BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES AND REGULATIONS OF THE COLORADO OIL AND GAS CONSERVATION COMMISSION BY ENCANA OIL & GAS (USA) INC., GARFIELD COUNTY, COLORADO |
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CAUSE NO. 1V
DOCKET NO. 0411-OV-35
TYPE: ENFORCEMENT
ORDER NO. 1V-281
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REPORT OF THE COMMISSION
This cause came on for hearing before the Colorado Oil and Gas Conservation Commission on November 29, 2004 at 9:00 a.m. in Suite 801, the Chancery Building, 1120 Lincoln Street, Denver, Colorado after giving Notice of Hearing as required by law, as to why EnCana Oil & Gas (USA) Inc. (“EnCana”) is in violation of certain rules and regulations of the Colorado Oil and Gas Conservation Commission (“COGCC”) and why the Commission should 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.
7. On September 15, 2002, the COGCC approved an APD, Form 2, for EnCana to drill the HMU 7-14 (N7) Well located in the NE¼ of Section 7, Township 8 South, Range 92 West, 6th P.M. This APD permitted the well for completion into the Corcoran Formation. EnCana recompleted the well to the Rollins and Williams Fork Formations without prior approval. This is a violation of Rule 303.b.
8. On June 8, 2004, seven (7) Notices of Alleged Violation (“NOAVs”) were issued to EnCana for violations of Rule 303.b., recompletions without a permit. The NOAVs required EnCana to submit a letter detailing the reason for not complying with Rule 303.b. The abatement date for the NOAV was June 25, 2004.
9. On June 23 and June 24, 2004, COGCC staff received letters from EnCana in response to the NOAVs, explaining the reasons the wells were recompleted without obtaining prior approval.
10. EnCana has submitted and COGCC staff has approved an Application for Permit-to-Recomplete, Form 2, for each of the well recompletions described above in Findings 1 through 7.
11. At the time of the hearing, Morris Bell, COGCC Operations Manager, presented testimony and exhibits in support of the COGCC staff’s recommended order.
12. Joel Fox, Petroleum Engineer for EnCana, testified that there were no safety violations, no correlative rights violations, no environmental impacts and no waste caused by recompleting the seven (7) wells without COGCC approval. In addition, he testified that EnCana self-reported to Commission staff that the seven (7) wells were recompleted without prior approval, and that the violations were corrected prior to the issuance of the NOAVs. Mr. Fox testified that EnCana has recently modified its processes to avoid future occurrences.
13. After deliberation, the Commission found that for the unauthorized recompletions described above, EnCana should be found in violation of Rule 303.b., failure to obtain an approved Application for Permit-to-Recomplete prior to recompletion, for seven (7) separate incidents.
14. Mr. Bell described the recommended base fine amount and the number of days that EnCana should be found in violation under Rule 523. which specifies a base fine of One Thousand dollars ($1,000) per day for each violation of Rule 303. He testified that all the violations were in excess of five (5) days.
15. Mr. Bell recommended that a monetary penalty of Five Thousand dollars ($5,000) should be assessed against EnCana, in accordance with Rule 523.d., for each violation of Rule 303.b., for a total of Thirty-Five Thousand dollars ($35,000). A mitigating factor in determining the fine recommendation under Rule 523.d.(1) is that the violations were self-reported.
16. EnCana’s attorneys argued that under Rule 523.b., EnCana, in self-reporting its failure to comply by obtaining the necessary recompletions permits, enjoys a rebuttable presumption against the imposition of fines.
17. After deliberation, the Commission determined that under Rule 523.b., fines should not be imposed upon EnCana for the seven (7) violations.
ORDER
Texaco Fee #6213 Well SW¼ NE¼ Section 25, Township 6 South, Range 99 West, 6th P.M
Federal #6202 Well SE¼ NE¼ Section 14, Township 6 South, Range 99 West, 6th P.M.
Cedar Bench Federal #6308 Well NW¼ SE¼ Section 1, Township 6 South, Range 100 West, 6th P.M.
Federal #6205 Well NW¼ SW¼ Section 26, Township 6 South, Range 99 West, 6th P.M.
Tate Federal #6211 Well SE¼ NE¼ Section 26, Township 6 South, Range 100 West, 6th P.M.
Texaco #6217 Well SE¼ NW¼ Section 25, Township 6 South, Range 99 West, 6th P.M.
HMU 7-14 (N7) Well NE¼ Section 7, Township 8 South, Range 92 West, 6th P.M.
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.
IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this order to be final agency action for purposes of judicial review within thirty (30) days after the date this order is mailed by the Commission.
IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this order is not required prior to the filing for judicial review.
ENTERED this day of December, 2004, as of November 29, 2004.
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
December 20, 2004