This week the US Department of Justice (DOJ) along with the Environmental Protection Agency (EPA) and the New Mexico Environment Department announced (click here) a settlement with the Hilcorp Energy Company regarding Clean Air Act and New Mexico state law violations (specifically the New Mexico Air Quality Control Act) involving “CO2 pollution” relating to its oil and gas upstream operations in New Mexico. Details regarding the case may be found on this dedicated web page set up by the EPA, and the 75-page consent decree may be found here. The Assistant Attorney General on the case commented:
"Hilcorp is a large, sophisticated natural gas producer and should know better than to violate Clean Air Act requirements to capture and control gas produced as a result of fracking."
The details of the case are briefly summarised as follows:
- During the period from 2 August 2017 to 1 August 2019 Hilcorp conducted 192 well completion operations in New Mexico where the company unlawfully emitted significant quantities of methane and other volatile organic compounds (VOCs) directly into the atmosphere;
- Hilcorp uses hydraulic fracturing (i.e. fracking), as its method of gas extraction in one area - 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, according to the EPA, contains hydrocarbons, including VOCs and methane, which, without recovery or control, are emitted directly into the environment;
- State and Federal air emissions standards for well completions require operators to recover or control methane and VOC emissions from this flowback;
- At 145 of the well completions, Hilcorp captured none of the gas and instead released all of it into the atmosphere following the fracking;
- At the remainder of the 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;
- The settlement agreement requires Hilcorp to pay a civil penalty in the amount of USD $9.4 million;
- Hilcorp must also undertake a mitigation project that will address harmful emissions resulting from its past violations where the company failed to capture the gas produced during well completion operations;
- This mitigation project requires Hilcorp to replace old process control equipment with equipment that does not emit air pollution on a faster timeline than is required by Federal regulations.
