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 VITRUVIAN EXPLORATION, LLC, MOFFAT COUNTY, COLORADO |
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CAUSE NO. 1V
DOCKET NO. 150700354
TYPE: ENFORCEMENT
ORDER NO. 1V-514 |
ADMINISTRATIVE ORDER BY CONSENT
(Pursuant to Rule 522.e of the Rules and Regulations of the
Colorado Oil and Gas Conservation Commission, 2 CCR 404-1)
FINDINGS
1. Vitruvian Exploration, LLC (“Vitruvian”) (Operator No. 10026) is the operator of the Argo Well # 33-10 (API # 05-081-07087), the Argo Well #33-16 (API # 05-081-07089), and the Aries Well #34-12 (API # 05-081-07088) located in Moffat County (the “Wells”). The Wells were all plugged and abandoned prior to 2008.
Reclamation NOAVs
2. COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule”), Rule 1004.a (Final Reclamation), states that final reclamation of well sites and associated facilities is not complete until the following conditions are met: “all pits, mouse and rat holes and cellars shall be backfilled. All debris, abandoned gathering line risers and flowline risers, and surface equipment shall be removed within three (3) months of plugging a well. All access roads to plugged and abandoned wells and associated production facilities shall be closed, graded and recontoured. Culverts and any other obstructions that were part of the access road(s) shall be removed. Well locations, access roads and associated facilities shall be reclaimed.” It further states that “[a]ll other equipment, supplies, weeds, rubbish, and other waste material shall be removed.”
3. On February 15, 2015, COGCC Environmental Protection Specialist Kris Neidel performed an inspection at the Argo Well #33-16 (Doc. # 669300179). Mr. Neidel determined that although the well was plugged and abandoned in August 2008, the well had not passed final reclamation because deadmen were still in place, trash and debris were on location, and visible flowline risers remained on the site.
4. On February 19, 2015, Mr. Neidel performed an inspection at the Argo Well #33-10 (Doc. # 669300178). Mr. Neidel determined that although the well was plugged and abandoned in July 2005, the well had not passed final reclamation because visible flowline risers remained on the site and because the location did not have adequate stormwater drainage.
5. On February 19, 2015, Mr. Neidel performed an inspection at the Aries Well #34-12 (Doc. # 669300181). Mr. Neidel determined that although the well was plugged and abandoned in August 2008, the well had not passed final reclamation because deadmen were still in place, trash and debris were on location, and visible flowline risers remained on the site.
6. On May 11, 2015, Reclamation Supervisor Denise Arthur issued NOAV Nos. 200429994, 200430002, and 200430004 to Vitruvian, alleging violations of Rule 1004. As of May 13, 2015, when this action commenced, Vitruvian had not submitted plans to Commission Staff describing how Vitruvian would reclaim the Wells in order to comply with Rule 1004.
Enforcement Proceeding
7. During negotiations with Enforcement Staff, Vitruvian provided documentation indicating that it ceased operations on or about December 31, 2013, and that it has insufficient revenues to pay for the reclamation work or pay any penalties related to this matter.
8. Vitruvian is willing to permit the entry of this order, imposing a penalty, ordering a compliance deadline and claiming Vitruvian’s financial assurance, so that the reclamation work can proceed with those funds.
