BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
IN THE MATTER OF CHANGES TO THE ) CAUSE NO. 1
RULES AND REGULATIONS OF THE OIL )
AND GAS CONSERVATION COMMISSION ) ORDER NO. 1R-94
OF THE STATE OF COLORADO )
Pursuant to a hearing before the Oil and Gas Conservation Commission on April 19, 2004, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, the Oil and Gas Conservation Commission promulgated amendments to its Rules and Regulations to amend Rules in the 300, 500 and 900 Series. Said Rules should henceforth read as attached Exhibit A.
Attached, as Exhibit B, is a statement giving the basis and purpose of the revisions and additions, and such statements are incorporated herein by reference.
DONE AND PERFORMED by the Oil and Gas Conservation Commission of the State of Colorado this 19th day of April , 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
April 19, 2004
Exhibit A
303. REQUIREMENTS FOR APPLICATION FOR PERMIT-TO-DRILL, DEEPEN, RE‑ENTER, OR RECOMPLETE, AND OPERATE.
[THE FOLLOWING LANGUAGE WILL BE PLACED ON THE APD BY THE DIRECTOR’S SIGNATURE: “BASED ON THE INFORMATION PROVIDED HEREIN, THIS APPLICATION FOR PERMIT-TO-DRILL COMPLIES WITH COGCC RULES AND APPLICABLE ORDERS AND IS HEREBY APPROVED.”]
a. FORM 2. APPLICATION FOR PERMIT-TO-DRILL, DEEPEN, RE-ENTER, OR RECOMPLETE, AND OPERATE.
(1) Approval by Director. Before any person shall commence operations for the drilling or re‑entry of any well, such person shall file with the Director an application on Form 2 for a Permit-to-Drill, pay a filing and service fee established by the Commission (see Appendix III), and obtain the Director's approval before commencement of operations with heavy equipment.
(2) Final agency action. The Director’s approval of a Permit-to-Drill shall be considered final agency action for purpose of judicial review.
(3) Operational conflicts. The Permit-to-Drill shall be binding with respect to any operationally conflicting local governmental permit or land use approval process.
(4) Exemptions. Wells drilled for stratigraphic information only shall be exempt from paying the filing and service fee. The re‑entry of a well in a unitized, storage, or secondary recovery operation shall be exempt from the filing of Form 2 and from paying the filing and service fee. The notice of such intent to re‑enter a well shall be filed on a Sundry Notice, Form 4.
d. Form 2/2A application and copies to local governmental designees.
(1) Drill Site/Access Road Reclamation Form, Form 2A. In addition to the above, an applicant filing a Permit-to-Drill, Form 2, shall also attach a completed Form 2A, except that the Form 2A shall not be required on federal or Indian owned surface lands when a Federal 13 Point Surface Use Plan is included. The Form 2A requires the attachment of a minimum of two (2) color photographs; one (1) of the staked location and one (1) of the existing or proposed access road. Each photograph shall be identified by: date taken, well name, location and direction of view. Permit-to-Drill, Form 2, shall be filed with the Director in duplicate for wells on all private, state and federal surface lands.
(2) Form 2/2A to local governmental designee. A single, informational copy of the Permit-to-Drill, Form 2 and Form 2A and all attachments shall be delivered by the applicant to the local governmental designee(s) of the county or municipal corporation within whose jurisdiction the activity is occurring or is proposed to occur at or before the time of filing with the Director. It shall be the responsibility of the Director to promptly provide the local governmental designee(s) with formal notification of the filing of the Permit-to-Drill, Form 2, by posting the Permit-to-Drill, Form 2, and the posting date on the COGCC website.
(3) Comment period for local governmental designee. Any comments from the local governmental designee concerning the Permit-to-Drill, Form 2, and Form 2A as filed shall be provided to the Director and to the applicant in writing within ten (10) days after the date on which the Permit-to-Drill, Form 2 was posted on the COGCC website by the Director. The Director shall take no action with respect to the Permit-to-Drill, Form 2, prior to the expiration of the ten (10) day comment period, except under the circumstances provided for in Rule 303.j.(1) and (2), or when the Director has received notice from the local governmental designee(s) waiving the ten (10) day comment period. Upon written request by the local governmental designee to the Director received prior to the expiration of the ten (10) day comment period, the local governmental designee shall be granted an extension of up to twenty (20) additional days to consider the application.
(4) Application for hearing by Local Governmental Designee. If, prior to the expiration of the comment period provided herein, including any extension, and after participation in an onsite consultation under Rule 306.a.(3), the local governmental designee files an application for hearing on the Permit-to-Drill, Form 2, under Rule 503.b.(6), alleging significant impacts on public health, safety and welfare, including the environment, the Director shall withhold approval of such permit except that the provisions of Rule 303.k. shall apply.
k. Withholding approval of application for Permit-to-Drill, Form 2.
