July 15, 2002
The Commission unanimously approved the minutes from the June
2002 meeting. Assistant Attorney General Harmon signed the May 1, 2002 Executive
Session minutes.
Director’s Report: Director Griebling provided a written
report and discussed the following: The Commission approved the request by
Director Griebling to docket a levy increase of approximately two-tenths of a
mil for the September hearing. The permit level is 7% behind last year’s record
second highest level of 2,273 permits. The Colorado complaint chart shows a
dramatic decrease in complaints filed with the Colorado Oil and Gas Conservation
Commission (“COGCC”). On June 18, 2002 Deputy Director Macke attended the South
of Silt Landowners Forum in Delta County. The Applications for Permits-to-Drill
(“APDs”) filed by Gunnison Energy have been approved by COGCC. The publicity
continues to emphasize the potential number of wells as a high number, much more
than the APDs on file with COGCC. The three budget change requests proposed for
fiscal year 2003-2004 have been approved by the MEGA Board. The Fire Prevention
Directive for Oil and Gas Operations was approved on June 21, 2002 and has
received favorable comments. Beginning in July, hearing applications and final
orders will be available for viewing on the website by clicking on the 2002
hearing docket and then clicking on docket number or cause number. Department of
Natural Resources Boards and Commissions members are invited to attend a lunch
and reception at the State Fair on Friday, August 23, 2002 at 12:00 p.m. There
were no variances requested this month.
Assistant Attorney General’s Report: AAG Harmon provided a
confidential litigation memo and requested an Executive Session to discuss
imminent litigation. AAG Harmon has been delayed in providing the Commission
with the previously requested executive session and attorney-client privilege
memo. She mentioned her concern about information contained in the La Plata
County Impact Report describing how impacts from oil and gas have affected the
La Plata County area. Chair Sonnenberg suggested that COGCC staff review the
report. AAG Harmon mentioned that the Attorney General’s office is supportive of
the COGCC Commissioners and other state agencies educating county officials.
Commissioner Comments: There were no comments.
Audience Comments: Greg Schnacke, COGA – Looking forward to
Commissioners participation in the COGA National Gas Conference and the
presenting of the Outstanding Operators Awards during the conference.
Complimented the Commissioners on taking a proactive approach on the Fire
Prevention Directive and views it as an opportunity to understand what agencies
are trying to do and being able to support those efforts. COGA has made it a
priority to support full funding of the COGCC with the legislature over the next
year. Concerned with national environmental groups harassing Rocky Mountain
Region oil and gas operations now that ANWAR is not moving forward. Chair
Sonnenberg wants the Commissioners to discuss how to respond to media articles
that misrepresent many issues.
Ken Wonstolen, COGA – LEAF has appealed to the Supreme Court
regarding hydraulic fracturing issues, which will be opposed by the Department
of Justice on behalf of the EPA, and COGA among others, will file an amicus
brief. Phase II Regulations under the Stormwater Discharge Permit of the Clean
Water Act took effect on July 1, 2002 and now effects most oil and gas operators
in Colorado. COGA has drafted a permit for its members to use. Effort underway
before the Air Quality Control Commission (“AQCC”) to review flashing losses at
oil and gas sites. A large number of tank batteries are now likely to be under
Air Quality regulations. COGA plans to develop a proposal for the AQCC hearing
in October.
Executive Director’s Report: Shane Henry, Assistant Director
of the Department of Natural Resources (“DNR”) discussed the following: Colorado
has had over 1000 fires since April 2002 with 365,000 acres destroyed and
approximately 365 homes lost with sixty percent of the fires caused by humans.
There is an estimated 13,000 firefighters who reside in Colorado. $116 million
has been spent to fight this year’s fires, considering the average cost over 10
years is $70 million and there has been $80 million in insurance costs this year
compared to an average of $17 million a year. The Governor’s office has asked
DNR to take the lead on coordinating agencies in responding to the current
situation and future situations. A September date is planned for DNR agencies to
hold a meeting to discuss Coalbed Methane issues. The State Engineer’s Office
will make an official recommendation to the Water Court on Las Animas County’s
water rights lawsuit. Chair Sonnenberg mentioned the desire to get funding for a
technical person or group to review reports that are being prepared by citizens’
groups, etc. in an effort to respond to these reports in a formal, scientific
manner. Assistant Director Henry will follow up with Vicki Cowart at Colorado
Geological Survey to see if her agency can accommodate this request.