9. COGCC records contain the following information with respect to Vitruvian’s financial assurance:
COMPANY
DETAIL REPORT
for Surety ID: 2005-0022
VITRUVIAN EXPLORATION LLC - #10026
4 WATERWAY WAY SQUARE
THE WOODLANDS , TX 77380
USA
SURETY DETAIL INFORMATION
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Surety ID: |
2005-0022 |
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Status: |
ACTIVE |
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Operator Number: |
10026 |
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Bond Amount: |
$30,000.00 |
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Instrument: |
INSURANCE |
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Instrument Number: |
B001443 |
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Coverage: |
BLANKET |
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Bond Type: |
PLUGGING |
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Limitation: |
99 |
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Deposit Number: |
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PDPA Number: |
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Received Date: |
3/10/2005 |
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Approved Date: |
3/10/2005 |
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Maturity Expire Date: |
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FA Provider Number: |
10028 |
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FA Provider Name: |
U S SPECIALTY INSURANCE COMPANY |
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Deposit Date: |
|
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Release Request Date: |
12/16/2014 |
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Release Date: |
N/A |
10. Following factual investigation and legal review of the violations alleged in the NOAVs referenced above, Enforcement Staff asserts Vitruvian has committed the following violations:
|
NOAV No. |
Rule |
Penalty Act and Class/Impact |
Base Penalty |
Start Date |
End Date |
Days |
Gross Penalty |
Duration Adjusted Penalty |
|
200429994 |
1004 |
New Class 2/Minor |
$2,500 |
2/19/15 |
6/05/15 |
106 |
$265,000 |
$47,100 |
|
200430002 |
1004 |
New Class 2/Minor |
$2,500 |
2/15/15 |
6/05/15 |
110 |
$275,000 |
$47,500 |
|
200430004 |
1004 |
New Class 2/Minor |
$2,500 |
2/19/15 |
6/05/15 |
106 |
$265,000 |
$47,100 |
|
Totals |
$805,000 |
$141,700 |
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11. Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy (“EPP”), Enforcement Staff calculated a penalty based on the following.
a. Initially, Enforcement Staff calculated a penalty of $805,000 for these violations. This penalty amount results largely from the duration of the violations and staff does not believe it appropriately reflects the nature of the violations. Consequently, staff applied the Violation Duration Matrix from the EPP, which results in a penalty amount of $141,700. Staff believes this penalty is appropriate for the nature of the violations.
b. The violations began after the effective date of HB 14-1356. The penalty for these violations has been calculated pursuant to the revised version of § 34-60-121, C.R.S., with reference to the revised Rules 522 and 523 for guidance;
c. The violations were on-going at the relevant inspection dates so those dates were used as penalty start dates. For purposes of calculating a penalty end date in this AOC the date the AOC was agreed to (June 5, 2015) was used;
d. No aggravating factors apply;
e. No mitigating factors apply;
f. No pattern of violation exists; and
g. No gross negligence or knowing and willful misconduct exists.
AGREEMENT
NOW, THEREFORE, based on the Findings and pursuant to Rule 522.b.(3), and the Commission’s Enforcement and Penalty Policy, the Director proposes and Vitruvian agrees to settle the NOAVs on the following terms and conditions:
1. Vitruvian is in violation of Rule 1004, as described above.
2. Vitruvian is assessed a total penalty of $141,700 for these violations, which will be due 30 days after this Order is mailed by the Commission.
3. Vitruvian is ordered to return to compliance with Rule 1004 at the Argo Well # 33-10 (API # 05-081-07087), the Argo Well #33-16 (API # 05-081-07089), and the Aries Well #34-12 (API # 05-081-07088), within 30 days after this Order is mailed by the Commission.
4. If Vitruvian fails to pay the penalty and return to compliance within 30 days, the Commission authorizes COGCC Staff to foreclose Vitruvian’s existing $30,000 financial assurance for these wells, described above, and claim both the principal and any accrued, but undisbursed, interest that may exist, supplemented as may be necessary by funds from the Oil and Gas Conservation and Environmental Response Fund, to:
a. Remediate conditions that threaten to cause, or that actually cause, environmental impacts at oil and gas locations operated by Vitruvian; and
b. Reclaim all well sites and associated facilities operated by Vitruvian.
5. All equipment and appurtenances related to Vitruvian’s operations, if any, shall become property of the Commission should COGCC Staff initiate any of the activities described in the preceding paragraph. COGCC Staff is authorized to dispose of such equipment and appurtenances as it sees fit, provided that any proceeds from the disposition of the assets will be applied to any work undertaken by COGCC Staff.
