REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on March 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 Powerline Energy Corporation, was not in violation of Rule No. 324.b., requiring a mechanical integrity test to be performed within six (6) months of request, of the Oil and Gas Conservation Commission, and why it should not invoke the pr ovisions 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. Powerline Energy 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. The Baumgartner No. 1 Well, operated by Powerline Energy Corporation, located in the SE1/4 NW1/4 of Section 2, Township 1 North, Range 63 West, 6th P.M., has been shut-in since October, 1990. The production equipment has been removed from the site. A pressure test was attempted on August 12, 1994. Upon review of the chart submitted to the Commission, a question arose as to the validity of the test because the perforations were not isolated. Staff required the test to be done correctly by August 30, 1995.

5. On November 6, 1995, staff issued a Notice of Alleged Violation (NOAV) to the Operator, for violation of Rule 324.b., requiring a mechanical integrity test to be performed by December 6, 1995. An extension was requested and granted until December 31, 1995. A further extension was granted until January 15, 1996. As of January 16, 1996, there has been no further contact from the Operator and the required test has not been done.

6. On January 22, 1996, an Administrative Order by Consent (AOC) was sent to Powerline Energy Corporation with a completion date of February 14, 1996 and a proposed fine of Two Thousand Dollars ($2,000) for violation of Rule No. 324.b. As of February 23, 1996, there has been no response from the Operator, though the AOC has been received by the Operator via certified mail.

7. On March 15, 1996, after discussions between Powerline Energy Corporation and COGCC staff, agreement with the terms of the AOC and the proposed fine were reached.

8. The Hearing Officer recommends that Powerline Energy Corporation be found in violation of Rule No. 324.b., requiring a mechanical integrity test to be performed within six (6) months of request. Further, the Hearing Officer recommends a fine of Two Thousand Dollars ($2,000) be assessed for violation of Rule No. 324.b, payable within thirty (30) days of the issuance of this Order.

O R D E R

NOW, THEREFORE IT IS ORDERED, that Powerline Energy Corporation shall be found in violation of Rule No. 324.b., requiring a mechanical integrity test to be performed within six (6) months of request.

IT IS FURTHER ORDERED, that Powerline Energy Corporation shall be assessed a total fine of Two Thousand Dollars ($2,000) for violation of Rule Nos. 3243.b., payable within thirty (30) days of the issuance of this Order.

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 March 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 March 29, 1996 ??