REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on January 18, 1996, at 8:30 a.m., in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing as required by law, on why Berenergy Corporation (Berenergy) is not in violation of Rule No. 902.e., oil on produced water pit; Rule No. 902.f., holes in skim pit cover; Rule No. 604, inadequate berms and dikes area capacity around tanks; and Rule No. 322.a., sig nificant adverse environmental impact, of the Oil and Gas Conservation Commission, and why it should not invoke the provisions of 34-60-121 C.R.S., as amended, providing for penalties for violations of the Rules and Regulations of the Commission.

FINDINGS

The Commission finds as follows:

1. Berenergy Corporation is an interested party in the subject matter of the above-referenced hearing.

2. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

3. The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4. On September 26, 1995, COGCC staff inspected the MacNeill No. 2R lease located in the SE1/4 NE1/4 of Section 2, Township 3 South, Range 56 West, 6th P.M., and found violations of Rule No. 902.e., oil on produced water pit; Rule No. 902.f., holes in skim pit cover; Rule No. 604, inadequate berms and dikes area capacity around tanks; and Rule No. 322.a., significant adverse environmental impact. A Notice of Alleged Violation (NOAV) was issued Septembe r 29, 1995. The alleged violations were required to be remediated by October 6, 1995. On October 12, 1995, COGCC staff received the NOAV which had been signed by Berenergy stating that the violations were corrected. On December 7, 1995, COGCC staff re-inspected the site. The same violation of Rule 902.e. existed. The other violations were corrected.

5. On September 26, COGCC staff inspected the Wright No. 31-1 lease located in the SW1/4 SW1/4 of Section 31, Township 3 South, Range 53 West, 6th P.M., and found violations of Rule No. 902.e., oil on produced water pit, Rule No. 902.f., holes in skim pit cover, and Rule No. 604, inadequate berms and diked area capacity around tanks. A NOAV was issued on September 27, 1995. The alleged violations were required to be remediated by October 4, 1995. On October 3, 1995, COGCC staff received the NOAV which had been signed by Berenergy stating that the violations were corrected. The site was reinspected on October 31, 1995. The same violation of Rule 902.e. existed. The other violations were corrected.

6. On December 22, 1995, two (2) proposed Administrative Orders by Consent (AOC) were issued by the COGCC staff for the MacNeill and Wright wells. On January 11, 1996, a meeting was held between Berenergy and COGCC staff to discuss the proposed AOCs. As a result, the AOC for the Wright well was waived and the AOC for the MacNeill well was revised.

7. On January 12, 1996, an AOC was issued by COGCC staff for the MacNeill Well with the agreement of Berenergy. The Hearing Officer recommends that Berenergy be found in violation of Rule No. 902.e., accumulation of oil in a pit for more than twenty-four (24) hours after discovery. Further, the Hearing Officer recommends a fine of Seven Hundred Fifty Dollars ($750) be assessed for the MacNeill No. 2R Well, payable within thirty (30) days from issuance of the Order.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that Berenergy Corporation shall be found in violation of Rule No. 902.e., accumulation of oil in a pit for more than twenty-four (24) hours after discovery for the MacNeill No. 2R Well, located in the SE1/4 NE1/4 of Section 2, Township 3 South, Range 56 West, 6th P.M.

IT IS FURTHER ORDERED, that Berenergy Corporation shall be assessed a total fine of Seven Hundred Fifty Dollars ($750) payable within thirty (30) days of the date the order is entered.

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.

ENTERED this day of , 1996, as of January 18, 1996.

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 February 6, 1996 ??