RECORD OF PROCEEDINGS

           

                                                                                                                                                                             April 22, 2002

 

            The Oil and Gas Conservation Commission met on April 22^nd at 10:00 a.m. in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for a hearing in Cause Nos. 1 (2 matters), 112 and 331.

 

            Those present were:

 

                        Brian Cree                             Vice Chair

                        Tom Ann Casey                    Commissioner

                        Michael Klish                         Commissioner

                        Abe Phillips                           Commissioner

                        Lynn Shook                            Commissioner

Rich Griebling                        Director

Brian Macke                          Deputy Director

                        Patricia Beaver                     Hearings Manager

 

The Commission unanimously approved the minutes from the March 2002 meeting.

 

Executive Director’s Report:  Shane Henry, Assistant Director of the Department of Natural Resources (“DNR”) discussed the following:  Assistant Director Henry met with the new Bureau of Land Management Director in Washington D.C. last week.  The energy bill was presented before the House of Representatives for approval.  ANWR failed by three (3) votes and the bill will go to the Senate next week.  Colorado is now involved in drought planning and the Governor will hold a press conference on April 23, 2002 to describe the state’s plan to address this issue.  A planning meeting will be held at the end of April between the Oil and Gas Conservation Commission, Department of Water Resources and Water Quality Control Development to discuss the water issues in the Raton Basin.  After the April discussion, there will be a water meeting held in Trinidad at the end of May to inform the citizens of the analysis.  The Western Governor’s Association will be meeting later in the week in Salt Lake City and will discuss coalbed methane issues.  

 

Director’s Report: Director Griebling provided a written report and discussed the following:  The permit level is 5% behind last year’s permits, which were at a record high based on natural gas prices.  In northwest Colorado, local meetings were held in Delta and Gunnison County in regard to permitting of wells in the new areas.  All nominations for the 2001 Outstanding Oil & Gas Operator Awards are due by May 17, 2002.  Eight variances were granted this month. 

 

Hearings Manager Beaver discussed the June Hearing in Durango.  Commissioner Klish recommended that representatives from the Bureau of Land Management in Durango be invited to the reception on June 3, 2002.

 

Deputy Director Macke mentioned the luncheon for the Boards and Commission on August 23, 2002 in Pueblo in conjunction with the State Fair.  In addition, the Commissioners are invited to a reception for Legislators that evening at the Fair. 

 

Commissioner Comments:  Commissioner Casey stated that citizens of La Plata County have contacted her regarding the backlog of production and levy data on the COGCC website.  Director Griebling explained that the position that performs the data entry tasks is vacant and due to the state hiring freeze is likely not to be filled for several months.  Director Griebling described the attempt to obtain a variance to the hiring freeze and how it had been unsuccessful.  The Commissioners adamantly stated their desire to see this position filled despite the freeze.  Commissioner Cree suggested posting a statement on the website as to the reason production and levy is backlogged. 

 

Audience Comments:  Greg Schnacke and Ken Wonstolen with the Colorado Oil and Gas Association (“COGA”) provided the Commission with COGA Gas Conference flyers for their August meeting.  COGA would like to participate in the Raton Basin water issues meeting.  COGA wants to bring the production and levy web posting delays to the MEGA Board for solutions.  Colorado will be a big part of national gas exploration, especially if drilling in ANWR is denied.  Mr. Wonstolen mentioned there is a push to drill in the west, however there are groups suggesting that the west has less reserves than previously estimated.  The royalty legislation has been dreadful considering the e-mail network and the outside attorneys lobbying against the legislation.  No relief through legislation is anticipated for the Westerman vs. Rogers decision this year.  HB-1357 is still active before the legislature, which involves notice to surface and mineral owners prior to surface development.  The settlement of Las Animas County was briefly described.  The NARCO vs. Town of Frederick case is at the final briefing stage.

 

Cause No. 191, Docket No. 0202-AW-01, Mam Creek Field, Garfield County, request by Calpine Natural Gas Company for an order to allow additional wells on the 640-acre drilling and spacing unit consisting of Section 22, Township 6 South, Range 92, West, 6^th P.M. was continued to the July 2002 hearing so that a local public forum may be held.            

 

            Cause No. 112, Docket No. 0203-GA-03, Ignacio-Blanco Field, La Plata County, request by J.M. Huber Corporation for an order to amend the permit for the Huber #3-24 Well located in the SE¼ SE¼ of Section 24, Township 35 North, Range 8 West, N.M.P.M. to allow the use of the appropriate downhole pumping device has been withdrawn. 

