January 6, 2003

 

            The Oil and Gas Conservation Commission met on January 6^th and 7^th at 10:00 a.m. in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for a hearing in Cause Nos. 1V, 1, 491 and 517.

 

            Those present were:

 

                        Stephen Sonnenberg           Chair

Brian Cree                             Vice Chair

                        Lynn Shook                            Commissioner

                        Michael Klish                         Commissioner

                        Tom Reagan                          Commissioner

                        Peter Mueller                         Commissioner

Tom Ann Casey                    Commissioner

Carol Harmon                        Assistant Attorney General

                        Richard Griebling                  Director

Brian Macke                          Deputy Director

                        Patricia Beaver                     Hearings Manager

 

            The Commission unanimously approved the minutes from the December 2, 2002 hearing.

 

            Director’s Report:  Director Griebling provided a written report and discussed the following: The total number of Applications for Permits-to-Drill (“APD”) was 2006 for the year.  The Delta County Seminar series was described by Deputy Director Brian Macke.  Deputy Director Macke will participate in the three meetings being held every other Tuesday beginning January 7, 2003.  Director Griebling mentioned that Bob Chesson would be providing an overview of the 2^nd year implementation plan by Williams later in today’s hearing.  The staff recommends not producing an annual report since all the information concerning Williams’ activity is available on the COGCC website.  A letter of commendation for Morris Bell was mentioned.  The Amoco vs. Thunderhead decision was issued in favor of Amoco.  A joint application for a rulemaking from the Colorado Oil and Gas Association (“COGA”) and Colorado Counties, Inc. (“CCI”) will be heard at the February 10^th hearing.  One variance has been granted this past month. 

 

            Bob Chesson presented a summary to the Commissioners on the 2^nd year implementation plan by Williams.  There are a total of 150 wells; 120 vertical, 30 directional and an estimated 131 new surface locations.  57 APD’s were approved.  Most will be drilled directionally, although only two are required to be drilled directionally under the order.  Deputy Director Macke believes Williams Production Company is drilling one half of their wells directionally.  All of the onsites were performed due to the proximity to wetlands.  One onsite was performed on Savage surface due to surface concerns.  Staff recommends not preparing a 3^rd year plan because all of the information on Williams’ activity is available to the public via the COGCC website.

 

Assistant Attorney General’s Report:  AAG Harmon discussed the Town of Frederick matter.  The petition for Certiorari was denied and the Commission is happy with this decision.  The Supreme Court will not reconsider these issues.  Oral arguments in the Delta County case are on January 23, 2003.  The Motion for Summary Judgment in the federal Allen Oil and Gas matter will be heard on January 24, 2003.  AAG Harmon provided a litigation memo for the Commissioners, which reviewed the Amoco vs. Thunderhead decision.

 

Executive Director’s Report:  There was no report.

 

Commissioner Comments:  There were no comments.

 

Audience Comments: Ken Wonstolen, COGA, mentioned that he was pleased to hear that the Supreme Court denied the Certiorari in the Town of Frederick matter.  COGA believes that the decision made by the Colorado Court of Appeals solidifies that the COGCC has primacy over well locations.  He is unaware of any legislators that are prepared to bring local government issues or the Commissioner makeup before the General Assembly.  The Royalty Task Force voted unanimously to stand down through the 2003 legislative session.  All stakeholders agreed to not seek any legislative fix during this session.  Not much progress has been made in resolving the issues from Westerman vs. Rogers.  Air quality regulations passed in October require reporting by oil and gas operators soon.  A proposal to control ozone is required by June 2003, which may include E & P facilities.  One issue that may surface in the legislature is whether produced water from coalbed methane can be used by surface owners.  February 4^th is COGA’s legislative reception at the Grant Humphreys mansion and all Commissioners are invited to attend.

 

Cause No. 112, Docket No. 0210-UP-07, request for an order to pool all non-consenting owners in the N½ of Section 8U and Lots 1, 2, 3, & 4 of Section 5U, Township 34 North, Range 9 West, N.M.P.M. for the drilling of the Koshak BA-A Well for production of gas from the Fruitland Coal seams, was withdrawn.

