BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

IN THE MATTER OF VIOLATION OF THE RULES AND               )        CAUSE NO. 1

REGULATION OF THE OIL AND GAS CONSERVATION            )                   

COMMISSION BY PETROGLYPH ENERGY, INC.,                      )        ORDER NO. 1C-5

HUERFANO COUNTY, COLORADO                                               )                   

 

CEASE AND DESIST ORDER

 

This Cease and Desist Order (“Order”) is issued by the Director of the Colorado Oil and Gas Conservation Commission (“Commission”) pursuant to §34-60-121(5)(a), C.R.S. (2007). 

 

FINDINGS

 

1.  On October 16, 2007, the Director of the Colorado Oil and Gas Conservation Commission (“Commission” or “COGCC”) issued Cease and Desist Order No. 1C-4 (“Order No. 1C-4”) to Petroglyph Energy, Inc. (“Petroglyph”). 

 

2.  The findings of Order No. 1C-4 are incorporated in this Order by reference.

 

3.  Pursuant to Order No. 1C-4, Petroglyph was enjoined from returning to production its 52 gas wells (listed in Attachment 1) in Huerfano County for a period of 30 days (through November 15, 2007) to allow Petroglyph and the COGCC staff additional time to analyze data and discuss open issues related to methane impacts to a shallow aquifer (Poison Canyon Formation) and domestic water wells caused by Petroglyph’s operations in the deeper coal beds of the Vermejo Formation.

 

4.  The data had been collected in August and September 2007 by Petroglyph and its third party contractor, Norwest Questa Engineering Corporation (“Questa”), pursuant to a methane investigation, monitoring, and mitigation program (“MIMMP”) developed by Petroglyph, Questa, and the COGCC staff to determine the migration pathways into and mitigation methods for the impacted aquifer and domestic water wells in south-central Huerfano County. 

 

5.  Questa’s report, dated October 10, 2007, contained results of the MIMMP and recommendations for methane monitoring and mitigation at the surface, in the shallow aquifer, and in the deeper coalbed formations.  Questa’s investigations did not identify the migration pathway from the coalbeds to the shallow aquifer but speculated that further investigations might reveal a man-made or natural conduit.  Questa’s recommendations included returning Petroglyph’s wells to production in order to facilitate identification and plugging of the conduit.

 

6.  Based on Questa’s and Petroglyph’s extensive investigations to date, the COGCC staff believes that the conduits for methane migration are most likely the naturally occurring igneous dikes and, perhaps, fractures associated with the dikes and that the potential for plugging these naturally occurring conduits is very low.  As a result, returning the wells to production would continue to result in migration of methane into the Poison Canyon Formation and the water wells completed in it.

 

7.  Questa’s recommendations for activities to be conducted, if Petroglyph’s wells are returned to production, do not address a number of COGCC staff’s concerns about protecting public health, safety, and welfare.  These include but are not limited to the following: lack of an emergency response plan; additional and more rigorous monitoring of the water wells’ ventilation systems and all water wells in the area of investigation (“AOI”) to rapidly detect changes in the concentration and presence of methane; lack of hydrologic modeling data on which to base the remediation strategy; monitoring and mitigating impacted water wells that are outside the AOI; and monitoring gas seepage at the outcrop, coal mines, and water wells updip of the AOI.     

 

8.  COGCC staff believes that the existing injunction on production of Petroglyph’s wells should continue and recommends that the Director issue another cease and desist order, to take effect immediately upon expiration of Order No. 1C-4, enjoining Petroglyph from returning the wells to production until Petroglyph applies for a public hearing before the Commission and demonstrates to the Commission’s satisfaction that it can return its wells to production in a manner that protects public health, safety and welfare.

 

9.  COGCC staff believes that the findings set forth in Order No. 1C-4, which are incorporated in this Order by reference, and the uncertain results of investigations at this time continue to constitute an emergency situation.

 

ORDER

 

NOW, THEREFORE, IT IS ORDERED, that in accordance with §34-60-121(5)(a), C.R.S. (2007), the Director of the Colorado Oil and Gas Conservation Commission hereby orders Petroglyph Energy, Inc. to cease and desist returning to production its 52 wells (listed in Attachment 1) in Huerfano County immediately from the expiration of Order No. 1C-4 until such time as Petroglyph applies for and receives a public hearing before the Commission and demonstrates to the Commission’s satisfaction that it can return its wells to production in a manner that protects public health and safety.

 

IT IS FURTHER ORDERED, that the findings set forth in emergency Order No. 1C-4, which are incorporated in this Order by reference, and the uncertain results of investigations at this time constitute the continuation of an emergency situation in the following area of Huerfano County, making it potentially threatening to public health, safety and welfare for Petroglyph Energy, Inc. to return to production its wells (listed in Attachment 1):

 

Township 29 South, Range 67 West, 6^th P.M.

