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 COLORADO OIL AND GAS CONSERVATION COMMISSION BY SCHNEIDER ENERGY SERVICES, INC., WASHINGTON COUNTY, COLORADO

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CAUSE NO. 1V DOCKET NO. 150900169 ORDER NO. 1V-523 TYPE:  ENFORCEMENT

ADMINISTRATIVE ORDER BY CONSENT

(Pursuant to Rule 522.e.(1) of the Rules and Regulations of the

Colorado Oil and Gas Conservation Commission, 2 CCR 404-1)

FINDINGS

            1.         Schneider Energy Services, Inc. (“Schneider”) (Operator No. 76840) is the operator of the Ward & Son 2 (API No. 05-121-09924) (“Well”) in Washington County, Colorado. 

            2.         Commission records indicate that the Well has been shut-in since June, 2005.

            3.         On September 28, 2007, Commission Staff inspected the Well (Document No. 200119974) and noted that the well was temporarily abandoned.

4.         Schneider last performed a successful Mechanical Integrity Test (“MIT”) on the Well on April 23, 2008.

5.         On November 14, 2014, Commission Staff issued a Notice of Alleged Violation (“NOAV”) (No. 2465139) to Schneider for multiple violations of the following COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”), including:

a. Rule 319.b. (Abandonment, Temporary Abandonment)

b. Rule 326.c.(2) (Mechanical Integrity Testing, Temporarily Abandoned Wells)

6.         On January 13, 2015, Colorado Oil and Gas Conservation Commission (“Commission” or “COGCC”) Staff inspected the Well (Field Inspection Report No. 673709305).  During the inspection, Staff observed that the Well was still temporarily abandoned as there was no equipment at the wellhead. The Well also failed a MIT during the inspection.

            7.         Rather than repair the well, Schneider elected to plug it.  On January 21, 2015, Schneider submitted a Form 6 – Well Abandonment Report indicating the well had been plugged on January 15, 2015 (Document No. 400777283).

            8.         Following factual investigation and legal review of the violations alleged in the NOAV, Hearing Staff now asserts Schneider has committed the following violations:

a.         One, 10-day violation of Rule 319.b (Abandonment, Temporary Abandonment) for the failure to request extended temporary abandonment status. 

b.         One, 10-day violation of Rule 326.c.(2) (Mechanical Integrity Testing, Temporarily Abandoned Wells) for the failure to perform a MIT on the Well on five year intervals from the date of the April 23, 2008 MIT; and

9.         Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Hearings Staff calculated a penalty of $20,000 for this violation. The penalty calculation is based on the following:

NOAV	Rule	Base Penalty	Start Date	End Date	Days	Penalty
2465139	319.b	$1,000	9/28/2007	1/15/2015	2,666	$10,000
2465139	326.c.(2)	$1,000	4/23/2013	1/15/2015	632	$10,000
Grand Total						$20,000

a. The violations began prior to June 6, 2014, the effective date of HB 14-1356, and therefore the penalty for these violations was calculated pursuant to the version of Rule 523 in effect at the time of the violation, with the statutory maximum being applied given the length of non-compliance at this Well.

b. No aggravating factors;

c. No mitigating factors;

d. No pattern of violation; and

e. No gross negligence or knowing and willful misconduct.

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 Schneider Energy Services, Inc. agrees to settle the NOAV on the following terms and conditions:

I. Schneider is found in violation of Rule 319.b. and 326.c.(2).

II. Schneider will be assessed a penalty of $20,000.

III. Schneider will pay $20,000 within 35 days after this AOC is mailed by the Commission.

RECOMMENDED this ___ day of July, 2015.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By

     Kyle W. Davenport, Assistant Attorney General 

AGREED TO AND ACCEPTED this   __ day of July, 2015.

                                                                                                                                                                                                                                                            SCHNEIDER ENERGY SERVICES, INC.

                        By

                             Signature of Authorized Company Representative

            ____________                                                        

                       Print Signatory Name

            ____________                                                                                             Title

ORDER

HAVING CONSIDERED the Agreement between the Director and Schneider Energy Services, Inc. to resolve the NOAV, the COMMISSION ORDERS:

1.         Schneider is found in violation of Rule 319.b. and 326.c.(2)

2.         Schneider will be assessed a penalty of $20,000.

3.         Schneider will pay $20,000 within 35 days after this AOC is mailed by the Commission.

4.         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.

5.         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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ENTERED this ___ day of September, 2015 as of the 14 day of September, 2015.

                                                            OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

                                                            By 

                                                                                    Julie Murphy, Secretary