 

Cause No. 1, Docket No. 0212-GA-10, request to bring Williams Production RMT before the Commission to determine why payment of proceeds have not been made on several wells in the S½ of Section 1 and the N½ of Section 12, both in Township 7 South, Range 96 West, 6th P.M., was withdrawn.

 

Cause No. 1, Docket No. 0212-GA-09, Motion to reconsider Order No. 1V-238, was approved.  After testimony and exhibits were presented by Monument Gas Marketing and COGCC staff, the Commission unanimously approved the motion to not rescind Order No. 1V-238.

 

After testimony and exhibits were presented by Bayless and Evergreen in Cause No. 517, Docket No. 0301-SP-02, Bayless’ request for an order to establish 160-acre drilling and spacing units for the NW¼ of Section 7, Township 34 South, Range 65 West, 6th P.M., the SE¼ of Section 1 and the NE¼ of Section 12, Township 34 South, Range 66 West, 6th P.M. for production of gas from the Vermejo Formation, was denied.

 

Consent Agenda:  Prior to adoption of the Consent Agenda, Paige Brock, attorney for William Silverman, asked to make a Rule 510 statement regarding Cause No. 1V, Docket No. 0301-OV-01.  Ken Jones, attorney for Evergreen Operating Corporation, objected to hearing the statement because it relates to the application filed by Evergreen for an exception location to be heard at the February hearing.  The Commission voted unanimously not to accept the Rule 510 statement.  The Commission then unanimously approved the consent agenda, which included the following:

 

Cause No. 491, Docket No. 0301-SP-01, request for an order to establish 320-acre drilling and spacing units for certain lands under the provisions of the Fortification Creek Field in Township 8, Range 91 West and 92 West, 6th P.M. for the production of gas and associated liquid hydrocarbons from the Mesaverde Formation.

 

Cause No. 1V, Docket No. 0301-OV-01, request to approve an Administrative Order by Consent finding Evergreen Operating Corporation in violation of Rules 603.a.(2), 305., and 306., failure to obtain a waiver to locate a well closer than 150 feet from a property line and to notify and consult the property owner prior to the commencement of operations with heavy equipment and assessing a fine of Three Thousand dollars ($3,000).

  

The meeting adjourned at 5:10 p.m. on January 6^th and resumed at 8:35 a.m. on January 7^th with all Commissioners except Commissioner Mueller present.  The meeting adjourned at 4:22 p.m. on January 7^th.

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            The Secretary was therefore authorized to issue the following orders:

 

            Order No. 1-100, Wild Sage Brush, Kiowa County:  Approves the request by Monument Gas Marketing to reconsider Order No. 1V-238 and affirms the provisions of Order No. 1V-238.

 

            Order No. 517-9, Lorencito Field, Las Animas County:  Denies the request by Robert L. Bayless, Producer LLC to establish 160-acre drilling and spacing units for the NW¼ of Section 7, Township 34 South, Range 65 West, 6th P.M., the SE¼ of Section 1 and the NE¼ of Section 12, Township 34 South, Range 66 West, 6th P.M. for production of gas from the Vermejo Formation.

 

            Order No. 491-2, Fortification Creek Field, Moffat County:  Approves the request by Matagorda Production Company to establish 320-acre drilling and spacing units for certain lands in Township 8, Range 91 West and 92 West, 6th P.M. under the provisions of the Fortification Creek Field for the production of gas and associated liquid hydrocarbons from the Mesaverde Formation.

 

            Order No. 1V-242, Las Animas County:  Approves the Administrative Order by Consent finding Evergreen Operating Corporation in violation of Rules 603.a.(2), 305., and 306., failure to obtain a waiver to locate a well closer than 150 feet from a property line and to notify and consult the property owner prior to the commencement of operations with heavy equipment and assesses a fine of Three Thousand dollars ($3,000).

 

           

 

Signed:

Patricia C. Beaver, Secretary

 

Approved:

Stephen Sonnenberg, Chair