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-204
ALLEN OIL & GAS LLC., MOFFAT COUNTY, COLORADO
REPORT OF THE COMMISSION
This cause came on for hearing before the Colorado Oil and Gas Conservation
Commission on December 4, 2000 at 8:30 a.m. at the Chancery Building, 1120
Lincoln Street, Suite 801, Denver, Colorado after giving notice of hearing as
required by law on why Allen Oil & Gas LLC is not in violation of certain
Commission rules on certain wells in the Buck Peak Field located in Section 25,
Township 6 North, Range 90 West, 6th P.M.
FINDINGS
1. Allen Oil & Gas 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 and of the parties
interested therein, and jurisdiction to promulgate the hereinafter-prescribed
order.
4. Allen Oil & Gas LLC is the operator of the hereinafter-described wells.
5. On August 3, 1998 Colorado Oil and Gas Commission (“COGCC”) staff inspected
the Voloshin #1 Well located in the NW¼ NE¼ of Section 25, Township 6 North,
Range 90 West, and found the operator was dumping produced water and oil into an
unlined pit. It was evident that the pit had been allowed to overflow repeatedly
and leachate from the pit had killed vegetation below the pit. The pit was
located in a sensitive area on a steep hillside above a live stream. On August
11, 1998 COGCC staff issued a Notice of Alleged Violation (“NOAV”) to Allen Oil
& Gas LLC. The NOAV cited violation of Rules 904. and 905. which state that
unlined pits are not allowed in sensitive areas and unlined production pits
shall be closed in accordance with an approved Site Investigation and
Remediation Plan, Form 27. The NOAV required that the operator file a Form 27,
obtain approval of the pit closure plan, close the pit and reclaim the pit area
by October 1, 2000. To date the operator has not filed the Form 27 or closed the
pit. The pit is in continuing violation of Rules 904. & 905. Allen Oil & Gas
LLC’s failure to bring the Voloshin #1 pit into compliance with Rules 904. and
905. threatens to cause a significant adverse environmental impact.
6. On August 3, 1998 COGCC staff inspected the Voloshin-Kowach Gas Unit #2 Well
located in the SE¼ NW¼ of Section 25, Township 6 North, Range 90 West, and found
it to be shut-in and the flowline disconnected. On August 11, 1998 COGCC staff
issued a NOAV to Allen Oil & Gas LLC. The NOAV cited violation of Rule 326.b.
which states a mechanical integrity test shall be performed on each shut-in well
within two (2) years of the initial shut-in date or within thirty (30) days if
at any time, surface equipment is removed or the well becomes incapable of
production. The well has not produced since prior to 1984. The NOAV required
that the well either be returned to production, or be tested for mechanical
integrity and converted to a disposal well or be plugged and abandoned with an
abatement deadline of October 1, 2000. To date the well has not been returned to
production, tested for mechanical integrity and converted to a disposal well or
plugged and abandoned. The well is in continuing violation of Rule 326.b. Allen
Oil & Gas LLC’s failure to bring the Voloshin-Kowach Gas Unit #2 Well into
compliance with Rule 326.b. threatens to cause a significant adverse
environmental impact.
7. On August 3, 1998 COGCC staff inspected the Voloshin-Kowach Gas Unit #1 Well
located in the NE¼ SE¼ of Section 25, Township 6 North, Range 90 West and found
it to be shut-in and the flowline disconnected. On August 11, 1998 COGCC staff
issued a NOAV to Allen Oil & Gas LLC. The NOAV cited violation of Rule 326.b.
which states a mechanical integrity test shall be performed on each shut-in well
within two (2) years of the initial shut-in date or within thirty (30) days if
at any time, surface equipment is removed or the well becomes incapable of
production. The well has not produced since prior to 1984. The NOAV required
that the well either be returned to production, or be tested for mechanical
integrity and converted to a disposal well or be plugged and abandoned with an
abatement deadline of October 1, 2000. To date the well has not been returned to
production, tested for mechanical integrity and converted to a disposal well or
plugged and abandoned. The well is in continuing violation of Rule 326.b. Allen
Oil & Gas LLC’s failure to bring the Voloshin-Kowach Gas Unit #2 Well into
compliance with Rule 326.b. threatens to cause a significant adverse
environmental impact.
