health, safety or welfare or the environment.
11. Tatonka
violated Rule 326.b.(1) because it failed to perform the required
mechanical integrity test within two years of the shut-in date. The COGCC Staff
have calculated a base fine of Ten Thousand dollars ($10,000) for the
violation of Rule 326.b.(1).
12. Tatonka
violated Rule 902.a. because it failed to construct a pit that would
protect public health, safety, and welfare and the environment, including soil,
waters of the state, and wildlife, from significant adverse environmental,
public health, or welfare impacts from E&P waste. The COGCC Staff have
calculated a base fine of Ten Thousand dollars ($10,000) for the
violation of Rule 902.a.
13. Tatonka
violated Rule 1002.f(2) because it failed to implement best management
practices in order to prevent storm water run-off. The COGCC Staff have
calculated a base fine of Ten Thousand dollars ($10,000) for the
violation of Rule 1002.f(2).
14. Tatonka
violated Rule 1003.a. because it failed to remove debris and waste
materials from the location. The COGCC Staff have calculated a base fine of
Ten Thousand dollars ($10,000) for the violation of Rule 1003.a.
15. Tatonka
violated Rule 1003.b. because it failed to properly reclaim the
location. The COGCC Staff have calculated a base fine of Ten Thousand
dollars ($10,000) for the violation of Rule 1003.b.
16. Tatonka
violated Rule 1003.d.(2) because it failed to properly close the drilling
pit. The COGCC Staff have calculated a base fine of Ten Thousand dollars
($10,000) for the violation of Rule 1003.d.(2).
17. Tatonka
should be assessed penalties as provided for by Rule 523. attributable to the
following wells as compiled below:
Well
Name/Number |
Base
Fine |
Culverwell #10-23-07-94 Well |
$40,000 |
Eldon
Gerber #07-24-07-92 Well |
$60,000 |
Total Base Fines |
$100,000 |
18. Further,
COGCC Staff requests that any and all bonds posted by Tatonka be claimed by the
Commission and that the proceeds of such bonds be used to offset expenses
associated with the plugging and abandonment of the wells listed above and
reclamation of the well sites in accordance with COGCC rules.
19. Furthermore,
Rule 525.b. provides that whenever the Commission or the Director has evidence
that an operator is responsible for a pattern of violation of any provision of
the Oil and Gas Conservation Act (§34-60-101, et seq.) (the “Act”), or of
any rule, permit or order of the Commission, the Director shall issue a notice
to the operator to appear for a hearing before the Commission. If the
Commission finds after such hearing, that a knowing and willful pattern of
violation exists, it may issue an order which shall prohibit the issuance of any
new permits to the operator.
20. A knowing
and willful pattern of violation exists because Tatonka has failed, for more
than one year, to perform the abatement and corrective actions required by
various Notices of Alleged Violation (“NOAVs”). Until the fine assessed under
this application is paid in full and all required abatement and corrective
actions are performed by Tatonka, the Director should not approve any
application for permit-to-drill, any Certificate of Clearance and/or Change of
Operator, Form 10, or other permit for conducting oil and gas operations for
Tatonka or any entity of which Brian Hughes is a principal, majority owner,
operational or general manager, or in which Mr. Hughes otherwise exercises
control.
21. Payment of
the fine pursuant to this AOC does not relieve the operator from its obligations
to complete corrective actions set forth in the NOAV, as may be amended or
modified by COGCC Staff.
22. Tatonka, or
its successors or assigns, should be required to remain responsible for
complying with this AOC, in the event of any subsequent sale of property.
ORDER
NOW, THEREFORE, IT IS ORDERED, that Tatonka
shall be found in violation of the following Rules at the Culverwell
#10-23-07-94 Well, located in the NW¼ SE¼ of Section 23, Township 7 North, Range
94 West, 6th P.M:
1. Rule
902.a., for failure to construct a pit that protects public health, safety, and
welfare, and the environment, from significant adverse impacts.
2. Rule
1002.f., for failure to implement best management practices to prevent
storm-water run-off and erosion.
3. Rule
1003.a., for failure to remove debris and waste materials from the location.
4. Rule 1003.b., for failure to properly
reclaim the location.
IT IS FURTHER
ORDERED, that Tatonka shall be found in violation of the following Rules at the
Eldon Gerber #07-24-07-92 Well, located in the SW¼ NE¼ of Section 24, Township 7
North, Range 92 West, 6th P.M:
1. Rule
326.b.(1), for failure to perform the required mechanical integrity tests.
2. Rule
902.a., for failure to construct a pit that protects public health, safety, and
welfare, and the environment, from significant adverse impacts.
3. Rule
1002.f.(2), for failure to implement best management practices in order to
prevent storm water run-off.
4. Rule
1003.a., for failure to remove debris and waste materials from location.
5. Rule
1003.b., for failure to properly reclaim the location.
6. Rule
1003.d.(2), for failure to properly close the drilling pit.
IT IS FURTHER ORDERED, that Tatonka shall be
assessed a total fine of One Hundred Thousand dollars ($100,000) for the
Rule violations set forth above, which shall be payable within thirty (30) days
of the date the order is approved by the Commission.
IT IS FURTHER
ORDERED, that any and all bonds posted by Tatonka shall be claimed by the
Commission and that the proceeds of such bonds be used to offset expenses
associated with the plugging and abandonment of the wells listed above and
reclamation of the well sites in accordance with COGCC rules.
IT IS FURTHER
ORDERED, that, acting pursuant to the finding of a knowing and willful pattern
of violation exists as to Tatonka and its principal, Brian Hughes, the Director
shall not approve any application for permit-to-drill, any Certificate of
Clearance and/or Change of Operator, Form 10, or other permit for conducting oil
and gas operations for Tatonka, or any entity of which Brian Hughes is a
principal, majority owner, operational or general manager, or in which Mr.
Hughes otherwise exercises control.
IT IS FURTHER ORDERED, that this Order does not
relieve the operator from undertaking and completing abatement or corrective
actions that may be required by the Notice of Alleged Violations described in
Finding Nos. 2 and 9 above, or any amendments or modifications thereto specified
by the COGCC Staff.
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.
ENTERED this
23rd day of September, 2011, as of September 19, 2011.
OIL AND
GAS CONSERVATION COMMISSION
OF THE
STATE OF COLORADO
By
Peter J. Gowen, Acting Secretary
Dated at Suite 801
1120 Lincoln St.
Denver, Colorado 80203
September 19,
2011