BEFORE
THE OIL AND GAS CONSERVATION COMMISSION
OF
THE STATE OF COLORADO
IN THE MATTER OF ALLEGED
VIOLATIONS OF )
THE RULES AND REGULATIONS OF THE
) CAUSE NO. 1V
COLORADO OIL AND GAS
CONSERVATION COMMISSION )
BY RED RIVER RANCH HOLDINGS
LLC, ) ORDER
NO. 1V-316
LAS ANIMAS COUNTY, COLORADO )
)
ADMINISTRATIVE ORDER BY CONSENT
(Pursuant to Rule 522.b.(3) of the Rules and Regulations of the
Colorado Oil and Gas
Conservation Commission, 2 CCR 404-1)
1. On October 19, 2006, Red River Ranch Holdings
LLC (“Red River”) notified staff of the Colorado Oil and Gas Conservation
Commission (“COGCC” or “Commission”) of a release at the Red River Ranch No.18-3E
well site (“RR No.18-3E,” API #05-071-08976) located in the NW¼ SW¼ of Section 18,
Township 35 South, Range 67 West, 6th P.M.
2. The release was an uncontrolled discharge of approximately
480 barrels of exploration and production (“E&P”) waste, consisting of formation
water, drill cuttings, and produced water, that over-flowed the onsite reserve
pit, flowed downhill in an easterly direction, and entered the Lorencito Canyon
water way, which is located approximately 150 feet from the well site. The released E&P waste flowed
approximately four miles downstream of the point where it entered the Lorencito
Canyon water way. The release occurred
on October 18 and 19, 2006 and was discovered by an adjacent gas operator.
3. On October 19, 2006, Red River reported the
release to the Colorado Department of Public Health and Environment (“CDPHE”) Release
and Incident System. On October 26, 2006,
Red River provided the five-day follow up report to the CDPHE, as required.
4. On October 24, 2006, COGCC staff inspected
the release site and observed deposits of drill cuttings on the hillside east
of the well site and on the bottom of the stream in Lorencito Canyon.
5. On November 1, 2006, COGCC staff issued Notice
of Alleged Violation (“NOAV”) #200098314 to Red River citing:
a. Rule 209.,
which requires operators to take special precautions in drilling wells to guard
against any loss of artesian water from the stratum in which it occurs and the
contamination of fresh water by objectionable water, oil, or gas;
b. Rule 324A.a.,
which requires the operator to take precautions to prevent significant adverse
environmental impacts to water, soil, or biological resources to the extent
necessary to protect public health, safety and welfare, to protect
environmental quality, and to prevent the unauthorized discharge or disposal of
E&P waste;
c. Rule 324A.b.,
which states that no operator shall perform an act or practice which shall
constitute a violation of water quality standards or classifications
established by the Water Quality Control Commission (“WQCC”) for waters of the
state;
d. Rule 907.a.(1),
which requires operators to ensure that E&P waste is properly stored,
handled, or disposed of to prevent threatened or actual significant adverse
environmental impacts to water, soil or biological resources; and
e. Rule 907.a.(2),
which requires E&P waste management activities to be conducted and facilities
constructed and operated to protect the waters of the state from significant
adverse environmental impacts from E&P waste.
6.
The NOAV abatement and corrective actions required Red River to provide
to the COGCC a Site Investigation and Remediation Work Plan, Form 27, to
address impacts to soil and water resources, and an Operation Plan, to provide
a description of methods, processes and procedures Red River would implement to
protect water-bearing formations and to ensure the proper management of E&P
waste on future drilling projects. The
NOAV abatement date was November 8, 2006 for submittal of the Site
Investigation and Remediation Work Plan, Form 27 and the Operation Plan, and November
30, 2006 for completion of the investigation.
7.
Red River responded to the NOAV on November 8, 2006 by submitting the Site
Investigation and Remediation Work Plan, Form 27 and the Operation Plan. A summary report that described the site investigation
and remedial actions was submitted to the COGCC on November 30, 2006. The summary report also included a discussion
of Red River’s emergency response actions implemented on October 19, 2006.
8.