8. On August 3, 1998 COGCC staff inspected the Kowach #2 Well located in the SE¼
NW¼ of Section 25, Township 6 North, Range 90 West and found it to be shut-in
and disconnected with the surface equipment removed. On August 11, 1998 COGCC
staff issued a NOAV to Allen Oil & Gas LLC. The NOAV cited violation of Rule
326.b. which states a mechanical integrity test shall be performed on each
shut-in well within two (2) years of the initial shut-in date or within thirty
(30) days if at any time, surface equipment is removed or the well becomes
incapable of production. The well has not produced since prior to 1984. The NOAV
required that the well either be returned to production, or be tested for
mechanical integrity and converted to a disposal well or be plugged and
abandoned with an abatement deadline of October 1, 2000. To date the well has
not been returned to production, tested for mechanical integrity and converted
to a disposal well or plugged and abandoned. The well is in continuing violation
of Rule 326.b. Allen Oil & Gas LLC’s failure to bring the Kowach #2 Well into
compliance with Rule 326.b. threatens to cause a significant adverse
environmental impact.
9. On August 3, 1998 COGCC staff inspected the Kowach #1 Well located in the NW¼
NW¼ of Section 25, Township 6 North, Range 90 West and found it to be shut-in
and disconnected with the surface equipment removed. On August 11, 1998 COGCC
staff issued a NOAV to Allen Oil & Gas LLC. The NOAV cited violation of Rule
326.b. which states a mechanical integrity test shall be performed on each
shut-in well within two (2) years of the initial shut-in date or within thirty
(30) days if at any time, surface equipment is removed or the well becomes
incapable of production. The well has not produced since prior to 1984. The NOAV
required that the well either be returned to production, or be tested for
mechanical integrity and converted to a disposal well or be plugged and
abandoned with an abatement deadline of October 1, 2000. To date the well has
not been returned to production, tested for mechanical integrity and converted
to a disposal well or plugged and abandoned. The well is in continuing violation
of Rule 326.b. Allen Oil & Gas LLC’s failure to bring the Kowach #1 Well into
compliance with Rule 326.b. threatens to cause a significant adverse
environmental impact.
10. On October 19, 1999 COGCC staff inspected the Voloshin #1 Well located in
the NW¼ NE¼ of Section 25, Township 6 North, Range 90 West and found an
unauthorized discharge of produced water and an oil spill adjacent to the
wellhead. The berm surrounding the tank from which the discharge was occurring
had been intentionally breached to allow the water to flow along a lease road to
an unauthorized pit. The berm around the pit was also breached allowing water to
spill onto the hillside killing vegetation. Salt staining was evident along the
discharge path. On November 2, 1999 COGCC staff issued a NOAV to Allen Oil & Gas
LLC. The NOAV cited Rules 324A.a., 906.b.(1), 906.e.(1) and 907.c.(2) which
state the operator shall take precautions to prevent unauthorized discharges of
E&P waste, that spills exceeding five (5) barrels shall be reported, that
secondary containment shall be constructed around certain tanks and that
produced water may be disposed of by certain methods. The NOAV required that the
operator excavate the oily and salt stained soil and dispose of it or remediate
it in accordance with an approved Site Investigation and Remediation Workplan,
Form 27 and repair the berms. The NOAV had an abatement deadline of November 30,
1999. To date the water discharge and oil spill has not been cleaned up and
remediated. Allen Oil & Gas LLC’s failure to bring the Voloshin #1 Well into
compliance with Rules 324A.a., 906.b.(1), 906.e.(1) and 907.c.(2) has caused and
continues to cause a significant adverse environmental impact.
11. After hearing testimony and reviewing exhibits presented in support of the
COGCC staff’s recommended order and proposed total fine of Ten Thousand dollars
($10,000) (One Thousand dollars ($1,000) per violation) the Commission
determined that the fine should be increased to a total of Sixty Thousand
dollars ($60,000). The fine should be increased since all aggravating factors
contained in Rule 523.d., except (4), could be applied and since the violations
at the Voloshin #1 Well were found to result in a significant adverse
environmental impact.