(1) The Director may withhold approval of any application for Permit-to-Drill, Form 2, for any proposed well when, based on information supplied in a written complaint submitted by any party with standing under Rule 522.a.(1), other than a local governmental designee, or by staff analysis, the Director has reasonable cause to believe the proposed well is in material violation of the Commission’s rules, regulations, orders or statutes, or otherwise presents an imminent threat to public health, safety and welfare, including the environment. Any such withholding of approval shall be limited to the minimum period of time necessary to investigate and dismiss the complaint, or to resolve the alleged violation. If the complaint is dismissed or the matter resolved to the dissatisfaction of the complainant, such person may consult with the local governmental designee pursuant to Rule 303.d.(4).
(2) The Director shall withhold approval of any application for Permit-to-Drill, Form 2, for any proposed well, when a request for a hearing is made by a local governmental designee in accordance with Rules 303.d.(4) and 503.b.(6), unless the local government has been disqualified from making such request under Rule 501.b.
(3) In the event the Director withholds approval of any application for Permit-To-Drill, Form 2, under this Rule 303.k., an operator may ask the Commission to issue an emergency order rescinding the Director’s decision.
4) Any hearing granted pursuant to this Rule 303.k. shall be expedited and the matter shall be heard at the next scheduled Commission hearing, and all parties shall be deemed to have waived any notice requirements to the contrary. The Director shall use best efforts to notify the parties of any such hearing.
l. Suspending approved Permit-To-Drill, Form 2. Prior to the spudding of the well, the Director shall suspend an approved Permit-to-Drill, Form 2, if the Director has reasonable cause to believe that information submitted on the Permit-to-Drill, Form 2 was materially incorrect. Under the circumstances described in Rule 303.j.(1) or (2), an operator may ask the Commission to issue an emergency order rescinding the Director’s decision.
305. NOTICES OF OIL AND GAS OPERATIONS
b. Notices.
4) Final reclamation notice. The following notice requirement shall apply only to final reclamation operations commenced more than thirty (30) days after the completion of a well:
Not less than thirty (30) days before any final reclamation operations are to take place pursuant to Rule 1004., the operator shall notify the surface owner in accordance with paragraph c. below. Final reclamation operations shall mean those reclamation operations to be undertaken when a well is to be plugged and abandoned or when production facilities are to be permanently removed.
308A. COGCC Form 5. DRILLING COMPLETION REPORT
Within thirty (30) days of the setting of production casing, the plugging of a dry hole, the deepening or sidetracking of a well, or any time the wellbore configuration is changed, the operator shall transmit to the Director the Drilling Completion Report, Form 5, and two (2) copies of all logs run, be they mechanical, mud, or other, submitted as one (1) paper copy and, as available, one (1) digital LAS (log ASCII) formatted copy, or a format approved by the Director. Additionally, if drill stem tests, core analyses, or directional surveys are run, they shall be submitted at the same time and together with this completion report. All Sections 1 - 22 (if applicable) and the attachment checklist shall be completely filled out.
310A. COGCC Form 8. MILL LEVY
On or before March 1, June 1, September 1 and December 1 of each year, every producer or purchaser, whichever disburses funds directly to each and every person owning a working interest, a royalty interest, an overriding royalty interest, a production payment and other similar interests from the sale of oil or natural gas subject to the charge imposed by §34‑60‑122 (1) (a) C.R.S., 1973, as amended, shall file a return with the Director showing by operator, the volume of oil, gas or condensate produced or purchased during the preceding calendar quarter, including the total consideration due or received at the point of delivery. No filing shall be required when the charge imposed is zero mill ($0.0000) per dollar value.
The Levy shall be an amount fixed by order of the Commission. The levy amount may, from time to time, be reduced or increased to meet the expenses chargeable against the oil and gas conservation fund. The present charge imposed, as of July 1, 2004, is five tenths of a mill ($0.0005) per dollar value.
312. COGCC Form 10. CERTIFICATE OF CLEARANCE AND/OR CHANGE OF OPERATOR
a. Each operator of any oil or gas well completed after April 30, 1956, shall file with the Director, within thirty (30) days after initial sale of oil or gas a Certificate of Clearance and/or Change of Operator, Form 10, in accordance with the instructions appearing on such form, for each well producing oil or gas or both oil and gas. A Certificate of Clearance shall be filed for any well from which oil, gas or other hydrocarbon is being produced.
A Certificate of Clearance shall be filed within thirty (30) days should the oil transporter (first purchaser) and/or the gas gatherer (first purchaser) change. In addition, within fifteen (15) days of an operator change for any well, a Change of Operator, Form 10, shall be filed with a filing and service fee as set by the Commission. (See Appendix III)
319. ABANDONMENT
b. Shut‑in and Temporary Abandonment.