COGCC staff, after review of records and documents regarding the October
18-19, 2006 release, including analytical laboratory results for water, soil,
and sediment samples collected by O&G Environmental Consulting LLC. during
the site investigation, concluded that the release consisted of drill cuttings,
formation water, and produced water. The
analytical laboratory results along with visual observations indicated that the
deposition of drill cuttings on the stream bottom did not create a long-term
impact to the Lorencito Canyon water way.
9.
Red River acted timely and responsively by reporting the release to the
COGCC and CDPHE, by initiating emergency response actions, and by correcting
the condition leading to the release.
10. Red River should be found in violation of Rule
209. for not taking special precautions in drilling the RR No. 18-3E Well to
guard against any loss of artesian water from the stratum in which it occurred
and the contamination of fresh water by objectionable water, oil, or gas.
11. Red River should be found in violation of Rule
324A.a. for not taking adequate precaution to prevent significant adverse
environmental impacts to water resources to the extent necessary to protect
public health, safety and welfare, to protect environmental quality, and to
prevent the unauthorized discharge of E&P waste.
12.
Red River should be found in violation of Rule 324A.b. for violating WQCC’s
Basic Standards and Methodologies for
Surface Water (5 CCR 1002-31, “Regulation 31”), which requires that surface
waters of the state be free from substances attributable to human-caused point
source or non-point source discharge in amounts, concentrations, or
combinations that can settle to form bottom deposits detrimental to beneficial
uses. See Regulation 31 at 31.11(1)(a)(i).
13. Red River should be found in violation of Rule
907.a.(1) for not ensuring that E&P waste was properly stored, handled, or
disposed of to prevent threatened or actual significant adverse environmental
impacts to water, soil or biological
resources.
14. Red River should be found in violation of
Rule 907.a.(2) for not conducting E&P waste management activities and not
constructing and operating facilities to protect the waters of the state from
significant adverse environmental impacts from E&P waste.
15.
Rule 523.c. specifies a base fine of One Thousand dollars ($1,000) for
each day of violation of Rule 209. The RR
No.18-3E Well was spud on October 17, 2006 and cased on October 20, 2006 for four
days of violation of Rule 209. A fine of
Four Thousand dollars ($4,000) for violation of Rule 209. should be assessed
against Red River in accordance with Rule 523.a.
16.
Rule 523.c. specifies a base fine of One Thousand dollars ($1,000) for
each violation of Rule 324A.a. E&P waste
was discharged to waters of the state from October 18, 2006 to October 19, 2006
for two days of violation of Rule 324A.a.
A fine of Two Thousand dollars ($2,000) for violation of Rule 324A.a.
should be assessed against Red River in accordance with Rule 523.a.
17.
Rule 523.c. specifies a base fine of One Thousand dollars ($1,000) for
each day of violation of Rule 324A.b. E&P
waste were discharged to waters of the state from October 18, 2006 to October
19, 2006 for two days of violation of Rule 324A.b. A fine of Two Thousand dollars ($2,000) for
violation of Rule 324A.b. should be assessed against Red River in accordance
with Rule 523.a.
18.
Rule 523.c. specifies a base fine of One Thousand dollars ($1,000) for
each day of violation of Rule 907.a.(1).
E&P waste was discharged to waters of the state on October 18, 2006 and
October 19, 2006 for two days of violation of Rule 907.a.(1). A fine of Two Thousand dollars ($2,000) for
violation of Rule 907.a.(1) should be assessed against Red River in accordance
with Rule 523.a.
19.
Rule 523.c. specifies a base fine of One Thousand dollars ($1,000) for
each day of violation of Rule 907.a.(2).
E&P waste was discharged from the RR No.18-3E well site and deposited
in the Lorencito Canyon water way on October 18, 2006 and October 19, 2006 for
two days of violation of Rule 907.a.(2).
A fine of Two Thousand dollars ($2,000) for violation of Rule 907.a. (2)
should be assessed against Red River in accordance with Rule 523.a.
20.
Rule 523.d. specifies that a fine may be adjusted because of mitigating
factors. The following mitigating
factors should be considered in adjusting the fine for the release of E&P
waste from the RR No.18-3E well site: (1) Red River demonstrated prompt,
effective response to the violations; (2) Red River cooperated with the COGCC
with respect to the violations; and (3) the cost of correcting the violations
reduced the economic benefit to Red River.
