BEFORE THE OIL
AND GAS CONSERVATION COMMISSION
OF
THE STATE OF COLORADO
IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES AND ) CAUSE
NO. 1V
REGULATIONS OF THE COLORADO OIL AND GAS CONSERVATION)
COMMISSION BY WILLIAMS PRODUCTION RMT CORPORATION, ) ORDER
NO. IV-274
GARFIELD COUNTY, COLORADO )
ADMINISTRATIVE ORDER BY CONSENT
FINDINGS
1.
On February 22, 2004, Williams Production RMT Corporation (”Williams”) lost
control of the PA 324-33 Well located in the SE¼ SW¼ of Section 33, Township 6 South,
Range 95 West, 6th P.M. following production casing cementing operations. Natural
gas was uncontrollably vented to the atmosphere, endangering the employees and
the general public. The natural gas ignited and burned for several hours
damaging the rig substructure. The loss of control was in violation of Rule
317.a. which states that “The operator shall take all necessary precautions for
keeping a well under control while being drilled or deepened” and Rule 327.
which states that “The operator shall take all reasonable precautions, in
addition to fully complying with Rule 317. to prevent any oil, gas or water
well from blowing uncontrolled …”. Williams should be found in violation of Rules
317.a. and 327. for failure to keep the well under control at all times during
the drilling process.
2.
The PA 324-33 Well is located within the area covered by Commission Order No. 139-38
(the “Order”). During the drilling process, Williams failed to perform a
surface casing shoe integrity test as required by the Order which states that
“The operator shall perform a surface casing shoe integrity test on all wells
drilled within applicable lands. Each surface casing shoe integrity test shall
be designed to test the drilled out surface casing shoe to a pressure
equivalent to the hydrostatic pressure exerted by a full column of mud at the
maximum mud weight anticipated during the drilling of the well plus an
additional one-half (1/2) pound per gallon.” Williams should be found in
violation of the Order for failure to comply with the Order.
3.
The PA 324-33 Well is located in the area covered by the “Notice to All Operators
Drilling Williams Fork Formation Wells in Garfield County, Surface Casing Depth
and Modifications of Leakoff Test Requirements” (the “Notice”) dated May 3,
2001. The Notice was attached to the Application for Permit-to-Drill at the
time of approval and requires that “All lost circulation zones and gas kicks
must be reported to the COGCC Northwest Colorado Area Engineer …”. During the
drilling process, lost circulation and gas kicks occurred which were not
reported to the COGCC Northwest Colorado Area Engineer. Williams should be found in violation
of the Notice for failure to notify staff of the lost circulation zones and gas
kicks.
4.
On May 11, 2004 staff issued a Notice of Alleged Violation (“NOAV”)
to Williams for failure to maintain control of the well, report kicks and lost
circulation zones and perform a surface casing shoe integrity test citing Rules
317.a., 327., Order No. 139-38 and the Notice attached to the Application for Permit-to-Drill
as described above in Finding Numbers 1 through 3. The NOAV had an abatement
deadline of May 28, 2004 and required Williams to explain why the loss of well
control occurred, file an Accident Report, Form 22 and a Loss of Well Control
Report, Form 23 documenting the incident and explain what will be done
differently in the future to prevent re-occurrence. The NOAV was hand-delivered
by COGCC staff to Williams.
5. Rule 523. specifies a base fine of One Thousand
dollars ($1,000.00) per day for each violation of Rules 317. and 327.
6. A monetary penalty of Thirty
Thousand dollars ($30,000.00) should be assessed against Williams in accordance
with Rule 523.a. and Rule 523.d., for violation of Rules 317.a. & 327., Commission
Order No. 139-38 and the Notice to All Operators Drilling Williams Fork
Formation Wells in Garfield County, Surface Casing Depth and Modification of Leakoff Test
Requirements. Aggravating factors in determining the fine recommendation are that
under Rule 523.d.(2) the violation had a threat of significant negative impact
on the public safety and under Rule 523.d.(5) the violation resulted in or threatened
to result in significant loss or damage to public or private property.
Mitigating factors in determining the fine recommendation are that under Rule
523.d.(1) the violator self-reported the violation and under Rule 523.d.(3) the
violator cooperated with the Commission with respect to the violation.
ORDER
NOW, THEREFORE, IT IS ORDERED, that
Williams Production RMT Corporation shall be found in violation Rules 317.a. and 327., Order No. 139-38 and the Notice
to All Operators Drilling Williams Fork Formation Wells in Garfield County,
Surface Casing Depth and Modifications of Leakoff Test Requirements attached to
the Application for Permit-to-Drill as described above for failure to prevent a
loss of well control on the PA 324-33 Well located in the SE¼ SW¼ of Section
33, Township 6 South, Range 95 West, 6th P.M. and for failure to perform a surface
casing shoe integrity test and for failure to report loss of circulation zones
and gas kicks.
IT
IS FURTHER ORDERED, that Williams Production RMT Corporation shall be assessed
a fine of Thirty Thousand dollars ($30,000.00)
payable within thirty (30) days of the date the order is approved by the
Commission for the above violations.
IT
IS FURTHER ORDERED, that Williams Production RMT Corporation shall explain why
the loss of well control occurred, file an Accident Report, Form 22 and a Loss
of Well Control Report, Form 23 documenting the incident and explain what will
be done differently in the future to prevent re-occurrence within thirty (30)
days of the date the order is approved by the Commission
IT
IS FURTHER ORDERED, that the provisions contained in the above order shall
become effective forthwith.
IT IS FURTHER ORDERED,
that the Commission expressly reserves its right after notice and hearing, to alter, amend, or repeal any and/or
all of the above orders.
IT IS FURTHER ORDERED, that under the State
Administrative Procedure Act the Commission considers this order to be final
agency action for purposes of judicial review within thirty (30) days after the
date this order is mailed by the Commission.
IT
IS FURTHER ORDERED, that an application for reconsideration by the Commission
of this order is not required prior to the filing for judicial review.
Recommended this day
of May, 2004.
OIL
AND GAS CONSERVATION COMMISSION
By
Morris J. Bell, Hearing Officer
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
May 25, 2004
AGREED TO AND ACCEPTED THIS
_________DAY OF ___________, 2004.
WILLIAMS
PRODUCTION RMT CORPORATION
By
____________________________________________
___________________________________________
Title