 

Cause No. 1, Docket No. 0204-GA-04, request for an extension of time until June 1, 2002 to perform the work described in Order No. 1V-218 on the Nichols No. 1-14 Well located in the SE¼ NW¼ of Section 14, Township 10 South, Range 97 West, 6^th P.M. was denied.  Testimony was provided by applicant Edward Neibauer, President of Rocky Mountain Operating Company, Morris Bell, COGCC staff, and protestants Ronald and Judy Galloway.  After deliberation, the Commission denied the request for an extension and required the well be plugged and abandoned by May 6, 2002.  The fine assessed in Order No. 1V-218 of Two Thousand ($2,000) will be waived if the work is performed by May 6, 2002.  If the work is not performed by May 6, 2002, COGCC staff will make a claim on the Thirty Thousand Dollar ($30,000) Cashier’s Check in order to plug, abandon and reclaim the well, and the fine will be required to be paid.  Rocky Mountain Operating Company will be required to provide new financial assurance if the Cashier’s Check is claimed.    

 

Cause No. 1, Docket No. 0204-GA-05, request for an extension of time until June 1, 2002 to perform the work described in Order No. 1V-219 on the Nichols No. 1-23 Well located in the SE¼ NE¼ of Section 23, Township 10 South, Range 97 West, 6^th P.M. was denied.  Testimony was provided by applicant Edward Neibauer, President of Rocky Mountain Operating Company, Morris Bell, COGCC staff. After deliberation, the Commission denied the request for an extension and required Rocky Mountain Operating Company plug and abandon the well by May 6, 2002.  The fine of One Thousand Dollars ($1,000) will be waived if the work is performed by May 6, 2002.  If the work is not performed by May 6, 2002, COGCC staff will make a claim on the Thirty Thousand Dollar ($30,000) Cashier’s Check in order to plug, abandon and reclaim the well, and the fine will be required to be paid.  Rocky Mountain Operating Company will be required to provide new financial assurance if the Cashier’s Check is claimed.  The fine previously assessed was not paid and is overdue. 

 

Consent Agenda:  The Commission unanimously approved the consent agenda, which included the following:

 

Cause No. 112, Docket No. 0204-UP-03, Ignacio-Blanco Field, La Plata County, request by MarkWest Resources, Inc. to pool all non-consenting owners in the 320-acre drilling and spacing unit consisting of the E½ of Section 25, Township 34 North, Range 8 West, N.M.P.M. for the development and operation of the Fruitland coal seams was approved.

 

            Cause No. 331, Docket No. 0204-AW-02, Buckboard Field, Yuma County, request by Rosewood Resources for an order to allow an optional second well to be drilled on certain 160-acre drilling and spacing units in Sections 7, 11, 19 and 20, Township 3 North, Range 46 West, 6^th P.M. for the production of gas and associated hydrocarbons from the Niobrara Formation was approved.

           

            The meeting adjourned at 1:15 p.m.

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The Secretary was therefore authorized to issue the following orders:

 

Order No. 1-98, Mesa County:  Denies the request by Rocky Mountain Operating Company for an extension until June 1, 2002 to perform work required in Order No. 1V-219 and requires Rocky Mountain Operating Company to plug and abandon the Nichols No. 1-23 Well by May 6, 2002.  If Rocky Mountain Operating Company plugs and abandons the well by May 6, 2002, the fine of One Thousand dollars ($1,000) previously assessed in Order No. 1V-219 will be waived.  If the work is not completed by May 6, 2002, COGCC staff is authorized to commence a claim on the Thirty Thousand dollar ($30,000) Cashier’s Check in order to plug, abandon and reclaim the well.  If COGCC staff claims the Cashier’s Check, Rocky Mountain Operating Company shall post financial assurance to cover its remaining wells.

 

Order No. 1-99, Mesa County:  Denies the request by Rocky Mountain Operating Company for an extension until June 1, 2002 to perform work required in Order No. 1V-218 and requires Rocky Mountain Operating Company to plug and abandon the Nichols No. 1-14 Well by May 6, 2002.  If Rocky Mountain Operating Company plugs and abandons the well by May 6, 2002, the fine of Two Thousand dollars ($2,000) previously assessed in Order No. 1V-218 will be waived.  If the work is not completed by May 6, 2002, COGCC staff is authorized to commence a claim on the Thirty Thousand dollar ($30,000) Cashier’s Check in order to plug, abandon and reclaim the well.  If COGCC staff claims the Cashier’s Check, Rocky Mountain Operating Company shall post financial assurance to cover its remaining wells.

 

Order No. 112-164, Ignacio-Blanco Field, La Plata County:  Approves the request by MarkWest Resources, Inc. to pool all non-consenting owners in the 320-acre drilling and spacing unit consisting of the E½ of Section 25, Township 34 North, Range 8 West, N.M.P.M. for the development and operation of the Fruitland coal seams.

 

            Order No. 331-8, Buckboard Field, Yuma County:  Approves the request by Rosewood Resources for an order to allow an optional second well to be drilled on certain 160-acre drilling and spacing units in Sections 7, 11, 19 and 20, Township 3 North, Range 46 West, 6^th P.M. for the production of gas and associated hydrocarbons from the Niobrara Formation.

 

 

Signed: 

           

Patricia C. Beaver, Secretary

 

 

Approved:

 

Brian J. Cree, Vice Chair