BEFORE THE OIL AND GAS CONSERVATION COMMISSION
BEFORE THE OIL AND GAS
CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF ALLEGED
VIOLATIONS ) CAUSE NO. 1V
OF THE RULES AND REGULATIONS OF THE
)
COLORADO OIL AND GAS
CONSERVATION ) ORDER NO. IV-318
COMMISSION BY NOBLE ENERGY, INC.,
)
ADAMS COUNTY, COLORADO
ADMINISTRATIVE ORDER BY
CONSENT
(Pursuant to Rule 522.b.(3) of
the Rules and Regulations of the
Colorado Oil and Gas
Conservation Commission, 2 CCR 404-1)
FINDINGS
1. On June 17, 1980,
Union Pacific Resources Company, d/b/a Champlin Petroleum Company (“Champlin”)
drilled the Wailes 41-33 #1-X Well (API #05-001-07626), which is located in the
NE¼ NE¼ of Section 33, Township 1 South, Range 64 West, 6th P.M. The Wailes
41-33 #1-X Well was completed in the “J” Sand Formation with 8⅝-inch surface
casing run from the ground surface to a depth of 212 feet below ground surface (fbgs),
5½-inch production casing run from ground surface to 7,990 fbgs, and with
perforations from 7,908 to 7,879 fbgs.
2. On or around June 29,
1998, ownership of the Wailes 41-33 #1-X Well was transferred from Champlin to
United States Exploration, Inc. (“USX”) (Operator #91755).
3. On March 31, 2003, a
domestic water well (the “Britton water well”) was constructed for James and
Sharon Britton under Colorado Division of Water Resources Permit No. 244247.
The Britton water well is located in the NE¼ NE¼ of Section 33, Township 1
South, Range 64 West, 6th P.M, and is approximately 300 feet west-southwest of
the Wailes 41-33 #1-X Well. The Britton water well is approximately 400 feet
deep. It is screened from approximately 300 fbgs to 400 fbgs and produces water
from the Upper Arapahoe Formation.
4. On or around March
30, 2006, Noble Energy, Inc. (“Noble Energy”) completed the purchase of assets
from USX, including the Wailes 41-33 #1-X Well. Noble Energy is responsible for
operations at the Wailes 41-33 #1-X Well, even though USX continues to be the
named operator.
5. On or around October
4, 2006, Mr. Britton contacted Noble Energy because he was concerned about gas
bubbling in his water well. On October 4, 2006, Noble Energy initiated
investigation and repair work on the Wailes 41-33 #1-X Well. During the initial
investigation, Noble Energy measured a bradenhead pressure of 80 pounds per
square inch. Noble Energy conducted numerous mechanical integrity tests on the
Wailes 41-33 #1-X Well and determined that holes were present in the production
casing from 200 to 230 fbgs. Noble Energy also advised Mr. Britton to contact
the Colorado Oil and Gas Conservation Commission staff (“COGCC Staff”).
6. On October 5, 2006,
Mr. Britton contacted COGCC Staff and informed them that he observed vigorous
bubbling in his water well. Mr. Britton further indicated that he first
observed bubbling in his water well one to two weeks prior to the call. COGCC
Staff assigned tracking number 200097544 to Mr. Britton’s complaint.
Arrangements were made with Noble Energy to sample the water well for possible
impact from the Wailes 41-33 #1-X Well.
7. On October 5, 2006,
Noble Energy shut in the Wailes 41-33 #1-X Well by installing a retrievable
bridge plug above the “J” Sand production interval. Noble Energy believes gas
ceased escaping from the Wailes 41-33 #1-X Well on October 5, 2006 when the
retrievable bridge plug was installed. Noble Energy bled off the remaining gas
in the casings that same day. LT Environmental, Inc. (“LTE”), on behalf of
Noble Energy, collected a gas sample from the bradenhead of the Wailes 41-33
#1-X Well for analysis of gas composition and stable isotopes of methane. (A
production gas sample could not be collected because the well had already been
shut-in by the time LTE arrived.) Analysis of this gas showed the presence of
thermogenic gas isotopic values and gas composition similar to the gas produced
from “J” Sand Formation wells.
