On Thursday, June 29, The New Mexico Environment Department (NMED) and the New Mexico Energy, Minerals and Natural Resources Department (EMNRD) announced significant “enforcement actions” against Ameredev, a major oil and gas operator in Lea County. Ameredev is based in Austin, Texas. 

In 2019 and 2020 Ameredev is accused of “egregious violations of state rules and permitting requirements” states a NMED press release (PDF). As a result of these violations, “NMED issued an Administrative Compliance Order (Order) to Ameredev for violations of state rules including significant excess emissions of five regulated air pollutants from five facilities [near Jal] in Lea County.”

“These pollutants are known to cause serious health issues, including respiratory issues, impaired cognition, convulsions, and even death, as well as contribute to climate change,” states NMED’s Director of Communication Matthew Maez.

The Order requires Ameredev to pay within 30 days $40,336,818 to the State of New Mexico’s general fund as a civil fine, as well as ceasing and desisting “all excess emissions from its facilities in accordance with applicable regulations”. Further, Ameredev must “undertake projects to mitigate excess emissions” and “hire an NMED-approved independent, third-party auditor to assess all Ameredev facilities in New Mexico.”

NMED alleges that Ameredev released “several pollutants linked to climate warming or known to cause serious health issues, including sulfur dioxide,” states an article posted at Fortune.com. Ameredev is accused of flaring (burning off) in 2019 and 2020 large amounts of natural gas “in excess of limits or without authorization” and mining “oil and natural gas without any means of transporting the gas away via pipeline, as required by state law”.

Regulators say that the excessive emissions were equivalent to the amount of pollution that would be created from heating more than 16,500 homes for a year. Communications director Maez remarked that the flared natural gas amounted to “…over 7.5 million pounds of excess pollutants such as hydrogen sulfide, sulfur dioxide, nitrogen oxides and others into the air.”

Cindy Hollenberg, a NMED air quality bureau compliance and enforcement section chief, said that Ameredev did not follow “…what they had represented in their permits.…” They said that they “…would capture 100% of their gas, send it to the sales pipeline.” However, Ameredev did not capture 100% of its natural gas and send it to their sales’ pipeline. Instead, Ameredev flared large amounts of the sour natural gas. 

The root of the problem for operators is that much of the Natural Gas produced in this area of New Mexico is Sour Gas.  This kind of gas creates a number of problems for operators:

• Health due to the fact that it contains highly poisonous hydrogen sulfide (H2S)
• Hydrogen sulfide is highly corrosive to metals, which destroys equipment and pipelines
• H2S is a potent greenhouse gas
• Regulatory compliance is expensive for operators
• Sour gas requires expensive processing steps before it can be transported and utilized

Fortunately, there is an upside for our area as Piñon Midstream LLC is expanding their sour natural gas facility to increase its capacity in Lea County. Additionally, Piñon is considering the addition of new interconnects on its pipeline. All of which means the creation of new jobs for Lea County.

Skirting the problems by flaring is not uncommon solutions taken by operators and according to Hollenberg, “…the sanctions stem from anonymous calls from concerned citizens about open-air flares from the burning of natural gas,” reports NPR’s KANW. In December of 2019 on-site inspections took place “at installations of tanks that receive crude oil from the wells.” Hollenberg continued, “None of the facilities had permitted a flare and yet every facility was flaring.” … “Every site was different than what they had represented.”

The simple truth remains that new technology has “unlocked massive amounts of natural gas from New Mexico’s portion of the Permian Basin….” Existing pipelines, however, do not have the necessary capacity “to gather and transport” all the natural gas currently being produced.

EMNRD Proposing to Fine Ameredev $2.4 Million

In another “enforcement action” New Mexico oilfield regulators are proposing to fine Ameredev $2,412,000 for “failing to file required production and natural gas waste reports” at one of its wells.

In addition to the monetary fine, Ameredev must correct immediately its filing issues at the well in question and conduct audits of its other facilities to insure compliance with state regulations.

In a recent statement about this infraction EMNRD says, “Such reports are critical for operators to demonstrate compliance with (New Mexico) waste rules, which themselves are a key component of New Mexico’s climate change policy,” 

EMNRD secretary Sarah Cottrell Propst noted that Ameredev submitted some “required reports” but that these reports “were unacceptably late.” Communications director Maez added that a review of Ameredev’s other facilities “suggests that there may be similar problems” at these sites. Probst also noted that although EMNRD “…is pursuing the maximum penalty available,” Ameredev has the right to administratively dispute EMNRD’s actions, as well as appeal in court any penalty it receives.

NMED Cabinet Secretary James Kenney said in a released statement that Ameredev has “exploited public health for profit.” Kenney continued, “Ameredev’s management team have shown blatant disregard for our right to breathe clean air and now they must be held accountable.”

Section chief Hollenberg added that the violations Ameredev has made “show ignorance of the law or at worst willful disregard by the company.” … “This [enforcement] action sends a strong message to this company and to the oil and gas industry as a whole that we [NMED and EMNRD] take compliance seriously.”

Ameredev now has the attention of NMED and EMNRD. Director of EMNRD’s Oil Conservation Division (OCD) Dylan Fuge, who also serves as the agency’s general counsel, is on record as saying, “We are very concerned with the pattern and practice we are seeing in Ameredev’s operation given the fact that the operator and its facilities are relatively new in New Mexico. Fuge added that “OCD will conduct a more detailed review of the remainder of Ameredev’s operations.”

Ameredev has not responded to requests for comment about the sanctions.