The EPA and Department of Justice (DOJ) recently announced a $9.4 million settlement with Hilcorp Energy Company resolving Clean Air Act (CAA) and New Mexico Air Quality Control Act (AQCA) violations at the company’s oil and gas production operations in New Mexico. The case is the first of its kind against an oil and gas producer for violations under the CAA and AQCA associated with well completion operations, which is the process of bringing oil or natural gas to the surface after drilling has been completed.
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The EPA alleges Hilcorp conducted 192 well completion operations in Rio Arriba County and San Juan County, New Mexico, between August 2, 2017, and August 1, 2019, where the company unlawfully emitted significant quantities of methane and other volatile organic compounds (VOCs) directly into the atmosphere in violation of the requirements.
“The company utilizes hydraulic fracturing, commonly referred to as fracking, as its method of gas extraction in the San Juan Basin,” states the EPA Hilcorp Settlement webpage. “Once the fracking process is completed, the internal pressure of the rock formation causes fluid known as ‘flowback’ to return to the surface through the wellbore. This fluid contains hydrocarbons, including VOCs and methane, which without recovery or control, are emitted directly to the environment. The applicable state and federal air emissions standards for well completions require operators to recover or control methane and VOC emissions from the flowback.
“At 145 of these well completions, Hilcorp captured none of the gas and instead released into the atmosphere all gas that flowed back following fracking. At the remainder of well completions, Hilcorp captured a portion of the gas and directed it to a flare but did not demonstrate that all green completion options were infeasible. At the remaining 47 well completions, Hilcorp failed to justify routing gas to flare by demonstrating the necessary controls were technically infeasible. Hilcorp also failed to meet reporting requirements related to well completion and flowback operations, in violation of the regulations.”
As a result of these actions, the EPA alleges nearly 2,000 tons of methane and VOCs were illegally released into the atmosphere.
“Federal [CAA] and New Mexico state air regulations require oil and gas producers to capture gas that flows back to the surface following fracking using equipment that can accommodate flowback and to implement a reduced emission completion control, commonly referred to as a green completion,” states an EPA news release. “Producers have several green completion options to choose from. If none are technically feasible, producers may route the captured gas to a pollution control device like a flare.”
“Hilcorp is a large, sophisticated natural gas producer and should know better than to violate [CAA] requirements to capture and control gas produced as a result of fracking,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division in a DOJ press release. “We are committed to upholding the rule of law and holding industry accountable. Today’s settlement importantly includes commitments to make infrastructure upgrades that will result in significant reductions of methane and VOC emissions.”
The state of New Mexico and the federal government will split the civil penalty. Other terms of the settlement include the requirement to employ an EPA-approved third-party auditor to ensure compliance with all applicable CAA and New Mexico AQCA requirements.
Hilcorp must also account for the excess VOC and methane emissions released through improper well completions by replacing, on a faster timeline than federal regulations require, old process control equipment with equipment that doesn’t emit air pollution. This mitigation project will occur on tribal lands of the Jicarilla Apache Nation Reservation in Rio Arriba County and on Navajo Nation Off-Reservation Trust Land in San Juan and Sandoval counties. All of these areas have potential environmental justice concerns.
The additional work Hilcorp agreed to do as part of its settlement terms “will result in the equivalent of over 113,000 tons of reduced carbon dioxide emissions over the next three years, similar to the number of reductions achieved by taking 24,000 cars off the road for one year. The settlement will also eliminate nearly 583 tons of VOC emissions annually,” the DOJ press release adds.
The 30-day comment period on the settlement agreement ends November 22, 2024.