8. On October 5, 2006,
Noble Energy offered to reimburse the Brittons for their purchase of bottled
water for drinking and cooking. To date, the Brittons have sought no
reimbursement for their drinking and cooking water from Noble Energy.
9. On October 6, 2006,
samples were collected from the Britton water well at an outdoor hydrant. The
sampling was performed by LTE, on behalf of Noble Energy. The samples were
analyzed for water quality parameters, gas composition, and stable isotopes of
methane. The analytical results showed dissolved methane to be present in the
Britton water well at a concentration of 6.46 milligrams per liter (mg/l).
Benzene was originally observed in the water well sample at a concentration of
76.5 micrograms per liter (mg/l) (using U.S. Environmental Protection Agency (“USEPA”) Method 8021B,
a gas chromatograph analytical method). However, a rigorous review was
conducted, including re-analysis of the sample using USEPA Method 8260B, a gas
chromatograph and mass spectrometer method that allows for specific ion
verification to substantiate this laboratory detection. The review and
re-analysis revealed that the original detection of benzene was a “false
positive” and that benzene was not present in the Britton water well. All other
laboratory results for water quality parameters were typical for water wells
completed in the Upper Arapahoe Formation. Analysis of the gas collected from
the Britton water well showed both gas composition (methane, ethane, propanes,
butanes, and hexanes) and stable isotope values characteristic of thermogenic
gas, and these sample results were very similar to the gas composition and
isotopic values detected in the Wailes 41-33 #1-X Well bradenhead gas sample.
Based on these sample results, COGCC Staff concluded that the gas present in the
Britton water well and the Wailes 41-33 #1-X bradenhead gas came from the same
source, i.e., “J” Sand gas from the Wailes 41-33 #1-X Well.
10. As part of the
initial complaint investigation, air within the Britton home was monitored by
LTE using a Lower Explosive Limit (“LEL”) meter. As a proactive measure, Noble
Energy elected to have residential LEL meters installed in the house. The LEL
meters have never alarmed.
11. From October 5,
2006, when the Wailes 41-33 #1-X Well was shut in, to October 16, 2006, Noble
Energy attempted to resolve lost circulation issues and performed remedial
cementing operations on the Wailes 41-33 #1-X Well. During that time period,
the pressure in the annulus between the surface casing and production casing
decreased from a steady blow to a light blow. On October 17, 2006, Noble Energy
observed a vacuum on the bradenhead, indicating that the flow of gas up the
annulus had likely stopped. Noble Energy did not observe bradenhead pressures
greater than zero pounds per square inch at any time after October 16, 2006.
12. On October 16, 2006,
Noble Energy ran a cement bond log from 1,810 to 90 fbgs to verify cement
coverage from the remedial cement operations. The cement bond log showed fair
cement from 1,658 to 1,400 fbgs, good cement from 1,400 to 1,190 fbgs, and fair
cement from 1,190 to 236 fbgs. Top of cement was at 236 fbgs (below the surface
casing shoe at 212 fbgs). Noble Energy also ran a cement bond log to verify the
existing primary cement top. The cement bond log showed good cement coverage
from the bottom of the logged interval at 7,724 fbgs to the primary cement top
at 7,036 fbgs. Despite evidence of cement on the cement bond log from 1,658 to
236 fbgs, the production casing would not hold pressure when Noble Energy
attempted to pressure test the production casing.
13. Despite several
attempts to squeeze cement into casing holes from October 17, 2006 through
November 7, 2006, the production casing would not hold pressure. COGCC Staff
conditionally approved Noble Energy’s plan to run and cement a liner from total
depth to surface, and required Noble Energy to continue to monitor the impacted
water well and collect a production gas sample when the well returned to
production. A 3½-inch liner was set and cemented from 7,840 fbgs to surface on
November 16, 2006. On November 20, 2007, Mr. Britton informed COGCC Staff that
his recollection was that gas bubbles did not cease in his water well until the
liner was installed.