Sections 1, 2, 3, 4, 9, 10, 11, 14, and 15

 

Township 28 South, Range 67 West, 6^th P.M.

Sections 34, 35, and 36

 

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 and COGCC Rule 522.d 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 unless the operator protests.

 

                        EXECUTED this                     day of November, 2007.

 

                                                                         

                                                                          IN THE NAME OF THE STATE OF COLORADO

                                                                         OIL AND GAS CONSERVATION COMMISSION

 

 

 

 

                                                                         By                                                                                                                              

        David S. Neslin, Interim Director

 

Dated at Suite 801

1120 Lincoln St.

Denver, Colorado 80203

November 14, 2007

ATTACHMENT 1

 

Petroglyph’s Gas Production Wells in Huerfano County

 

Well Name	API Code	Section	Township	Range	Qtr1	Qtr2
ANDREATTA 13-12	05055061690000	13	29S	67W	NW	SW
ANSELMO 07-05	05055062420000	7	29S	66W	SW	NW
ANSELMO 07-12	05055062650000	7	29S	66W	NW	SW
ANSELMO 07-13	05055062680000	7	29S	66W	SW	SW
ANSELMO 12-16	05055062660000	12	29S	67W	SE	SE
HURTADO 13-04	05055061680000	13	29S	67W	NW	NW
LIVELY 02-02	05055061560000	2	29S	67W	NE	NW
LIVELY 02-03	05055061570000	2	29S	67W	NE	NW
LIVELY 02-12	05055061510000	2	29S	67W	NW	SW
LIVELY 03-01	05055061600000	3	29S	67W	NE	NE
LIVELY 03-04	05055061580000	3	29S	67W	NW	NW
LIVELY 03-10	05055061460000	3	29S	67W	NW	SE
LIVELY 03-12	05055061470000	3	29S	67W	NW	SW
LIVELY 10-04	05055061490000	10	29S	67W	NW	NW
LIVELY 10-12	05055061500000	10	29S	67W	NW	SW
LIVELY 35-07	05055061530000	35	28S	67W	SW	NE
LIVELY 35-09	05055061540000	35	28S	67W	NE	SE
LIVELY 35-11B	05055061590000	35	28S	67W	NE	SW
MARTINEZ 05-12	05055062670000	5	29S	66W	NW	SW
MARTINEZ 06-09	05055062730000	6	29S	66W	NE	SE
MARTINEZ 06-15	05055062720000	6	29S	66W	SW	SE
MARTINEZ 06-16	05055062570000	6	29S	66W	SE	SE
MARTINEZ 07-01	05055062440000	7	29S	66W	NE	NE
MARTINEZ 07-02	05055061630000	7	29S	66W	NW	NE
MARTINEZ 07-03	05055062560000	7	29S	66W	NE	NW
MARTINEZ 07-06	05055062430000	7	29S	66W	SE	NW
MARTINEZ 07-07	05055062580000	7	29S	66W	SE	NE
MARTINEZ 07-09	05055061640000	7	29S	66W	NE	SE
MARTINEZ 07-10	05055062740000	7	29S	66W	NW	SE
MARTINEZ 07-11	05055061720000	7	29S	66W	NE	SW
MARTINEZ 07-14	05055062550000	7	29S	66W	SE	SW
MARTINEZ 07-15	05055062540000	7	29S	66W	SW	SE
MARTINEZ 07-16	05055062700000	7	29S	66W	SE	SE
MARTINEZ 08-04	05055062530000	8	29S	66W	NW	NW
MARTINEZ 12-09	05055061670000	12	29S	67W	NE	SE
PASSOW 22-08	05055062020000	22	28S	67W	SE	NE
ROHR 04-10	05055061660000	4	29S	67W	NW	SE
ROHR 04-14	05055062910000	4	29S	67W	SE	SW
ROHR 05-16	05055062880000	5	29S	67W	SE	SE
ROHR 08-01	05055062920000	8	29S	67W	NE	NE
ROHR 09-04	05055062900000	9	T29S	R67W	NW	NW
ROHR 09-05	05055062890000	9	29S	67W	SW	NW
ROHR 09-10	05055061650000	9	29S	67W	NW	SE
STATE 10Wb	05055062610000	36	28S	67W	SE	NE
STATE 2W	05055062140000	36	28S	67W	NW	NW
STATE 36-02	05055061790000	36	28S	67W	NW	NE
STATE 36-05	05055061610000	36	28S	67W	SW	NW
STATE 36-11	05055061550000	36	28S	67W	NW	SW
STATE 3W	05055062150000	36	28S	67W	NE	NW
STATE 4W	05055062160000	36	28S	67W	NE	NW
STATE 7W	05055062190000	36	28S	67W	SW	NE
STATE 9W	05055062210000	36	28S	67W	SW	NE