BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF THE APPLICATION for a hearing pursuant to Commission Rule 303.c. relating to a Form 2 and a Form 2A FOR THE CAMEO, CORCORAN AND COZZETTE FORMATIONS, Unnamed Field, Garfield County, Colorado.
CAUSE NO. 1
DOCKET NO. 150500298
ORDER NO. 1- 192
TYPE: GENERAL ADMINISTRATIVE
REPORT OF THE COMMISSION
The Commission heard this matter on May 18, 2015, at the Aims Community College, 260 College Avenue, Fort Lupton, Colorado, upon application pursuant to Commission Rule 303.c. relating to a Form 2 (Application for Permit to Drill) (“Form 2”) and a Form 2A (Application for Oil and Gas Location Assessment) (“Form 2A”), for a permit to drill and a surface location, respectively, for the Federal 8-89-7 Well (No API No.) (“Garfield Well”), located in Section 7, Township 8 South, Range 89 West, 6th P.M., Garfield County, Colorado.
1. SG Interests I, Ltd., Operator No. 77330 (“SG” or “Applicant”) is an interested party in the subject matter of the above-referenced hearing.
2. Town of Carbondale (“Carbondale) is an interested party in the subject matter of the above-referenced hearing.
3. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.
4. The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.
5. On March 19, 2015, SG filed a verified application pursuant to Commission Rule 303.c. relating to a Form 2 (Application for Permit to Drill) (“Garfield Form 2”) and a Form 2A (Application for Oil and Gas Location Assessment) (“Garfield Form 2A”), for a permit to drill and a surface location, respectively, for the Federal 8-89-7 Well (No API No.) (“Garfield Well”), located in Section 7, Township 8 South, Range 89 West, 6th P.M., Garfield County, Colorado (“Garfield Application”).
Township 8 South, Range 89 West, 6th P.M.
6. On May 11, 2015, Carbondale filed its Motion to Intervene in Docket Number 150500298. Also on May 11, 2015, SG filed its Motion in Limine to Exclude Testimony and Evidence Regarding Validity of Federal Lease COC66692.
7. On May 12, 2015, SG filed its Response to and Motion to Deny the Town of Carbondale’s Motion to Intervene.
8. On May 12, 2015, a prehearing conference attended by SG and Carbondale was held for this matter.
9. On May 13, 2015, Carbondale filed its Response to Motion in Limine.
10. On May 14, 2015, the Hearing Officer issued a Prehearing Order consolidating this matter with Docket Number 150500299, which involve similar legal questions, and granting Carbondale’s permissive intervention pursuant to Rule 509.a.(2)C.
11. On May 18, 2015, the Hearing Officer orally recommended the Motion in Limine be granted to exclude all testimony regarding Federal Lease COC66692. The Commission approved the Hearing Officer’s recommendation.
12. Testimony and exhibits provided by Greg Deranleau, Environmental Manager for COGCC, showed the timeline and the review process for the Form 2 and Form 2A.
13. Testimony provided by Dave Kubeczko, Oil and Gas Location Assessment Specialist for COGCC, showed the Conditions of Approval (“COAs”) that Staff proposed for the Garfield Well included requiring Scope of Drilling and Completion activities; COGCC, Governmental, Public Notifications; Access and Traffic Control Plan; Emergency Response Plan; Water Use Plan; Material Management Plan; Public Safety; and Spill Response Program.
14. Testimony provided by Kent Kuster, Oil and Gas Liaison for the Colorado Department of Public Health and Environment (“CDPHE”), stated that a consultation has been completed with Pitkin. Pitkin asked to use adaptive concepts and components, and CDPHE looked at water and air quality for the wells, but determined that the regulations in place from the COGCC and CDPHE would be adequate upon approval.
15. Further testimony by Greg Deranleau showed that Staff’s historic activity was not high on the Forms 2 and 2A, but Staff recently had been actively reviewing the permits and is close to completing its review subject only to word changes.
16. Testimony provided by Stacey Bernot, Mayor of Carbondale, showed that the Town was concerned about the impact of oil and gas development on the Thompson Divide. She further testified that she is participating in the BLM NEPA process and has seen oil and gas development in remote areas near Carbondale. She also noted concerns regarding emergency responses because the area where the development is occurring is so remote.
17. Testimony was provided by Robbie Guinn, Vice-President of SG Interests, regarding SG’s operations in the Western Slope of Colorado. He testified regarding the infrastructure contiguous to the leases in the area, i.e. Wolf Creek storage unit which is the operational storage unit by Source Gas which supplies Natural gas to Carbondale and Aspen. He testified that the permit process started in 2013 and passed completeness in January 2013. Further testimony demonstrated that SG was in agreement with the COAs identified by the COGCC and is planning to comply with any conditions from the BLM regarding the NEPA process. He testified that SG intends to develop the minerals in this lease but has not started working on traffic plans and has not approached the municipalities yet.
18. Testimony was provided by Ellen Sassano, Long Range Senior Planner for Pitkin, regarding the notice published in the Federal Register for the NEPA process for the BLM leases in the area. Pitkin is one of the participating agencies in the process. Further testimony was provided regarding the White River National Park Environmental Impact Statements (“EIS”) and the United States Forest Service’s conclusion in the draft record of decision that there would be no future leasing in the area because of the extensive analysis done. On behalf of Pitkin, testimony was provided that Pitkin is in agreement with the NEPA process undertaken by the Forest Service and the BLM
19. Testimony for SG was provided by Catherine Deckert, SG’s Environmental and Permitting Manager, showing approximately 18 COAs that are proposed to be attached to the permits and which would include protection for water resources; safeguards for air quality; and BMPs that identify sensitive wildlife habitat.
20. After closing arguments, the Chairman closed the record.
Commission Deliberation Comments:
21. Assistant Attorney General Jake Matter advised the Commissioners that they had three options. The Commissioners could either move for approval of the permits, deny the application, or provide further instruction to the parties and come back at a later date.
22. Commissioner Benton stated that he heard Director Lepore state that the Commission also had the authority to approve the Forms 2 and 2A and address the issues raised.
23. Chairman Compton remarked that we could put some time limitations on this.
24. Chairman Alward asked regarding whether, if they reject the permit, does it stop the Staff from working on them and what are the consequences. Assistant Attorney General advised that rejection does not stop them but only rejected them as they are.
25. Commissioner Craig stated that Staff has done its work and that the COGCC regulations are ahead of any other state and that the State is doing what is necessary done to mitigate concerns.
26. Commissioner Spielman stated that the approval of the Forms 2 and 2A does not give the operator the authority to drill a well until the NEPA process is concluded and the BLM permit has been obtained. There may be business reasons for the request for the approval of the APDs today. Without the conditions of approval, he does not see that the Commission has the authority to deny the permits based on the leasing status.
27. Commissioner Benton moved to direct the Staff to either issue or deny the Forms 2 or 2A within 30 days.
28. Commissioner Alward seconded the Motion in order to allow the process to continue and the Staff to evaluate the permits.
29. Commissioner Hawkins supported his previous position that right now the lease is valid and we have an obligation to allow the operator to drill. He fully supports the motion.
30. The Motion was approved by unanimous vote of the Commissioners.
IT IS HEREBY ORDERED:
1. Staff shall either approve or deny the Garfield Application within 30 days.
ENTERED this ___ day of June, 2015, as of May 18, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
Julie Murphy, Secretary