(1) A well may be shut‑in or temporarily abandoned when completed, upon approval of the Director, for a period not to exceed six (6) months provided the hole is cased or left in such a manner as to prevent migration of oil, gas, water or other substance from the formation or horizon in which it originally occurred. All shut‑in or temporarily abandoned wells shall be closed to the atmosphere with a swedge and valve or packer, or other approved method. The well sign shall remain in place. If an operator requests shut‑in or temporary abandonment status in excess of six (6) months the operator shall state the reason for requesting such extension and state plans for future operation. A Sundry Notice, Form 4, or other form approved by the Director, shall be submitted annually stating the status of the well and plans for future operation.
321. DIRECTIONAL DRILLING
If an operator intends to drill a horizontal or deviated wellbore utilizing controlled directional drilling methods, other than whipstocking due to hole conditions, the plans shall accompany an application for Permit-to-Drill, Form 2. In addition to the information required on the plat in Rule 303.c., the plat shall also show the surface and bottom hole location. If the surface location is in a different section than the bottom hole location, a plat depicting each section is required. Additionally, the proposed directional survey including two (2) wellbore deviation plots, one depicting the plan view and one depicting the side view, shall accompany the application.
Within thirty (30) days of completion the operator shall submit a Drilling Completion Report, Form 5, according to Rule 308., with a copy of the directional survey coordinate listing and the wellbore deviation plots (plan and side views). The survey data shall be provided in a single analysis report with sufficient detail to determine the location of the wellbore from the base of the surface casing to the kick off point and from that point to total depth. It shall be the operator’s responsibility to ensure that the wellbore complies with the setback requirements in Commission orders or rules prior to producing the well.
502. PROCEEDINGS NOT REQUIRING THE FILING OF AN APPLICATION
a. Commission's own motion. The Commission may, on its own motion, initiate proceedings upon any questions relating to conservation of oil and gas or the conduct of oil and gas operations in the State of Colorado, or to the administration of the Act, by notice of hearing or by issuance of an emergency order without notice of hearing. Such emergency order shall be effective upon issuance and shall remain effective for a period not to exceed fifteen (15) days. Notice of an emergency order shall be given as soon as possible after issuance.
b. Variances.
(1) Variances to any Commission rules, regulations, or orders may be granted in writing by the Director without a hearing upon written request by an operator to the Director, or by the Commission after hearing upon application. The operator or the applicant requesting the variance shall make a showing that it has made a good faith effort to comply, or is unable to comply with the specific requirements contained in these rules to secure a waiver or an exception, if any, and that the requested variance will not violate the basic intent of the Oil and Gas Conservation Act.
503. ALL OTHER PROCEEDINGS COMMENCED BY FILING AN APPLICATION
b. Applications to the Commission may be filed by the following applicants:
(6) For purposes of seeking a hearing on a Permit-to-Drill, Form 2, under Rules 303.d. and 303.k.(2), the relevant local government shall be the applicant, and the hearing shall be conducted in similar fashion as is specified in Rule 508.j., k. and l. with respect to a public issues hearing. It shall be the burden of the local government applicant to bring forward evidence sufficient for the Commission to make the preliminary findings specified in subsection j. of Rule 508. at the outset of such hearing.
522. PROCEDURE TO BE FOLLOWED REGARDING ALLEGED VIOLATIONS
c. Order Finding Violation.
(2) If the Director decides not to issue a NOAV, the Commission may conduct a hearing to consider whether to issue an OFV upon twenty (20) days notice to the affected operator under the following circumstances:
A. On the Commission's own initiative if it believes that the Director has failed to enforce a provision of statute, rule, regulation, order, permit or permit condition subject to Commission jurisdiction.
B. On the application of a complainant pursuant to Rule 503.b.(4), provided that such complainant has first made a written request to the Director to issue an NOAV and the Director has determined in writing not to do so. An application for hearing by a complainant shall be filed within forty-five (45) days of the receipt of the Director's written determination.
EXPLORATION & PRODUCTION (E&P) WASTE MANAGEMENT
909. SITE INVESTIGATION, REMEDIATION AND CLOSURE
e. Release of financial assurance. Financial assurance required by Rule 706. may be held by the Director until the required remediation of soil and/or ground water impacts is completed in accordance with the approved workplan, or until cleanup goals are met.
Exhibit B
STATEMENT OF BASIS AND PURPOSE
CAUSE NO. 1, DOCKET NO. 0404-RM-01
300 Series
The 300 Series of the Rules and Regulations of the Oil and Gas Conservation Commission pertain to Drilling, Development, Producing and Abandonment for oil, gas and disposal operations.