14. On December 2, 2006,
COGCC Staff issued a Notice of Alleged Violation (“NOAV”) (#20001001063) to
Noble Energy for impacting the Britton water well with gas from the “J” Sand
Formation from casing leaks at the Wailes 41-33 #1-X Well. The NOAV alleged
violations of the following COGCC Rules (a through c, below) and required the
following actions (d and e, below):
a. Rule 324.A.a., which
requires an operator to take precautions to prevent significant adverse
environmental impact to air, water, soil, or biological resources to the extent
necessary to protect public health, safety and welfare, by using cost-effective
and technically feasible measures to protect environmental quality and to
prevent the unauthorized discharge or disposal of oil, gas, exploration and
production waste, chemical substances, trash, discarded equipment or other oil
field waste;
b. Rule 317A.b., which states
that surface casing must be set to a depth sufficiently deep to protect the
deepest permitted producing water well within one mile of the well; and
c. Rule 906.a and b., which
state that impacts resulting from releases shall be investigated and cleaned up
as soon as practicable.
d. The NOAV required Noble
Energy to submit a Site Investigation and Remediation Workplan, Form 27, to
address mitigation of the Britton water well impact, and either 1) treat the
Britton water well to reduce dissolved methane levels to below 2 mg/l; 2)
provide the Brittons with a new water well outside the impacted area; 3) provide
the Brittons with a domestic water tap to a public water system if a system
exists in the area; or 4) propose another alternative to remediate the water
well impact.
e. The NOAV
additionally required that the chosen remedial alternative, if available by the
Form 27 submittal deadline, be agreed to by the Brittons. The Form 27 submittal
deadline was December 29, 2006.
15. On December 28,
2006, Noble Energy requested from COGCC Staff and received approval for an
extension to the deadline for the Form 27 to allow for further discussion with
the Brittons regarding replacement and/or treatment of their water well. Noble
Energy submitted Form 27 to the COGCC Staff on January 16, 2007, and COGCC Staff
approved it with conditions on January 18, 2007. The conditions of approval of
Noble Energy’s Form 27 were:
a. A
long-term ground water monitoring period needs to be instituted at the end of
the third quarterly period proposed by Noble Energy (i.e., after December 31,
2007).
b. Any new
water well drilled for the Brittons must be periodically monitored for possible
ground water contaminants related to the natural gas release.
c. If
the existing Britton water well is converted to a monitoring well, a longer
monitoring plan must be developed to evaluate ongoing remediation of the release
from the Wailes 41-33 #1-X Well.
16. The Britton water
well was resampled for dissolved methane on January 8, 2007. Methane was not
detected in this water well sample indicating that the remedial cementing work
performed in October and November 2006 on the Wailes 41-33 #1-X Well was
successful in eliminating the release of natural gas into the aquifer in which
Britton water well is completed. The Britton water well has
been re-tested seven times since the October 6, 2006 sample. Other than the
6.46 mg/l reading obtained on October 6, 2006, the day after Mr. Britton noticed
bubbling in the well, the dissolved methane concentration in the water well has
ranged from 0.0014 to 0.0065 mg/l. Two of the re-test samples, collected on
January 8, 2007 and September 25, 2007, did not exceed the analytical method
detection limit of 0.0008 mg/l. Benzene has not been detected in any of the
samples above the analytical detection limit of 0.001 mg/l.
17. Noble Energy should
not be found in violation of Rule 317A.b. because at the time the Wailes 41-33
#1-X Well was drilled, the depth of surface casing was sufficiently deep to
protect water wells in the area. The Britton water well was drilled and
completed after the Wailes 41-33 #1-X Well and to a depth greater than the depth
of the surface casing in the pre-existing Wailes 41-33 #1-X Well.
18. Noble Energy should
not be found in violation of Rule 906.a. or 906.b. because Noble Energy
investigated and cleaned up the release from the Wailes 41-33 #1-X as soon as
practicable.
19. Noble Energy should
be found in violation of Rule 324A.a. for the unauthorized discharge of gas from
the Wailes 41-33 #1-X Well that impacted the Britton water well.
20. Rule 523 specifies a
base fine of One Thousand dollars ($1,000) for each day of violation of Rule
324. The parties disagree on the calculation of the number of days the
violation continued but have agreed to a fine of Eighteen Thousand Four Hundred
dollars ($18,400).
