BEFORE THE OIL AND GAS CONSERVATION COMMISSION

                                                                OF THE STATE OF COLORADO

 

IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES              )                    CAUSE NO. 1V

AND REGULATIONS OF THE COLORADO OIL AND GAS                     )

CONSERVATION COMMISSION BY ENCANA ENERGY                         )                    DOCKET NO. 0402-OV-06

RESOURCES INC., WELD COUNTY, COLORADO                                )

                                                                                                                                                                                    

                                                NOTICE OF ADMINISTRATIVE ORDER BY CONSENT

 

TO ALL INTERESTED PARTIES AND TO WHOM IT MAY CONCERN:

 

            On July 11, 2003, a Colorado Oil and Gas Conservation Commission (“COGCC”) Application for Permit-to-Drill (“APD”), Form 2, was approved for EnCana Energy Resources Inc. (“EnCana”) to drill the Owens Brothers #13-32 Well located in the NW¼ SW¼ of Section 32, Township 3 North, Range 67 West, 6th P.M.  The APD for the Owens Brothers #13-32 Well specified the objective formations as the Niobrara, Codell, and “J” Sand Formations.  The APD was approved by the Director only for these formations.

 

            Immediately after, it was determined by EnCana that the Owens Brothers #13-32 Well had been accidentally drilled to and completed in the Dakota Formation.  EnCana contacted COGCC staff by telephone on September 24, 2003 and informed COGCC staff of this oversight.  The content of the telephone conversation is disputed.  EnCana maintains that COGCC staff was informed that the Owens Brothers #13-32 Well had been drilled to and already perforated and completed in the Dakota Formation.  COGCC staff maintains that EnCana provided notice that the Dakota Formation had been accidentally penetrated but made no mention of the fact that the Dakota Formation had already been perforated and completed.  COGCC staff and EnCana agree that the COGCC staff informed EnCana to not perform any further completion work on the Dakota Formation until an Application for Permit to Recomplete the Dakota Formation was submitted to and approved by the Director.  On September 25, 2003, EnCana pulled the tubing and set a cast iron bridge plug (“CIBP”) above the Dakota Formation perforations, thereby isolating the Dakota Formation. 

 

            On October 30, 2003, the COGCC received an Application for Permit to Recomplete the Owens Brothers #13-32 Well to the Dakota Formation.  On November 10, 2003, COGCC staff contacted EnCana by telephone and requested that EnCana submit a Drilling Completion Report, Form 5, Completed Interval Report, Form 5A, open hole logs, and a cement bond log for the Owens Brothers #13-32 Well.  This information was required for COGCC staff to properly evaluate the Application for Permit to Recomplete the well to the Dakota Formation. 

 

            On November 19, 2003, COGCC staff received from EnCana the requested forms and logs for the Owens Brothers #13-32 Well.  The submitted information included three Completed Interval Reports, Form 5A, for the Well.  Upon review of the Dakota Formation Completed Interval Report, Form 5A, for the Owens Brothers #13-32 Well, COGCC staff determined that the Dakota Formation had already been perforated, fractured, and tested by EnCana.  It is EnCana’s position that all of this information had been self-reported during the telephone conversation of September 25, 2003.  The Form 5A submitted by EnCana listed a test date of September 1, 2003 for the Dakota Formation.  One of the Form 5As confirmed that EnCana had set a CIBP over the Dakota Formation.  A separate Form 5A revealed that EnCana had drilled out the CIBP above the Dakota Formation and commingled production of the “J” Sand and Dakota Formations.  This Form 5A submitted by EnCana listed a test date of November 4, 2003 for the commingled “J” Sand and Dakota Formations.  The Application to Recomplete the Dakota Formation was not approved by the Director until December 5, 2003.  EnCana maintains that at the time it was determined that the Owens Brothers #13-32 Well was drilled to and completed in the Dakota Formation, ownership was reviewed and it was determined that EnCana owned 98.9% of the Dakota rights.  The remaining 1.1% Dakota Formation interest owners have been notified.  EnCana therefore maintains that no significant negative impact of correlative rights has occurred.

 

            On December 8, 2003, COGCC staff issued an Administrative Order by Consent (“AOC”) to EnCana Energy Resources Inc. for the violation of COGCC Rule 303.b., Rule 301., and Section 34-60-117.(1) of the Oil and Gas Conservation Act for failure to have an approved Application for Permit-to-Drill or Application for Permit-to-Recomplete to the Dakota Formation, not providing written notice of intention to do work and failure to protect correlative rights of all owners in every field or pool for the Owens Brothers #13-32 Well.  On December 18, 2003, EnCana Energy Resources Inc. agreed to and accepted the AOC, including the fine of Ten Thousand Dollars ($10,000).

 

NOTICE IS HEREBY GIVEN, that the Oil and Gas Conservation Commission of the State of Colorado, pursuant to the above, has scheduled the above-entitled matter for hearing on:

                 

Date:                            Tuesday, February 10, 2004

 

Time:                           9:00 a.m.

 

Place:                          Garfield County Courthouse Plaza

                                    108 8^th Street, Room 100

                                    Glenwood Springs, CO 81601

                       

            In accordance with the Americans with Disabilities Act, if any party requires special accommodations for this hearing as a result of a disability, please contact Audra Serlet at (303) 894-2100, extension 114, prior to the hearing and arrangements will be made.

 

Pursuant to said hearing in the above-entitled matter at the time and place aforesaid, or at any adjourned meeting, the Commission will enter such orders as it deems appropriate and necessary to protect public health, safety and welfare and to prevent the waste of oil and gas, either or both, in the operations of said field, and carry out the purposes of the statute.

 

In accordance with Rule 509., any interested party desiring to protest or to intervene should file with the Commission a written protest or a notice to intervene no later than January 26, 2004 briefly stating the basis of the protest or intervention.  Such interested party shall, at the same time, serve a copy of the protest or notice to intervene to the person filing the application.  An original and nine (9) copies shall be filed with the Commission.

 

      IN THE NAME OF THE STATE OF COLORADO

 

                                                                  OIL AND GAS CONSERVATION COMMISSION

                               OF THE STATE OF COLORADO

 

 

 

                        By_________________________________

Dated at Suite 801                                                              Patricia C. Beaver, Secretary

1120 Lincoln Street

Denver, Colorado, 80203

January 9, 2004