The Statutory Authority for the promulgation of these rules is found in:
§34-60-106 (1)(f), C.R.S., provides that “no operations for the drilling of a well for oil and gas shall be commenced without first obtaining a permit from the commission, under such rules and regulations as may be prescribed by the commission . . . .”
§34-60-106 (2)(a), C.R.S., provides that the commission has the authority to regulate “[t]he drilling, producing and plugging of wells and all other operations for the production of oil or gas; . .”
§34-60-106(1)(b), C.R.S., gives the commission the authority to require the making and filing of well logs, directional surveys, and reports on well location, drilling and production.
§34-60-106 (2)(d), C.R.S., gives the commission authority to regulate “[o]il and gas operations so as to prevent and mitigate significant adverse environmental impacts on any air, water, soil or biological resource to the extent necessary to protect public health, safety, and welfare, in consideration of cost-effectiveness and technical feasibility.”
§34-60-122 (1)(a) imposes on the market value at the well of all oil and natural gas produced, saved, and sold or transported from the field where produced a charge not to exceed one and one-half mill on the dollar. The Commission shall by order fix the amount of such charge and may reduce or increase the amount as needed.
§39-29-109.(1)(c)(II) provides for the severance tax trust fund and specifically charges the Commission that “[i]n determining the uses of these monies, the commission shall give priority to uses that reduce industry fees and mill levies.”
§34-60-106 (11), C.R.S., mandates the commission to “promulgate rules and regulations to protect the health, safety and welfare of the general public in the conduct of oil and gas operations.”
Reorganize Rule 303.a. and add clarifying language.
Amend Rule 303.a.(2) to define when an Application for Permit-to-Drill is final for purposes of judicial review.
Amend Rule 303.a.(3) to insert “operationally” in reference to conflicting local governmental permits or land use approval processes.
Reorganize Rule 303.d. and add clarifying language.
Amend Rule 303.d.(1) to change the number of Applications for Permit-to-Drill to be submitted and to change “patented” lands to “private” lands.
Amend Rule 303.d.(2) so that the official copy of an Application for Permit-to-Drill is posted on the COGCC website for the local governmental designee.
Amend Rule 303.d.(3) to clarify that the 10 day comment period on the Application for Permit-to-Drill by the local governmental designee begins on the date posted to the COGCC website.
Reorganize Rule 303.k. and add clarifying language.
Amend Rule 303.k.(1) to clarify who may file a written complaint prior to the issuance of an Application for Permit-to-Drill, to include rule violations as another basis for the withholding of an Application for Permit-to-Drill and to specify that withholding approval shall be limited to a minimum time.
Add new Rule 303.l. to describe the basis for which an approved Application for Permit-to-Drill can be suspended and when an operator can ask for an emergency hearing.
Delete Rule 305.b.(4)B.
Amend Rule 308A. to require digital logs to be submitted when available.
Amend Rule 310A. to decrease the mill levy paid by operators.
Amend Rule 312.a. to delete one of the circumstances in which a Certificate of Clearance must be filed.
Delete Rule 312.g. because this information is available on the COGCC website for local governmental designees.
Amend Rule 319.b.(1) to delete the requirement to send Sundry Notices to local governmental designees because this information is available on the COGCC website.
Amend Rule 321. to delete the language regarding submittal of changes to an approved Application for Permit-to-Drill.
500 Series
The 500 Series Rules and Regulations of the Oil and Gas Conservation Commission describe the Rules of Practice and Procedure before the Commission.
The Statutory Authority for the promulgation of these rules is found in:
§34-60-105 (1), C.R.S., provides that the commission has the “power to make and enforce rules, regulations, and orders pursuant to this article . . . and to do whatever may reasonably be necessary to carry out the provisions of this article.”
§34-60-108 (1), C.R.S., mandates that “the commission shall prescribe rules and regulations governing the practice and procedure before it.”
Amend Rule 502.b. to clarify the requirements needed to apply for a variance.
Amend Rule 503.b.(6) to remove an incorrect title.
Amend Rule 522.c.(2).B. to clarify the time in which a complainant may file for a hearing.
900 Series
The 900 Series of the Rules and Regulations of the Oil and Gas Conservation Commission pertain to exploration and production waste management regulations.
The Statutory Authority for the promulgation of these rules is found in:
§34-60-106.(1)(c), C.R.S., as amended, gives the commission authority to prevent the pollution of fresh water supplies by oil, gas, saltwater or brackish water.
§34-60-106.(11), C.R.S., gives the commission authority to promulgate rules and regulation to protect the health, safety and welfare of the general public in the drilling, completion and operation of oil and gas wells and production facilities.
§34-60-106.(13), C.R.S., gives the commission authority to require every operator to provide assurance that it is financially capable of fulfilling certain obligations under the Oil and Gas Conservation Act.
Amend Rule 909.e. to include soil as an additional item that must be remediated prior to release of financial assurance.