IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES
CAUSE NO. 1
AND REGULATIONS OF THE COLORADO OIL AND GAS
CONSERVATION COMMISSION BY SOVEREIGN OIL
ORDER NO. 1V-119
COMPANY, LARIMER COUNTY, COLORADO
REPORT OF THE COMMISSION
TO ALL INTERESTED PARTIES AND TO WHOM IT MAY CONCERN:
This cause came on for hearing before the Commission on April 21, 1997, 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 Sovereign
Oil Company is not in violation of Rule 319.b.3., failure to obtain Director
approval for continued shut-in status; Rule 210.b., failure to install permanent
lease signs; Rule 603.g., failure to keep well site free of weeds, and Rule
907., failure to remediate an oil spill, 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 for certain wells.
FINDINGS
The Commission finds as follows:
1. Sovereign Oil Company 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 July 19, 1996 COGCC staff sent a letter to Mr. V. John Brook, Trustee for
Sovereign Oil Company. The letter notified Mr. Brook that the below-listed wells
were in violation of various Commission rules and requested any information
pertinent to the disposition of Sovereign Oil properties.
State #1 Well NW¼SW¼ Section 16 T4N R69W
State #2 Well SW¼NW¼ Section 16 T4N R69W
Fagan Farms #1 Well NE¼SE¼ Section 17 T4N R69W
Fagan Farms #2 Well SE¼NE¼ Section 17 T4N R69W
5. On August 5, 1996 COGCC staff received a letter from Mr. Brook. Mr. Brook
supplied a Trustee's Bill of Sale indicating that Sovereign's interests in the
four wells had been sold to Wild West Joint Ventures c/o Francis Energy, Inc.
Mr. Brook's letter did not address remediation of the alleged violations.
6. On August 15, 1996 COGCC staff received from Francis Energy, Inc. a copy of a
Special Warranty Deed that indicated that Wild West Joint Ventures had sold any
title, right, and interest in the four (4) wells listed in Finding #4 to Mr.
Malcolm McCoy.
7. On November 15, 1996 COGCC staff sent a letter and four Notices of Alleged
Violations (NOAVs) to Mr. Brook as Trustee for Sovereign Oil Company. All four
wells were cited for violation of Rule 319.b.3., failure to obtain Director
approval for continued shut-in status, and Rule 210.b., failure to install
permanent lease signs. In addition, the State #1 Well was cited for violation of
Rule 603.g., failure to keep well site free of weeds, and Rule 907., failure to
remediate an oil spill. No action has been taken to date to abate the
violations.
8. On March 10, 1997 the Commission received a letter from Mr. Allan C. Watkins,
P.A. Mr. Watkins stated in the letter that he represented the Bankruptcy Trustee
for Sovereign Oil Company, that the bankruptcy is now closed, and that Sovereign
has no assets.
9. Prior to the March 17, 1997 hearing, staff requested a continuance of this
matter to the April hearing, so that additional notice could be provided.
10. The four (4) wells were permitted and drilled by Coral Gulf Exploration
Corporation in 1980 and 1981. Coral Gulf Exploration has a $30,000 blanket
plugging bond from Aetna Casualty and Surety Company that has never been
released by the Director of the COGCC. On July 1, 1983, the COGCC Director
approved Change of Operator, Form 10, from Coral Gulf Exploration Corporation to
Sovereign Oil Company without requiring a new plugging bond or a name change
rider for the existing Coral Gulf Exploration plugging bond. The COGCC Form 10’s
changing operator from Coral Gulf Exploration to Sovereign Oil Company were
signed by Mr. T. M. McCoy. The existing Coral Gulf Exploration plugging bond was
also signed by Mr. T. M. McCoy. On February 8, 1990 Aetna Casualty and Surety
wrote a letter to Mr. Malcolm McCoy detailing the process to obtain a name
change rider for Sovereign Oil Company to the existing Coral Gulf Exploration
plugging bond.
11. The Commission has never released the Coral Gulf Exploration blanket
plugging bond and considers that this bond covers the plugging liabilities for
the four wells.
12. At the time of hearing on April 21, 1997, Malcolm McCoy presented testimony
that he has contracted to purchase the Sovereign properties but has not done so
at this time. He requested the Commission continue the matter to allow him
additional time to finalize the purchase, provide proper financial assurance,
and submit Change of Operator, Form 10, to operate the wells.
13. An order of the Commission should be entered finding Sovereign Oil Company
in violation of Rule 319.b.3., failure to obtain Director approval for continued
shut-in status; Rule 210.b., failure to install permanent lease signs; Rule
603.g., failure to keep well site free of weeds, and Rule 907., failure to
remediate an oil spill, for the above-referenced wells. Since the referenced
company has been dissolved through bankruptcy and no responsible entity exists,
no fine shall be assessed but the Commission should commence a claim on the
$30,000 Coral Gulf Exploration blanket plugging bond.
ORDER
NOW, THEREFORE, IT IS ORDERED, that Sovereign Oil Company shall be found in
violation of Rule 319.b.3, failure to obtain Director approval for continued
shut-in status, and Rule 210.b., failure to install permanent lease signs, Rule
603.g., failure to keep well site free of weeds, and Rule 907., failure to
remediate an oil spill for the State #1 Well, NW¼SW¼ , Section 16, Township 4
North, Range 69 West, 6th P.M.
IT IS FURTHER ORDERED, that Sovereign Oil Company shall be found in violation of
Rule 319.b.3, failure to obtain Director approval for continued shut-in status,
and Rule 210.b., failure to install permanent lease signs, for the State #2
Well, SW¼NW¼, Section 16, Township 4 North, Range 69 West, 6th P.M.
IT IS FURTHER ORDERED, that Sovereign Oil Company shall be found in violation of
Rule 319.b.3, failure to obtain Director approval for continued shut-in status,
and Rule 210.b., failure to install permanent lease signs, for the Fagan Farms
#1 Well, NE¼SE¼, Section 17, Township 4 North, Range 69 West, 6th P.M.
IT IS FURTHER ORDERED, that Sovereign Oil Company shall be found in violation of
Rule 319.b.3, failure to obtain Director approval for continued shut-in status,
and Rule 210.b., failure to install permanent lease signs, for the Fagan Farms
#2 Well, SE¼NE¼, Section 17, Township 4 North, Range 69 West, 6th P.M.
IT IS FURTHER ORDERED, that the Commission shall make a claim on the $30,000
blanket plugging bond in order to plug and abandon and reclaim the four (4)
wells, unless a responsible entity files a bond and Form 10’s for the wells in
question within the next sixty (60) days, at which point the bond claim will be
halted.
.
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 2nd day of May, 1997, as of April 21, 1997.
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 May 2, 1997
(1V#119)