REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on October 16, 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 McWhinney Management Company, LLC is not in violation of Rule Nos. 210.b., 603.g., 604.c.(3), 604.c.(4), and 908.e., of the Oil and Gas Conservation Commission, and why it should not invoke the provisions of 34-60-121 C.R.S., as amende d, providing for penalties for violations of the Rules and Regulations of the Commission.

FINDINGS

The Commission finds as follows:

1. McWhinney Oil & Gas, dba McWhinney Management Company LLC, 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 March 4, 1996, COGCC staff inspected the Nasty No. 1 Well located in the SE1/4 SE1/4 of Section 9, Township 5 North, Range 68 West, the Mean No. 1 Well located in the NE1/4 SE1/4 of Section 9, Township 5 North, Range 68 West, and the Wicked No. 1 Well located in the NW1/4 SW1/4 of Section 10, Township 5 North, Range 68 West, 6th P.M. The inspection revealed that no lease signs were in place, that excess oil spillage existed within the berms of th e lease tank battery and at the wellhead of the Mean No. 1, that the tank battery area was not fenced despite encroaching commercial development, and that debris and equipment were being stored at the tank battery.

5. On March 6, 1996 COGCC staff issued a Notice of Alleged Violation (NOAV) to McWhinney Management Company LLC, citing violations of Rule Nos. 210.b. and 604.c.(4), failure to install lease signs; Rule No. 604.c.(3), failure to adequately fence the producing facilities to prevent access by unauthorized persons; and Rule No. 908.e., failure to properly treat oily waste, with abatement required by May 6, 1996.

6. COGCC staff received a voice mail message from the pumper of the wells, Mr. Dirk Olsen, stating that the McWhinney's were the surface owners and were using the tank battery area for an equipment storage yard.

7. On May 15, 1996 COGCC staff again inspected the three (3) wells and the lease tank battery and discovered that a lease sign for the Nasty No. 1 had been installed at the tank battery, however none of the other work required had been done.

8. On May 16, 1996 COGCC staff contacted Mr. Olsen to discuss the noncompliance. COGCC staff agreed that the tank battery area could be used for equipment storage because the well operator also owned the surface. COGCC staff was informed that the wells would be in compliance within the following week.

9. On June 18, 1996 COGCC staff inspected the three (3) wells and the lease tank battery and discovered that the only additional work that had been undertaken was the installation of metal fence posts around the storage tanks and heater-treater, however no wire had been strung.

10. An order of the Commission should be entered finding McWhinney Management Company, LLC in violation of Rule Nos. 210.b. and 604.c.(4), failure to install lease signs; Rule No. 604.c.(3), failure to adequately fence the producing facilities to prevent access by unauthorized persons; and Rule No. 908.e., failure to properly treat oily waste, and assessing a fine of One Thousand Dollars ($1,000) payable within thirty (30) days from the date the order i s issued.

O R D E R

NOW, THEREFORE, IT IS ORDERED, that McWhinney Management Company, LLC is in violation of Rule Nos. 210.b. and 604.c.(4), failure to install lease signs; Rule No. 604.c.(3), failure to adequately fence the producing facilities to prevent access by unauthorized persons; and Rule No. 908.e., failure to properly treat oily waste.

IT IS FURTHER ORDERED, that McWhinney Management Company, LLC shall be assessed a fine of One Thousand Dollars ($1,000) payable within thirty (30) days from the date the order is issued.

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 November, 1996, as of October 16, 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 25, 1997 ??

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