Ken Wonstolen, COGA – The Colorado Oil and Gas Association
has filed an opposition to the Las Animas County water rights lawsuit. Assistant
Director Henry indicated that the list of objectors is very lengthy.
Cause No. 191, Docket No. 0202-AW-01, 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, 6th P.M. for the production of gas from the Mesaverde
Formation has been withdrawn.
Cause No. 1V, Docket No. 0206-OV-05, La Plata County, request
to approve an Order Finding Violation finding MarkWest Resources, Inc. in
violation of Rule 1003.a. for the Tiffany No. 2-17 Well located in the NE¼ NW¼
of Section 17, Township 32 North, Range 6 West, N.M.P.M. The Commission heard
testimony provided by COGCC staff Morris Bell, Operations Manager and Mark Weems,
Field Inspector. Testimony was provided by Paul Lerno, Landowner who showed a
video and made a statement. Testimony was provided by Mike Finney, Landman and
Scott Davis, Engineer. After deliberation, the Commission directed the landowner
and the MarkWest to attempt a settlement prior to the August hearing.
Cause No. 523, Docket No. 0207-GA-07, Garfield County,
request by SWD, LLC for an order to establish a surface use plan designating
approved well site locations within the Stillwater Planned Unit Development (the
“Stillwater PUD”) located in the town of Silt, covering and including 1450 acres
in portions of Sections 9 through 16, Township 6 South, Range 92 West, 6th P.M.
was approved. Testimony was provided by Edward Sutton, Senior Vice President of
SWD regarding the background and plans for developing the 1450 acres of land
known as the Stillwater Development. Testimony was provided by John Obourn, an
independent petroleum landman regarding mineral ownership. Testimony was
provided by Logan MacMillan, a Certified Professional Geologist regarding the
geologic development in the area, and the possible existence of natural gas
underlying the Stillwater Development. Testimony was provided by Walter Pearson,
consulting professional engineer regarding proposed drilling pad locations and
dimensions, maximum required directional drilling deviations and additional
directional drilling costs. Testimony was provided by Leslie Hope, Engineering
Division Manager for High Country Engineering, Inc. regarding alternate drilling
pad locations in response to the protestants’ concerns. Comments were made by
Gene Burk, attorney for Bobby Roy McPherson and Leslie Dale McPherson regarding
the McPhersons’ desire to prevent diminution in the value of their mineral
estate and access issues. Testimony was provided by Mary McPherson regarding
leasing of her family’s minerals by Williams Exploration and the subsequent
release of the leased minerals. Rule 510. statements were made by Ken Wonstolen,
Senior Vice President and General Counsel for the Colorado Oil and Gas
Association who provided a written statement and made an oral statement in
support of the concept of preserving access for oil and gas development and by
John Spillane, attorney, individually and representing Bob Lembke, who commended
SWD for bringing an application before the Commission to address mineral
development prior to commencing surface development. Janet Steinbach, Community
Development Director for the Town of Silt read a letter from John Evans, Mayor
of the Town of Silt, describing the Town’s concerns about mineral development
and the belief that a surface use plan would allow for orderly development in
light of the proposed surface development plan. Staff analysis provided by Rich
Griebling, COGCC Director indicated that the staff strongly supports SWD’s
application. The application was approved by all Commissioners except
Commissioner Phillips.
Consent Agenda: The Commission unanimously approved the
consent agenda, which included the following:
Cause No. 1V, Docket No. 0207-OV-06, Washington County,
request to approve an Administrative Order by Consent finding Alfred Ward & Son
Operating Company in violation of Rules 324A.a., 324A.b., 902.a., 907.a.(1),
907.a.(2), and 907.c.; failure to ensure that E&P waste is properly stored,
handled, transported, treated, recycled or disposed and for the unauthorized and
intentional discharge of produced water into adjacent surface waters for the
State #1 and #2 tank battery in the NE¼ SE¼ of Section 36, Township 3 South,
Range 54 West, 6th P.M. was approved.
