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-135
JAYARE EXPLORATION, INC., LOGAN COUNTY, COLORADO
This cause came on for hearing before the Commission at 8:30 a.m., on February
9, 1998, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver,
Colorado, after giving Notice of Hearing as required by law, on why Jayare
Exploration, Inc. 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. Jayare Exploration, Inc. 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 14, 1994 COGCC staff approved a Sundry Notice, Form 4, granting
shut-in status for the Coe Trust #2 Well located in the SW¼ NW¼ of Section 18,
Township 16 South, Range 45 West, 6th P.M. As a condition of approval, Union
Pacific Resources Company was ordered to comply with COGCC Rule 324.b. (326.b.
as of June 1, 1996). Commission records indicate that the well has been shut in
since August 8, 1990 without having passed a Mechanical Integrity Test. On
January 17, 1996 COGCC staff inspected the Coe Trust #2 Well. The inspection
report issued required Union Pacific Resources Company to run a Mechanical
Integrity Test, produce or plug the well by July 17, 1996. On July 31, 1996
COGCC staff issued a Notice of Alleged Violation (NOAV) for the Coe Trust #2
Well. The NOAV cited violation of Rule 326.b., failure to perform a mechanical
integrity test within two (2) years of initial shut-in. Per return receipt the
NOAV was accepted August 5, 1996. On February 13, 1997, Union Pacific Resources
Company was contacted regarding the NOAV in which the abatement date had passed
(January 31, 1997). Union Pacific Resources Company indicated that no action had
been taken. On March 6, 1997, Union Pacific Resources Company sent a letter to
staff explaining the well had been sold to Jayare Exploration, Inc.
5. On March 25, 1997, COGCC staff issued an NOAV to Jayare Exploration, Inc. for
violations of Rule 326.b., failure to perform a mechanical integrity test a well
within two (2) years of initial shut-in, Rule 312., failure to file a Form 10,
Change of Operator within 15 days, and Rule 304.a. (now Rule 706.), failure to
submit a plugging bond. On April 30, 1997, a Form 10 was submitted by Jayare to
become operator of the well. On May 1, 1997, Jayare submitted financial
assurance in the amount of Five Thousand dollars ($5,000) to the Commission to
comply with Rule 706. As of November 11, 1997, the well has not been mechanical
integrity tested.
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. Based on the testimony presented, an order of the Commission should be
entered finding Jayare Exploration, Inc. in continuing violation of Rule 326.b.,
failure to perform a mechanical integrity test within two (2) years of initial
shut-in date for the Coe Trust #2 Well. Further, Jayare Exploration, Inc. should
be required to either: 1) perform a successful mechanical integrity test; or 2)
properly plug and abandon; or 3) put on production the Coe Trust #2 Well. Jayare
Exploration, Inc. should be assessed a total fine of Two Thousand dollars
($2,000) for violation of Rule 326.b. for the Coe Trust #2 Well. If Jayare
Exploration, Inc. does not comply with the order, COGCC staff should be directed
to make a claim on the Five Thousand dollar ($5,000) plugging bond and plug the
well. If plugging and reclamation costs exceed the bond amount COGCC staff
should confiscate available equipment and tubulars for salvage per
§34-60-124.(6).(c). C.R.S.
ORDER
NOW THEREFORE, IT IS ORDERED, that Jayare Exploration, Inc. is hereby found in
continuing violation of Rule 326.b., failure to perform a mechanical integrity
test within two (2) years of initial shut-in date for the Coe Trust #2 Well
located in the SW¼ NW¼ of Section 18, Township 16 South, Range 45 West, 6th P.M.
IT IS FURTHER ORDERED, that Jayare Exploration, Inc. shall be required to
either: 1) perform a successful mechanical integrity test; or 2) properly plug
and abandon; or 3) put on production the Coe Trust #2 Well within thirty (30)
days of the date this order is issued.
IT IS FURTHER ORDERED, that Jayare Exploration, Inc. shall be assessed a total
fine of Two Thousand dollars ($2,000) payable within thirty (30) days from the
date the order is issued.
IT IS FURTHER ORDERED, that if Jayare Exploration, Inc. does not comply with the
order, COGCC staff shall be authorized to commence claim on the Five Thousand
dollar ($5,000) plugging bond. If plugging and reclamation costs exceed the bond
amount COGCC staff shall confiscate available equipment and tubulars for salvage
per §34-60-124.(6).(c). C.R.S.
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 March, 1998, as of February 9, 1998.
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 9, 1998
(1V#135)