6. Vitruvian, or its successors or assigns, remain responsible for complying with this Order, including the penalties imposed, in the event Vitruvian is revived or recapitalized or there is a sale of any well sites or associated facilities operated by Vitruvian.
7. Vitruvian, or its successors or assigns, shall repay any funds expended by the Commission from the Oil and Gas Conservation and Environmental Response Fund for any work undertaken by COGCC Staff in reclaiming the well sites and associated facilities if Vitruvian is revived or recapitalized or there is a sale of any well sites or associated facilities operated by Vitruvian.
8. Vitruvian’s Operator Number (No. 10026) is forfeited, Vitruvian’s Form 1 (Document No. 1662585) is rescinded, and Vitruvian’s right to conduct oil and gas operations in the state of Colorado is revoked.
9. In no event shall Ed Donahue, authorized person of Vitruvian, have any personal liability for the compliance requirements or penalty ordered above.
RECOMMENDED this day of , 2015.
OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
By
Jeremy I. Ferrin, Enforcement Officer
AGREED TO AND ACCEPTED this ______day of , 2015
VITRUVIAN EXPLORATION COMPANY, LLC
Ed Donahue, on behalf of former Vitruvian Exploration, LLC
ORDER
HAVING CONSIDERED the Agreement between the Director and Vitruvian and to resolve the NOAVs, the COMMISSION ORDERS:
1. Vitruvian is in violation of Rule 1004, as described above.
2. Vitruvian is assessed a total penalty of $141,700 for these violations, which will be due 30 days after this Order is mailed by the Commission.
3. If Vitruvian fails to pay the penalty and return to compliance within 30 days, the Commission authorizes COGCC Staff to foreclose Vitruvian’s existing $30,000 financial assurance for these wells, described above, and claim both the principal and any accrued, but undisbursed, interest that may exist, supplemented as may be necessary by funds from the Oil and Gas Conservation and Environmental Response Fund, to:
a. Remediate conditions that threaten to cause, or that actually cause, environmental impacts at oil and gas locations operated by Vitruvian; and
b. Reclaim all well sites and associated facilities operated by Vitruvian.
4. All equipment and appurtenances related to Vitruvian’s operations, if any, shall become property of the Commission should COGCC Staff initiate any of the activities described in the preceding paragraph. COGCC Staff is authorized to dispose of such equipment and appurtenances as it sees fit, provided that any proceeds from the disposition of the assets will be applied to any work undertaken by COGCC Staff.
5. Vitruvian, or its successors or assigns, remain responsible for complying with this Order, including the penalties imposed, in the event Vitruvian is revived or recapitalized or there is a sale of any well sites or associated facilities operated by Vitruvian.
6. Vitruvian, or its successors or assigns, shall repay any funds expended by the Commission from the Oil and Gas Conservation and Environmental Response Fund for any work undertaken by COGCC Staff in reclaiming the well sites and associated facilities if Vitruvian is revived or recapitalized or there is a sale of any well sites or associated facilities operated by Vitruvian.
7. Vitruvian’s Operator Number (No. 10026) is forfeited, Vitruvian’s Form 1 (Document No. 1662585) is rescinded, and Vitruvian’s right to conduct oil and gas operations in the state of Colorado is revoked.
8. In no event shall Ed Donahue, authorized person of Vitruvian, have any personal liability for the compliance requirements or penalty ordered above.
9. Payment of the penalty pursuant to this AOC does not relieve Vitruvian of its obligations to complete corrective actions set forth in the NOAVs, as may be amended or modified by COGCC Staff.
10. Entry of this Order constitutes final agency action for purposes of judicial review as of the date this order is mailed by the Commission. For all other purposes, this Order is effective as of the date of approval by the Commission.
11. The Commission expressly reserves its right after notice and hearing, to alter, amend, or repeal any and/or all of the above orders.
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OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By _
Julie Murphy, Secretary