One of the Permian Basin’s largest oil and gas operators agreed to spend more than $6 million to address air pollution concerns in southeast New Mexico, after environmentalists threatened to sue the company last year for alleged violations of federal law at facilities in the Carlsbad area.
Occidental Petroleum (Oxy) filed a settlement agreement Tuesday with Santa Fe-based WildEarth Guardians (WEG), agreeing to spend $5.5 million to reduce emissions at its facilities, pay a $500,000 penalty and invest another $500,000 in local air quality projects.
The settlement filed in U.S. District Court for the District of New Mexico stemmed from a November 2021 suit brought by WildEarth Guardians, alleging the company was in violation of the Clean Air Act at a natural gas compression facility and tank battery near Carlsbad.
In that suit, WildEarth Guardians, citing its own research of alleged emissions events at Occidental’s facilities, estimated the company could be liable for up to $350 million in penalties.
The group’s complaints were in response to flaring, or the burning of excess natural gas, along with the venting or release of greenhouse gases like methane – a main component of extracted natural gas.
In signing the agreement, Occidental admitted no wrongdoing, a spokesperson said, but agreed to operational changes to limit both venting and flaring at facilities throughout the region.
After it was agreed to by both parties, the settlement will be finalized when signed by a federal judge.
“We believe the facilities in question received appropriate permits, and as noted in the Consent Decree, Oxy has denied WEG’s allegations,” said Occidental spokesperson Jennifer Brice. “As part of our agreement with WildEarth Guardians, we look forward to working with the communities in Southeast New Mexico on public health improvement projects.”
She said the company intended to use new technologies to improve gas capture, replacing gas driven valves with lower-emission electric components, converting facilities to tankless operations and increasing leak detection.
Brice said the company was already working to reduce emissions in response to recent regulations enacted by two New Mexico State agencies.
The New Mexico Environment Department earlier this year enacted new rules to increase leak detection and repair and reporting requirement for emissions throughout the oil and gas supply chain, aiming to reduce the release of chemicals like volatile organic compounds (VOCs) that are known to form cancer-causing, smog-inducing, ground-level ozone.
That followed last year’s imposition of emission controls at the State’s Energy, Minerals and Natural Resources Department, calling for operators throughout the state to cut emissions by 98 percent by 2026 while banning flaring except in emergencies.
Meanwhile, the federal Environmental Protection Agency was considering designating the entire Permian Basin region, both in Texas and New Mexico, in violation of federal air quality standards which could slow permitting and reduce oil and gas drilling in the region.
“Oxy is committed to responsible environmental performance and applying innovative technologies proactively to reduce flaring and emissions,” Brice said. “We also have a history of collaborating with environmental organizations that share a commitment to minimizing emissions and support the new methane and ozone rules in New Mexico.”
Climate and Energy Program Director Jeremy Nichols with WildEarth Guardians said the State and EPA lacked the resources to fully enforce their own rules, but that the settlement should show oil and gas companies that they still must comply with environmental laws.
The initial legal complaint was filed under a provision in the Clean Air Act that allows citizens to call for enforcement in federal court, a move Nichols said was needed amid what he called a lacking government response.
“With this agreement, we hope to send a message to the oil and gas industry that just because the state of New Mexico or the EPA aren’t enforcing clean air laws, doesn’t mean you won’t be held accountable,” Nichols said.
“While the New Mexico Environment Department or the EPA might turn their backs on illegal air pollution, that won’t prevent us from doing our job as advocates for clean air, public health, and a safe climate.”
Attorney with WildEarth Guardians Daniel Timmons said the agreement addressed alleged violations but would also prevent Occidental from future air pollution events throughout its New Mexico operations.
As oil and gas operations continued to grow in the Permian Basin, which spans southeast New Mexico and West Texas, the region became the U.S.’ busiest oilfield producing about 5 million barrels a day – almost half of the nation’s total crude output of about 11 million barrels a day, according to data from the Energy Information Administration.
“This is an extremely comprehensive agreement that doesn’t just resolve outstanding violations, it lays the groundwork to ensure Oxy doesn’t violate again,” Timmons said. “With air pollution plaguing the skies of the Permian Basin, this is critical progress for clean air.”
Adrian Hedden can be reached at 575-628-5516, [email protected] or @AdrianHedden on Twitter.