BEFORE THE OIL AND GAS CONSERVAT
BEFORE THE OIL
AND GAS CONSERVATION COMMISSION
OF THE STATE OF
COLORADO
IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES AND REGULATIONS OF THE
COLORADO OIL AND GAS CONSERVATION COMMISSION BY MARATHON OIL COMPANY,
GARFIELD COUNTY, COLORADO |
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CAUSE NO. 1V
ORDER NO. 1V-373 |
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 September 27, 2008, the Director (“Director”) of the Colorado Oil and
Gas Conservation Commission (the “Commission” or the “COGCC”) approved an
Application for Permit-to-Drill for the Marathon Oil Company (“Marathon”)
697-12A #12 Well Pad (the “Well Pad”) (API #05-045-14728), located in the SW¼
NE¼ of Section 12, Township 6 South, Range 97 West, 6th P.M. On or
about November 28, 2007, Marathon began using a lined pit on the Well Pad to
contain flow-back fluids (mostly fresh water) from two other well pads for
storage prior to reuse.
2.
On or about January 30, 2008, Marathon noted a discrepancy in pit fluid
level relative to the volume of water hauled to the pit, and notified the COGCC
on January 31, 2008 that there appeared to have been a release of flow-back
fluids from the lined pit on the Well Pad. A small amount of condensate was
observed in the pit, but did not appear to have been released.
3.
On January 31, 2008, Marathon submitted a Spill/Release Report (Form 19,
COGCC Document #1981707) to the COGCC, estimating that 31,590 barrels of
flow-back fluid had been released from the pit due to the failure of a seam in
the pit liner.
4.
Between January 30, 2008 and March 28, 2008, COGCC Staff and Marathon
engaged in a thorough investigation of the release, cooperatively sharing
information and communicating frequently during this time. The analytical
results from sampling of surface water in Garden Gulch and Parachute Creek
indicated no significant impact to either Garden Gulch or Parachute Creek.
Benzene, toluene, ethylbenzene, and xylenes (“BTEX”) were not detected above the
Colorado Department of Public Health and Environment (“CDPHE”), Water Quality
Control Commission (“WQCC”) ground water standards.
5.
On April 11, 2008, COGCC Staff issued NOAV #200130139 to Marathon
alleging violations of nine COGCC Rules, in effect at the time of the release,
for which the COGCC recommended Marathon be penalized.
6.
On May 31, 2011, the Director and COGCC Staff met with Marathon
representatives, and the parties agreed to the following settlement of the
above-captioned matter.
7. Rule 523. specifies a base
fine of One Thousand dollars ($1,000) for each day of violation of each Rule.
Rule 523.a.(3) specifies that “the maximum penalty for any single violation
shall not exceed Ten Thousand dollars ($10,000) regardless of the number of days
of such violation,” unless the violation results in significant waste of oil and
gas resources, damage to correlative rights, or a significant adverse impact on
public health, safety or welfare or the environment.
8. COGCC Staff
believes that the release of flow-back fluids from lined reserve pit on the Well
Pad resulted in a significant adverse impact to the environment and public
health, safety, and welfare. Marathon does not agree that this release resulted
in a significant adverse impact to the environment or public health, safety, or
welfare, but for purposes of settling this matter, does not dispute this
finding.
9. COGCC Staff
believes that Marathon should be found in violation of Rules 324A.a., 904.b.(3),
and 907a.(2), for failing to properly construct and maintain the lined pit on
the Well Pad so that E&P waste was not released. COGCC Staff believes that
these violations occurred from November 28, 2007, when Marathon began using the
lined pit, through January 31, 2008, when Marathon reported the release of flow
back fluid to the COGCC. Base fines should be levied as compiled in the table
below:
Rule
Violation |
Days of
Violation |
Fine
Amount/Violation |
324A.a. |
58 |
$58,000 |
904.b.(3) |
58 |
$58,000 |
907.a.(2) |
58 |
$58,000 |
Total
Maximum Allowable Fine |
$174,000 |
10. Because the base fines for
these violations are set at One Thousand dollars ($1,000) per day of violation,
the aggravating factors set forth in Rule 523.d. are not applicable by their
terms.
11. Pursuant to
Rule 523.d., mitigation of 17.5% was applied to the total base fine in
recognition of the following factors:
·
As is provided for by
Rule 523.d.(2), Marathon demonstrated a prompt, effective and prudent response
to the violations, and
·
Under Rule 523.d.(3),
Marathon cooperated with the Commission with respect to the violations.
12. Marathon
should be assessed a total adjusted fine of One Hundred Forty Three Thousand,
Three Hundred Fifty dollars ($143,350) for the Rule violations described above
at the Well Pad.
13. Marathon
does not admit to the alleged violations but agrees to pay the total fine set
forth in Finding No. 12 to resolve this matter without the necessity of an
extended contested hearing before the Commission.
ORDER
NOW, THEREFORE, IT IS ORDERED, that Marathon
shall be found in violation of the following Rules at the Well Pad, located in
the SW¼ NE¼ of Section 12, Township 6 South, Range 97 West, 6th P.M.:
a. Rule
324A.a., for failure to take precautions to prevent the unauthorized discharge
or disposal of E&P waste, chemical substances, trash, discarded equipment or
other oil field waste;
b. Rule
904.b.(3)., for failure to install and maintain the synthetic liner to prevent
deterioration and ensure that liner seams did not fail; and
c. Rule
907.a.(2), for failure to conduct E&P waste management activities and failure to
construct and operate E&P waste management facilities to protect the waters of
the state from significant adverse impacts from E&P waste.
IT IS FURTHER ORDERED, that Marathon shall be
assessed a total adjusted fine of One Hundred Forty Three Thousand, Three
Hundred Fifty dollars ($143,350) for the Rule violations set forth above,
which shall be payable within thirty (30) days of the date this order is
approved by the Commission.
IT IS FURTHER ORDERED that nothing in this AOC
shall constitute or be construed as an admission by Marathon that it committed
any violations of any rules of the COGCC or other applicable law.
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 Marathon is fully released from any and all claims
for violations of COGCC rules, the Colorado Oil and Gas Conservation Act, or any
other rule, law, order, or directive set out or that could have been set out in
the Notice of Alleged Violation or this Administrative Order by Consent.
RECOMMENDED this day of June, 2011.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By: _________________________________________
Robert Willis, COGCC Enforcement Officer
Dated at Suite 801
1120 Lincoln St.
Denver, Colorado 80203
AGREED TO AND ACCEPTED this _________ day of June, 2011.
MARATHON OIL COMPANY
By: _________________________________________
Signature of Authorized Company Representative
_________________________________________
Print Signatory Name
_________________________________________
Title
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This cause
came on for hearing before the Commission on the 27th day of
June, 2011, at the Elbert County Fairgrounds, Ag
Building, 95 Ute Avenue, Kiowa, Colorado,
for
the approval of this Administrative Order
by Consent.
ENTERED this
30th day of June 2011, as of the 27th day of
June, 2011.
OIL AND
GAS CONSERVATION COMMISSION
OF THE STATE OF COLORAD
By____________________________________
Robert A. Willis, Acting Secretary
Dated at Suite
801
1120 Lincoln
Street
Denver, Colorado
80203