IN THE MATTER OF THE RULES AND REGULATIONS
CAUSE NO. 1
OF THE COLORADO OIL AND GAS CONSERVATION
COMMISSION IN ADAMS, ARAPAHOE, LOGAN, MORGAN ORDER
NO 1V-207
AND WELD COUNTIES, COLORADO
ADMINISTRATIVE ORDER BY CONSENT
This cause came on for a prehearing conference before the Hearing Officer at
9:00 a.m. on November 29, 2000 in Suite 801, 1120 Lincoln Street, Denver,
Colorado on the request the Colorado Oil and Gas Conservation Commission staff
filed for the Commission to issue an order to require additional financial
assurance and to perform mechanical integrity tests for certain wells.
FINDINGS
1. On October 12, 2000 COGCC staff asked the Director to docket K.P. Kauffman
Company (“KPK”) for hearing to request the Commission issue an order to require
additional financial assurance and to perform mechanical integrity tests for
eighty-eight (88) wells.
2. On October 27, 2000, Notice of Hearing was executed by the Secretary of the
Colorado Oil and Gas Commission (“COGCC”).
3. On November 16, 2000 KPK filed with the Commission a protest to the Notice.
4. On November 17, 2000 the Colorado Oil & Gas Association (“COGA”) filed with
the Commission an intervention on the matter.
5. On November 29, 2000 the Hearing Officer convened a prehearing conference
with the parties. At that time, it was determined that a settlement discussion
should proceed, as it appeared likely to be successful. The prehearing
conference was adjourned and settlement discussions were entered into by the
staff and KPK’s representatives. As a result of those discussions, this
Administrative Order by Consent Hearing was prepared.
6. Over the past two years, COGCC staff has requested that KPK submit a plan to
address the staff’s concern about KPK’s inactive well count. KPK prepared and
submitted such a plan in September of 1999 and another plan prior to the
November 29, 2000 prehearing conference. Neither plan was submitted to or
approved, by the Commission.
7. During the settlement discussion, KPK proposed a plan that within twelve (12)
months would: 1) reestablish production, 2) perform mechanical integrity tests
or 3) plug and abandon the fifty (50) inactive wells listed on Attachment 1. KPK
also proposed to update COGCC staff every six (6) months on the status of the
wells listed on Attachment 1.
8. Staff requested and KPK agreed to provide the Commission with an additional
one hundred thousand dollars ($100,000) of financial assurance in the form of
bond, for a total bond of two hundred thousand dollars ($200,000).
9. Because a large number of KPK wells produce into a common facility and
production is allocated to individual wells, COGCC staff is concerned that
inactive wells may not be easily identified by staff.
10. After substantial discussions, the parties were able to reach a mutually
acceptable agreement that is incorporated in this Administrative Order by
Consent.
11. KPK currently operates seven hundred eighty-two (782) wells in Colorado.
12. KPK currently provides financial assurance to the Commission to ensure the
protection of the soil and the proper plugging and abandonment of wells,
including a corporate surety bond in the amount of one hundred thousand dollar
($100,000).
ORDER
NOW, THEREFORE IT IS ORDERED, that K.P. Kauffman Company shall: 1) reestablish
production, 2) perform mechanical integrity tests, or 3) plug and abandon the
fifty (50) inactive wells listed on Attachment 1 within twelve (12) months of
the date this Order is approved.
IT IS FURTHER ORDERED, that K.P. Kauffman Company shall provide a report to the
Commission on the status of the wells listed on Attachment 1 every six (6)
months until one of the three steps set forth above has been accomplished with
respect to each of the wells listed on Attachment 1.
IT IS FURTHER ORDERED, that K.P. Kauffman Company shall provide to the
Commission an additional bond in the amount of one hundred thousand dollars
($100,000), for a total bond of two hundred thousand dollars ($200,000) to
ensure soil protection and proper plugging and abandonment of wells.
IT IS FURTHER ORDERED, that K.P. Kauffman Company shall measure the wellhead
pressure of a reasonable number of wells selected by COGCC staff to ensure the
wellhead pressure is greater than the flow line pressure to show that the wells
are producing. It is anticipated that COGCC staff shall request and witness
approximately thirty (30) of these tests each year and will schedule these tests
with KPK at a mutually acceptable time. A reasonable number of additional tests
may be required depending on the results of the first thirty (30) tests in
staff’s reasonable discretion. If K.P. Kauffman Company believes that the number
of wells requested by staff is unreasonable then K.P. Kauffman Company may seek
Commission review of the matter.
IT IS FURTHER ORDERED, that COGCC staff shall monitor the number of inactive
wells being addressed and advise the Commission if in staff’s opinion an
insufficient number of wells are being resolved in accordance with this Order,
and staff shall provide K.P. Kauffman Company with appropriate notice of such
opinion.
IT IS FURTHER ORDERED, that COGCC staff shall continue to monitor the number of
inactive wells being resolved by K.P. Kauffman Company in accordance with this
Order and advise the Commission if wells are not being resolved in accordance
with this Order and after appropriate notice to K.P. Kauffman Company.
RECOMMENDED this 8th day of January 2001.
OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
By Dated at Suite 801 Morris Bell, Hearing Officer 1120 Lincoln Street Denver, Colorado 80203 June 18, 2001.
(1V#207)