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-161
BLACK THUNDER MARKETING, INC.,
WASHINGTON COUNTY, COLORADO
REPORT OF THE COMMISSION
This cause came on for hearing before the Colorado Oil and Gas Conservation
Commission on October 19, 1998 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 Black Thunder Marketing, Inc. is in violation of Rule
326.b. and why the Commission should not invoke the provisions of §34-60-121
C.R.S., as amended, to assess penalties for violations of the Rules and
Regulations of the Commission.
FINDINGS
The Commission finds as follows:
1. Black Thunder Marketing, 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, and that
3. The Commission has jurisdiction of the subject matter embraced in said
Notice, and of the parties interested therein, and jurisdiction to promulgate
the hereinafter prescribed order.
4. On July 21, 1997 Colorado Oil and Gas Conservation Commission (“COGCC”) staff
sent a Notice of Alleged Violation (“NOAV”) to Black Thunder Marketing, Inc.
(“Black Thunder”) for the Swan "C" #1 Well located in the SW¼ NW¼ of Section 22,
Township 2 South, Range 56 West, 6th P.M. The NOAV cited a violation of Rule
326.b., all shut-in wells shall pass a mechanical integrity test (“MIT”). The
last reported production for the Swan "C" #1 Well was August, 1991. The
abatement action required that the well be either put on production, pass a MIT,
or be plugged and abandoned. The NOAV had an abatement date of September 21,
1997.
5. On August 11, 1997 the COGCC received a copy of a notice from the U.S.
Bankruptcy Court, District of Wyoming. The notice indicated that Black Thunder
had filed for Chapter 7 bankruptcy on May 14, 1992.
6. The Washington County Tax Assessor has notified COGCC staff that Black
Thunder is delinquent in paying taxes on the Swan "C" #1 Well and has requested
assistance.
7. First Interstate Bank of Sheridan, Wyoming established an irrevocable Letter
of Credit for plugging and abandonment surety for the Swan "C" #1 Well on April
20, 1988. The Letter of Credit states that the Letter of Credit shall be
automatically extended each year unless the Commission receives notice of
election not to renew. The Commission has no record that it was notified by
First Interstate Bank of an election not to renew the Letter of Credit for the
Swan "C" #1 Well.
8. Based on testimony and exhibits presented at the hearing by COGCC staff, the
Commission finds that failure to either produce, MIT, or plug and abandon the
Swan "C" #1 Well is a continuing violation of Rule 326.b. by Black Thunder.
9. A monetary penalty of Two Thousand Dollars ($2,000) should be assessed
against Black Thunder for violation of Rule 326.b. in accordance with Rule
523.a. The base fine for violation of Rule 326.b. is One Thousand Dollars
($1,000.) per day.
10. In accordance with Rule 523.d. the Director considers the following to be
aggravating factors to be used in determining the fine amount; Rule 523.d.(1),
the violation was intentional or reckless; Rule 523.d.(2), the violation had a
significant negative impact, or threat of significant negative impact on the
environment or on public health, safety, or welfare; Rule 523.d.(6), the
violation involved recalcitrance or recidivism upon the part of the violator;
and Rule 523.d.(8), the violation resulted in economic benefit to the violator.
11. Based on the testimony presented, an order of the Commission should be
entered finding Black Thunder in violation of Rule 326.b., all shut in wells
shall pass a mechanical integrity test, for the Swan “C” #1 Well located in the
SW¼ NW¼ of Section 22, Township 2 South, Range 56 West, 6th P.M. The Commission
should invoke the provisions of §34-60-121 C.R.S., as amended, to assess
penalties for violations of the Rules and Regulations of the Commission and a
fine of Two Thousand Dollars ($2,000) should be assessed payable within thirty
(30) days the order is issued.
ORDER
NOW, THEREFORE, IT IS ORDERED, that Black Thunder Marketing, Inc. is hereby
found in continuing violation of Rule 326.b., all shut-in wells shall pass a
mechanical integrity test, for the Swan "C" #1 Well located in the SW¼ NW¼ of
Section 22, Township 2 South, Range 56 West, 6th P.M.
IT IS FURTHER ORDERED, that Black Thunder Marketing, Inc. shall be assessed a
fine of Two Thousand Dollars ($2,000) for the violation, payable within thirty
(30) days of the date the Order is issued.
IT IS FURTHER ORDERED, that Black Thunder Marketing, Inc. shall be required to
either produce, or perform a successful mechanical integrity test on, or plug
and abandon the Swan "C" #1 Well within thirty (30) days of the date that the
Order is issued.
IT IS FURTHER ORDERED, that if Black Thunder Marketing, Inc. does not comply
with paragraphs two and three of this Order COGCC staff shall make a claim on
Black Thunder Marketing's plugging bond and plug and reclaim the Swan "C" #1
Well. If plugging and reclamation costs exceed the bond amount the Commission
shall confiscate available equipment and tubulars for salvage in accordance with
§34-60-124(6)(c), C.R.S.
IT IS FURTHER ORDERED, that in accordance with §34-60-121(7), C.R.S. the
Commission shall not issue any permits to drill to Black Thunder Marketing, Inc.
until Black Thunder Marketing, Inc. brings the Swan "C" #1 Well into compliance
with Rule 326.b. and remits the fine.
ENTERED this 19th day of November, 1998 as of October 19, 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 November 19, 1998
(1V#161)