IN THE MATTER OF ALLEGED VIOLATIONS OF THE
CAUSE NO. 1
RULES AND REGULATIONS OF THE COLORADO
OIL AND GAS CONSERVATION COMMISSION BY
ORDER NO. 1V-128
AMERICAN RESOURCES MANAGEMENT CORPORATION,
RIO BLANCO AND GARFIELD COUNTIES, COLORADO
REPORT OF THE COMMISSION
This cause came on for hearing before the Commission at 8:30 a.m. on September
16, 1997, in the La Plata County Commissioner Hearing Room, 1060 E. 2nd Avenue,
Durango, Colorado, after giving Notice of Hearing as required by law, on why
American Resources Management Corporation is in violation of certain rules and
regulations of the Oil and Gas Conservation Commission and why the Commission
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. American Resources Management 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 April 3, 1996, COGCC staff conducted a field inspection of the Pierce-Govt.
No. 20-2X Well located in the SW¼ NW¼ of Section 20, Township 2 North, Range 97
West, 6th P.M., Rio Blanco County, and found it to be shut-in. The well has no
flowline or surface equipment and there is no record of production since its
completion in June, 1981. The well does not appear to have ever been capable of
production. It is in violation of Rules 319.b. and 326.b. On June 17, 1996,
COGCC staff conducted a field inspection of the Gasaway Unit No. 10-3 Well
located in the SE¼ SE¼ of Section 10, Township 6 South, Range 100 West, 6th
P.M., Garfield County and found the well appeared to be plugged but the location
had not been reclaimed. The reserve pit was still present and the site had not
been recontoured. The site had not been properly revegetated and noxious weeds
were abundant.
5. In 1989, American Resources Management Corporation filed for Chapter 11
Bankruptcy in the U.S. Bankruptcy Court. The case was ultimately closed by the
court on March 26, 1997. On June 11, 1997 staff issued a Notice of Alleged
Violation (NOAV) to Anna W. Drake, trustee for the American Resources Management
Corporation bankruptcy estate for violations of Rule Nos. 319.b., failure to
obtain Director approval for continued shut-in status; 326.b., failure to
demonstrate mechanical integrity (for the Pierce-Govt. No. 20-2X Well) and
1004., failure to reclaim the well site (for the Gasaway Unit No. 10-3 Well). In
a letter dated June 16, 1997, Ms. Drake indicated that the case was now closed
and no assets remain in the estate and as a result the estate did not intend to
comply with the NOAV. Ms. Drake understood that the COGCC would make a claim
upon the bond and undertake remediation based on their failure to remedy the
violations.
6. At the time of the hearing, Commission staff provided testimony and presented
exhibits in support of the proposed order being recommended for adoption by the
Commission.
7. The Commission should direct the Commission staff to commence a claim on the
Thirty Thousand Dollar ($30,000) bond in order to plug and abandon and reclaim
the above-listed wells.
8. The Commission should authorize the Commission staff to confiscate and sell
for salvage any equipment abandoned at the well sites in accordance with
§34-60-124.(6)(c), C.R.S.
9. Based on the testimony presented, an order of the Commission should be
entered finding American Resources Management Corporation in violation of Rule
319.b., failure to obtain Director approval for continued shut-in status or
abandon, and Rule 326.b., failure to demonstrate mechanical integrity for the
Pierce-Govt. #20-2X Well (SW¼ NW¼ Sec 20, Township 2 North, Range 97 West, 6th
P.M., Rio Blanco County) and Rule 1004.a., failure to reclaim the well site for
the Gasaway Unit #10-3 Well (SE¼ SE¼, Sec 10, Township 6 South, Range 100 West,
6th P.M., Garfield County). The Commission should authorize COGCC staff to make
a claim on the Thirty Thousand Dollar ($30,000) blanket plugging bond in order
to plug and abandon and reclaim the Pierce-Govt. #20-2X Well and reclaim the
Gasaway Unit #10-3 wellsite. The Commission should confiscate any available
equipment and tubulars for salvage in accordance with §34-60-124(6)(c), C.R.S.
Because American Resources Management Corporation has been dissolved through
bankruptcy and no responsible entity exists, no fine should be assessed in this
matter.
ORDER
NOW THEREFORE, IT IS ORDERED, that American Resources Management Corporation
shall be found in violation of Rule 319.b., failure to obtain Director approval
for continued shut-in status or abandon, and Rule 326.b., failure to demonstrate
mechanical integrity for the Pierce-Govt. #20-2X Well located in the SW¼ NW¼
Section 20, Township 2 North, Range 97 West, 6th P.M., Rio Blanco County
IT IS FURTHER ORDERED, that American Resources Management Corporation shall be
found in violation of Rule 1004.a., failure to reclaim the well site for the
Gasaway Unit #10-3 Well located in the SE¼ SE¼, Section 10, Township 6 South,
Range 100 West, 6th P.M., Garfield County.
IT IS FURTHER ORDERED, that the Commission shall authorize staff to make a claim
on the Thirty Thousand Dollar ($30,000) blanket plugging bond in order to plug
and abandon and reclaim the Pierce-Govt. #20-2X Well and reclaim the Gasaway
Unit #10-3 wellsite.
IT IS FURTHER ORDERED, that the Commission shall confiscate any available
equipment and tubulars for salvage in accordance with §34-60-124(6)(c), C.R.S.
IT IS FURTHER ORDERED, that because American Resources Management Corporation
has been dissolved through bankruptcy and no responsible entity exists, no fine
shall be assessed in this matter.
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 9th day of October, 1997, as of September 16, 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 October 9, 1997
(1V#128)