Cause No. 1V, Docket No. 0207-OV-07, Baca County, request to
approve an Administrative Order by Consent finding Oneok Resources Company in
violation of Rules 302, 312, and 706; failure to provide a Registration for Oil
and Gas Operations, Certification of Clearance and/or Change of Operator, and
financial assurance for the Bauman A #1-2 Well in the SW¼ SW¼ of Section 2,
Township 33 North, Range 42 West, 6th P.M. was approved.
Cause No. 112, Docket No. 0207-GA-06, Ignacio-Blanco Field,
La Plata County, request by Texaco Exploration and Production, Inc. for an order
to allow the West Animas-University #9-3 Well to be located 1085 feet FSL and
2300 feet FWL in the SE ¼ SW ¼ of Section 9, Township 34 North, Range 9 West,
N.M.P.M. within one and one-half miles of the outcrop between the Fruitland and
Pictured Cliffs Formations was approved.
Cause No. 112, Docket No. 0207-EX-02, Ignacio-Blanco Field,
La Plata County, request by 44 Canyon, LLC for an order to allow the drilling of
the Eagles #1-2 Well at an exception location of 1465 feet FSL and 690 feet FWL
in the SW¼ of Section 1, Township 34 North, Range 9 West, N.M.P.M. for the
production of gas from the Fruitland coal seams was approved.
Cause No. 232 and 499, Docket No. 0207-SP-09, Wattenberg
Field, Weld County, request by United States Exploration, Inc. to amend Cause
Nos. 232 and 499 to allow the 320-acre drilling and spacing unit consisting of
the N½ of Section 9, Township 4 North, Range 63 West, 6th P.M. to be segregated
into 160-acre drilling and spacing units consisting of the NE¼ and NW¼ of
Section 9, for the production of oil, gas and associated hydrocarbons from the
“J” Sand and Dakota Formations was approved.
The meeting adjourned at 7:20 p.m.
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The Secretary was therefore authorized to issue the following
orders:
Order No. 1V-223, Washington County: Approves the
Administrative Order by Consent finding Alfred Ward & Son Operating Company in
violation of Rules 324A.a., 324A.b., 902.a., 907.a.(1), 907.a.(2), and 907.c.;
failure to ensure that E&P waste is properly stored, handled, transported,
treated, recycled or disposed and for the unauthorized and intentional discharge
of produced water into adjacent surface waters for the State #1 and #2 tank
battery in the NE¼ SE¼ of Section 36, Township 3 South, Range 54 West, 6th P.M.,
and assesses fine of Six Thousand dollars ($6,000.00) for the above violations.
Order No. 1V-224, Baca County: Approves the Administrative
Order by Consent finding Oneok Resources Company in violation of Rules 302.,
312., and 706. for the Bauman A #1-2 Well located in the SW¼ SW¼ of Section 2,
Township 33 South, Range 42 West, 6th P.M., and assesses a fine of One Thousand
Seven Hundred Fifty dollars ($1,750) for the above violation.
Order No. 112-166, Ignacio-Blanco Field, La Plata County:
Approves the request by 44 Canyon, LLC for an order to allow the drilling of the
Eagles #1-2 Well at an exception location of 1465 feet FSL and 690 feet FWL in
the SW¼ of Section 1, Township 34 North, Range 9 West, N.M.P.M. for the
production of gas from the Fruitland coal seams.
Order Nos. 232-235 and 499-73, Wattenberg Field, Weld County:
Approves the request by United States Exploration, Inc. to amend Cause Nos. 232
and 499 to allow the 320-acre drilling and spacing unit consisting of the N½ of
Section 9, Township 4 North, Range 63 West, 6th P.M. to be segregated into
160-acre drilling and spacing units consisting of the NE¼ and NW¼ of Section 9,
for the production of oil, gas and associated hydrocarbons from the “J” Sand and
Dakota Formations.
Order No. 523-1, Garfield County: Approves the request by SWD,
LLC for an order to establish a surface use plan designating approved well site
locations within a PUD covering portions of Sections 9-16, Township 6 South,
Range 92 West, 6th P.M.
Signed:
Patricia C. Beaver, Secretary
Approved:
Stephen Sonnenberg, Chair