New Mexico hits Austin oil company with nearly $25 million penalty over flaring



The state of New Mexico came down hard this week on oil and gas company Ameredev II,LLC, fining the firm $24.5 million over alleged violations of state air regulations—namely unlicensed flaring.

“Let this serve as a wake-up call to the oil and gas industry – the Environment Department is using remote sensing technology, on-the-ground inspections, and responding to citizen complaints,” said Environment Department Cabinet Secretary James Kenney. “The only option to avoid enforcement is to comply with state rules and permits.”

The New Mexico Environment Department announced the fine, the largest ever reached by the department for a ivil oil and gas violation,  was the result of a settlement with Ameredev II, of Austin, Texas, a company created in 2017. Ameredev II is also operator of the largest privately held contiguous land position in the northern Delaware Basin.

“This settlement makes one thing crystal clear – companies that pollute our air will pay for circumventing New Mexico’s rules,” said Gov. Michelle Lujan Grisham. “Today’s settlement is about penalizing the bad actors in an effort to protect communities from breathing harmful pollution.”

(unlicensed flaring)

The settlement came after the NMED’s Environmental Protection Division issued a $40.3 million administrative compliance order to Ameredev in June of last year. The state had identified five Ameredev facilities that actively extracted oil and natural gas between October 2018 and April 2020 but could not accept or transport the gas to downstream processors. During this time, Ameredev flared over 3,219,402 thousand cubic feet of natural gas, releasing an amount of CO2 equivalent to heating 16,640 homes for one year.

A spokesman for Ameredev issued a statement to OK Energy Today.

“This is an issue we take very seriously. Over the last four years, Ameredev has not experienced any flaring-related excess emissions events thanks to our significant – and ongoing – investments in various advanced technologies and operational enhancements. We are pleased to resolve this legacy issue, and look forward to continuing to responsibly work with the State of New Mexico and regional stakeholders to support the state’s economic development as well as American energy security.”

As a result of Ameredev’s flaring, 3,219,402 thousand cubic feet of natural gas were emitted, resulting in over 7.6 million pounds of excess hydrogen sulfide, sulfur dioxide, nitrogen oxides, carbon monoxide and volatile organic compounds, being released into the air. These pollutants are known to cause serious health issues, including respiratory issues, impaired cognition, and convulsions, as well as contribute to climate change. Upon discovery of the compliance issues by NMED staff, Ameredev engaged a third-party contractor to review its compliance with New Mexico requirements and made the results available to NMED’s Air Quality Bureau. The Air Quality Bureau is unaware of any ongoing non-compliance at Ameredev facilities in New Mexico.

“This settlement holds the company accountable for failing to follow the terms of their permit and improperly releasing a substantial amount of natural gas into the environment,” said General Counsel Zachary Ogaz. “We will continue to strictly enforce NMED permits and New Mexico air regulations and show companies that cutting corners and violating the law won’t save you any money in the long run.”

In addition to the cash settlement, Ameredev also agreed to:

·         Perform an independent, third-party compliance audit of their operations at all the New Mexico facilities that they own or operate.

·         Calculate and submit monthly reports of actual emission rates from each emissions unit at each facility operating in New Mexico under General Construction Permits or notices of intent.

·         Propose, subject to NMED approval, a mitigation project to conduct weekly Optical Gas Imaging inspections for each facility operating in New Mexico under a General Construction Permit-Oil & Gas for two years or implement an advanced leak and repair monitoring technology.

·         Remove equipment from the Azalea Central Tank Battery and submit the appropriate permit application or registration to amend the permit.

If Ameredev fails to complete the above corrective actions in the time allotted in the settlement, the state will assess penalties of $2,000 per day until the corrective actions are completed. These payments are to the State’s General Fund.

“I am grateful to our dedicated and hard-working compliance and enforcement staff who worked diligently to bring this case to fruition,” said Compliance and Enforcement Section Chief Cindy Hollenberg. “The Air Quality Bureau is committed to deterring noncompliance such as this and leveling the playing field for those companies that prioritize protecting the environment.”