21.
The total fine assessed in paragraphs #15 though #19 is Twelve Thousand
dollars ($12,000). The fine should be
decreased by ten percent (10%) because of the mitigating factors enumerated in
paragraph #20, resulting in a recommended fine of Ten Thousand Eight Hundred dollars
($10,800).
22.
Pursuant to Article IX, of the
“Memorandum of Agreement” between the Water Quality Control Division (“WQCD”) of
CDPHE and COGCC, adopted February 15, 2000, COGCC staff conferred with WQCD
enforcement staff in determining the monetary penalty against Red River for
violations of WQCC standards for surface waters. WQCD indicated it agrees with the fine and
the terms of this AOC and will not pursue any additional penalty.
ORDER
NOW,
THEREFORE, IT IS ORDERED, that Red River Ranch Holdings LLC shall be found in violation of Rule 209. for failure to take
special precautions in drilling the Red River Ranch No.18-3E Well, located in
the NW¼ SW¼ of Section 18, Township 35 South, Range 67 West, 6th
P.M., to guard against any loss of artesian water from the stratum in which it
occurred and the contamination of fresh water by objectionable water, oil, or
gas.
IT IS FURTHER ORDERED, that Red
River Ranch Holdings LLC shall be found
in violation Rule 324A.a. for not taking adequate precautions to prevent
significant adverse environmental impacts to water resources to the extent
necessary to protect environmental quality, and to prevent the unauthorized
discharge of E&P waste, as described above, on the Red River Ranch No.18-3E
well site.
IT IS FURTHER ORDERED, that Red
River Ranch Holdings LLC shall be found in violation Rule 324A.b. on the Red River Ranch No.18-3E well site for violating WQCC’s standard that
surface waters of the state shall be free from substances attributable to
human-caused point source or non-point source discharge in amounts, concentrations,
or combinations that can settle to form bottom deposits detrimental to
beneficial uses.
IT IS FURTHER ORDERED, that Red
River Ranch Holdings LLC shall be found
in violation Rule 907.a.(1) for not ensuring that E&P waste was properly
treated, stored, handled, or disposed of to prevent threatened or actual
significant adverse environmental impact, as described above, on the Red River
Ranch No.18-3E well site.
IT IS FURTHER ORDERED, that Red
River Ranch Holdings LLC shall be found
in violation Rule 907.a.(2) for failure to conduct E&P waste management
activities and construct and operate E&P waste facilities to protect the
waters of the state from significant adverse environmental impact, as described
above, on the Red River Ranch No.18-3E well site.
IT IS FURTHER ORDERED, that Red River Ranch Holdings
LLC’s violations of COGCC Rules shall be reduced by ten percent (10%) because
Red River Ranch Holdings LLC demonstrated prompt, effective response to the
violations; it cooperated with the COGCC with respect to the violations; and,
its economic benefit was reduced by the cost of correcting the violations at
the Red River Ranch No. 18-3E well site.
IT IS FURTHER ORDERED, that Red River Ranch Holdings LLC shall be assessed a total fine of Ten Thousand Eight Hundred dollars ($10,800) for the violations described above, which shall be payable within thirty (30) days of the date this order is approved by the Commission.
IT IS FURTHER ORDERED, that the Commission
expressly reserves its right, after notice and hearing, to alter, amend or
repeal any/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.
RECOMMENDED
this day of August 2007.
OIL
AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By_________________________________ Carol
Harmon
Enforcement
Officer
Dated at Suite 801
1120 Lincoln Street
Denver, Colorado 80203
AGREED
to and accepted this _________day of August 2007.
RED
RIVER RANCH HOLDINGS LLC
By
____________________________
Authorized
Signature
____________________________
Print
Full Name
____________________________
Print
Title
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This cause came on for hearing before the Commission
at 9:00 a.m. on November 5, 2007,
Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for the approval of this Administrative Order by
Consent.
ENTERED this________day
of November, 2007, as of November 5, 2007.
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 9, 2007