The company will expedite the replacement of outdated process control equipment with non-polluting alternatives, ahead of the timeline mandated by federal regulations. This mitigation effort will take place on the Tribal lands of the Jicarilla Apache Nation Reservation in Rio Arriba County, as well as on Navajo Nation Off-Reservation Trust Land in San Juan and Sandoval counties, areas that face potential environmental justice issues.
The Justice Department, along with the Environmental Protection Agency (EPA) and the New Mexico Environment Department (NMED), has announced a settlement with Hilcorp Energy Company regarding violations of the Clean Air Act and New Mexico state laws at its oil and gas production sites in New Mexico.
According to a press release, the settlement with Hilcorp will pay a civil penalty of $9.4 million due to its failure to minimize emissions during well completion activities. This penalty will be divided between the federal government and the State of New Mexico. Additionally, Hilcorp is required to hire a third-party auditor approved by the EPA to ensure adherence to all relevant Clean Air Act and New Mexico Air Quality Control Act regulations.
“Oil and gas production results in significant air pollution, including emissions of methane that are one of the leading sources of near-term climate change, which makes today’s settlement with Hilcorp Energy a huge win for the environment and the planet,” said Assistant Administrator David M. Uhlmann of EPA’s Office of Enforcement and Compliance Assurance. “EPA is requiring Hilcorp to pay a $9.4 million penalty and make substantial investments in Clean Air Act compliance, which will reduce climate damaging emissions and improve air quality for all New Mexico residents, including communities with environmental justice concerns.”
Furthermore, Hilcorp must address the excess emissions of volatile organic compounds (VOCs) and methane that resulted from improper well completions. The company will expedite the replacement of outdated process control equipment with non-polluting alternatives, ahead of the timeline mandated by federal regulations. This mitigation effort will take place on the Tribal lands of the Jicarilla Apache Nation Reservation in Rio Arriba County, as well as on Navajo Nation Off-Reservation Trust Land in San Juan and Sandoval counties, areas that face potential environmental justice issues.
The actions Hilcorp will undertake as part of this agreement are expected to lead to a reduction of over 113,000 tons of carbon dioxide emissions over the next three years, which is comparable to removing 24,000 cars from the roads for a year. Additionally, the settlement will result in the elimination of nearly 583 tons of VOC emissions each year.
“This settlement holds one of the San Juan Basin's largest polluters accountable for their contribution to climate change and ozone pollution,” said Secretary James Kenney of the New Mexico Environment Department. “If we want to make New Mexico’s air safe for future generations then Houston-based Hilcorp Energy Corporation executives need to step up their game and comply with federal and state rules."
This case marks the first instance of addressing violations of the Clean Air Act's New Source Performance Standards related to well completions after hydraulic fracturing, commonly known as "fracking."
The Federal Clean Air Act, along with New Mexico's state air regulations, mandates that oil and gas companies capture gas that returns to the surface after fracking. This must be done using equipment designed for flowback and by implementing reduced emission completion controls, often known as green completions. Producers have various green completion methods available to them. If none of these methods are technically viable, they are permitted to direct the captured gas to a pollution control device, such as a flare.
Out of these completions, Hilcorp failed to capture any gas during 145 of them, allowing all flowback gas to escape into the atmosphere. For the remaining completions, while some gas was captured and sent to a flare, Hilcorp did not prove that all green completion options were unfeasible.
This negligence led to the release of thousands of tons of harmful methane and volatile organic compounds (VOCs) into the environment. Methane is a potent greenhouse gas and a significant climate super pollutant, while VOCs can negatively impact human health in various ways, including contributing to ground-level ozone formation.
Hilcorp stands as one of the largest privately-owned oil and gas exploration and production firms in the nation and was a leading natural gas producer in New Mexico from 2018 to 2021. New Mexico ranked among the top ten natural gas-producing states in the U.S. from 2018 to 2023. In 2022, data from the onshore oil and gas industry reported to the EPA indicated that Hilcorp's operations in the San Juan Basin emitted the highest levels of methane in the country among all oil and gas operations.
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