21. The fine includes
adjustment for the following aggravating factor (a, below) and four mitigating
factors (b through e, below), is not subject to the $10,000 fine limitation
pursuant to Rule 523.a.(3) and §34-60-121(1), C.R.S., and results in no more
than $1,000 per violation per day:
a. The
violation caused, or threatened to cause, a significant adverse environmental
impact to air, water, soil or biological resources;
b. Noble
Energy demonstrated prompt, effective and prudent response to the violation;
c. Noble
Energy cooperated with the COGCC Staff with respect to the violation; and
d. The cause
of the violation was outside Noble Energy’s reasonable control and
responsibility because the Britton water well was drilled after the Wailes 41-33
#1-X Well was drilled and was screened at a depth deeper than surface casing was
set on the Wailes 41-33 #1-X Well.
e. The cost
of correcting the violation reduced or eliminated any economic benefit to Noble
Energy because Noble Energy shut in the Wailes 41-33 #1-X Well and performed
remedial work on the Well until December 11, 2006.
22. Noble Energy should
continue to follow the Site Investigation and Remediation Workplan, Form 27, as
necessary, including any subsequent revisions and/or adjustments required by the
COGCC Staff.
23. Noble Energy, or its
successors or assigns, should be required to remain responsible for complying
with this Administrative Order by Consent (“AOC” or “order”) notwithstanding any
subsequent sale of the water well or property.
24. Noble Energy agrees
to the findings in this AOC only for the purpose of expeditiously resolving the
matter without a contested hearing. Notwithstanding the above, Noble Energy
does not admit to any of the factual or legal determinations made by the
Commission herein, and fully reserves its right to contest same in any future
action or proceeding other than a proceeding to enforce this AOC. Any action
undertaken by Noble Energy pursuant to this AOC shall not constitute evidence of
any liability or fault by Noble Energy with respect to matters set forth in this
AOC.
ORDER
NOW, THEREFORE, IT IS ORDERED,
that Noble Energy, Inc. shall be found in violation Rule 324A.a. for the
unauthorized discharge of gas from the Wailes 41-33 #1-X Well (API
#05-001-07626, located in the NE¼ NE¼ of Section 33, Township 1 South, Range 64
West, 6th P.M.) that impacted the Britton water well (located in the NE¼ NE¼ of
Section 33, Township 1 South, Range 64 West, 6th P.M., approximately 300 feet
from the Wailes 41-33 #1-X Well.)
IT IS FURTHER ORDERED, that
Noble Energy, Inc. shall be assessed a total fine of Eighteen Thousand Four
Hundred dollars ($18,400) for the violation described above, which shall be
payable within thirty (30) days of the date this order is approved by the
Commission.
IT IS
FURTHER ORDERED, that COGCC Staff may, in its sole discretion, approve a public
project proposed by Noble Energy, Inc. in lieu of fine within thirty (30) days
of the date this order is entered by the Commission.
IT IS FURTHER ORDERED, that
Noble Energy, Inc. shall continue to follow the Site Investigation and
Remediation Workplan, Form 27, as conditioned by the COGCC Staff’s letter, dated
January 18, 2007, as necessary, including any subsequent revisions and/or
adjustments required by the COGCC Staff (by way of example and not limitation,
instituting a ground water monitoring program at the end of the third quarterly
period proposed by Noble Energy, Inc. (i.e., after December 31, 2007) and
collecting and analyzing a production gas sample for gas composition and stable
isotopes of methane).
IT IS FURTHER ORDERED, that
Noble Energy, Inc. or its successors or assigns, shall remain responsible for
complying with this AOC (and any amendments) notwithstanding any subsequent sale
of the Britton water well or property.
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.
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/or all of the above orders.
RECOMMENDED this
_______day of January, 2008.
OIL AND GAS CONSERVATION
COMMISSION
OF THE STATE OF COLORADO
By
___________________________________
Carol Harmon
Enforcement Officer
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
January 24, 2008
AGREED TO AND ACCEPTED THIS
_________DAY OF ___________, 2008.
NOBLE ENERGY, INC.
By ___________________________________________
Authorized
Company Representative
____________________________________________
Print Full
Name
______________________________________________ Title
===============================================================================
This cause came on for hearing before the
Commission at 9:00 a.m. on February 25, 2008, Suite 801,
The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for the approval
of this Administrative Order by Consent.
ENTERED this________day
of March, 2008, as of February 25, 2008
OIL AND GAS
CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By____________________________________
Patricia C. Beaver, Secretary
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
March 11, 2008