12. The Commission requested that in accordance with Rule 525.b., a Notice of
hearing be issued to Allen Oil & Gas LLC in early 2001 to determine if a knowing
and willful pattern of violation exists such that the Commission should enter an
order to prohibit the issuance of any new permits to Allen Oil & Gas LLC.
ORDER
NOW, THEREFORE IT IS ORDERED, that Allen Oil & Gas LLC shall be found in
violation of Rule 326.b. for failure to pass a mechanical integrity test on the
following wells:
Voloshin-Kowach Gas Unit #2 Well located in the SE¼ NW¼ of Section 25, Township
6 North, Range 90 West, 6th P.M.
Voloshin-Kowach Gas Unit #1 Well located in the NE¼ SE¼ of Section 25, Township
6 North, Range 90 West, 6th P.M.
Kowach #2 Well located in the SE¼ NW¼ of Section 25, Township 6 North, Range 90
West, 6th P.M.
Kowach #1 Well located in the NW¼ NW¼ of Section 25, Township 6 North, Range 90
West, 6th P.M.
IT IS FURTHER ORDERED, that Allen Oil & Gas LLC shall be found in violation of
Rules 324A.a., 904., 905., 906.b.(1), 906.e.(1) and 907.c.(2) for failure to
take precautions to prevent unauthorized discharge of produced water and oil,
for operating an unlined production pit in a sensitive area and for failure to
clean up an unauthorized release of oil and water and also for failure to close
an unlined production pit in accordance with approved Site Investigation
Workplan(s), Form(s) 27, for failure to properly report spills, for
intentionally breaching secondary containment, and for improper disposal of
produced water on the Voloshin #1 Well site located in the NW¼ SE¼ of Section
25, Township 6 North, Range 90 West, 6th P.M.
IT IS FURTHER ORDERED, that Allen Oil & Gas LLC shall be assessed a total fine
of Sixty Thousand dollars ($60,000) for each violation of the above-stated
rules, based on the following aggravating factors: the violation was intentional
or reckless; the violation had a significant negative impact, or threat of
significant negative impact on the environment or on public health, safety, or
welfare; the violation resulted in significant waste of oil and gas resources;
the violation resulted in or threatened to result in significant loss or damage
to public or private property; the violation involved recalcitrance or
recidivism upon the part of the violator; the violation involved intentional
false reporting or recordkeeping; and, the violation resulted in economic
benefit to the violator, including the economic benefit associated with
noncompliance with the applicable rule, in which case the amount of such benefit
may be taken into consideration, payable within thirty (30) days of the date the
order is entered by the Commission.
IT IS FURTHER ORDERED, that COGCC staff shall plug, abandon, remediate and
reclaim the following wells and sites:
Voloshin-Kowach Gas Unit #2 Well located in the SE¼ NW¼ of Section 25, Township
6 North, Range 90 West, 6th P.M.
Voloshin-Kowach Gas Unit #1 Well located in the NE¼ SE¼ of Section 25, Township
6 North, Range 90 West, 6th P.M.
Kowach #2 Well located in the SE¼ NW¼ of Section 25, Township 6 North, Range 90
West, 6th P.M.
Kowach #1 Well located in the NW¼ NW¼ of Section 25, Township 6 North, Range 90
West, 6th P.M.
Voloshin #1 Well located in the NW¼ SE¼ of section 25, Township 6 North, Range
90 West, 6th P.M.
IT IS FURTHER ORDERED, that to the extent required by statute, COGCC staff shall
either confiscate and sell for salvage, the equipment and tubulars, on location
that is owned by any responsible party pursuant to §34-60-124 (6)(c), C.R.S., or
stack the tubulars and surface equipment on the location for the owners who are
not responsible parties as defined in §34-60-124 (8)(a), C.R.S on the above
wells.
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 19th day of December, 2000 as of December 4, 2000.
OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
By Dated at Suite 801 Patricia C. Beaver, Secretary 1120 Lincoln Street Denver, Colorado 80203 December 19, 2000.
(1V#204)