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$440K in fines issued to Carlsbad-area oil and gas company for air pollution violations

Carlsbad Current-Argus logo Carlsbad Current-Argus 3/24/2023 Adrian Hedden, Carlsbad Current-Argus

A Permian Basin oil and gas operator in New Mexico faced almost half a million dollars in fines resulting from alleged violations of federal air pollutions law at facilities in Eddy County.

The U.S. Environmental Protection Agency said Chisholm Energy Operating was found in violation of the Clean Air Act during an aircraft investigation in 2020 throughout the Permian Basin region in southeast New Mexico.

On Wednesday the EPA announced Chisholm was ordered to pay $440,000 in fines for violations at eight sites throughout the county, noting leaks and unauthorized emissions from storage tanks owned by the operator at the time and facilities that were built and operated before they were legally permitted.

A still taken from EPA aircraft footage of an oil and gas storage tank owned by Chisholm Energy, believed in violation of federal air pollution rules. © Provided by U.S. Environmental Protection Agency A still taken from EPA aircraft footage of an oil and gas storage tank owned by Chisholm Energy, believed in violation of federal air pollution rules.

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Chisholm Energy sold its Permian Basin assets to Earthstone Operating last year in a $600 million deal, but representatives from both companies did not respond to a request for comment from the Carlsbad Current-Argus.

Chisholm did take corrective actions at the facilities, the EPA reported, resulting in a 1,717-ton reduction in volatile organic compounds (VOCs) emissions, and removing 6,168 tons of methane emissions.

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VOCs form ground-level ozone, known as smog, that can cause respiratory illness and other health problems for nearby communities.

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Methane is a greenhouse gas known to have a global warming capacity 25 times that of carbon dioxide and is mostly attributed to oil and gas extraction in the Permian Basin.

Recently, researchers with the National Aeronautics and Space Administration (NASA) found a methane plume 2 miles long near Carlsbad believed to be from a leaking oil and gas facility owned by a company other than Chisholm.

And the EPA was expected to rule later this year on listing the Permian Basin as in violation of federal ozone standards, a move that would increase requirements for oil and gas permitting conducted by the State of New Mexico.

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In its final settlement with Chisholm, the agency said the operator agreed to pay the fine after being notified numerous times by the EPA of potential violations stemming from flyover research in the area between Aug. 25, 2020, and Oct. 15, 2020.

These included hydrocarbon emissions from process equipment and vapor recovery systems at Chisholm’s facilities, the settlement read, and the company notified EPA of corrective actions of Feb. 22, 2021, and May 12, 2022, to address “some of the compliance issues” found during the flights.

Multiple tanks and pressure valves at the eight facilities were found leaking, the settlement read.

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The EPA said the operator failed to comply with several portions of federal law, violating its federal permits and allowing air pollution to release into the atmosphere.

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In the settlement, Chisholm did not admit or deny the allegations but agreed to pay the penalties within 30 days and waived any right to contest the EPA’s findings.

EPA Regional Administrator Earthea Nance said companies like Chisholm will be held accountable for violations of federal law when it comes to oil and gas air pollution, and that the federal agency partnered with the New Mexico Environment Department (NMED) on the investigation.

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“By using advanced technology, the EPA, working in partnership with the NMED, was able to detect Clean Air Act (CAA) violations and ensure that the company took prompt action to address unauthorized emissions,” Nance said.

“The CAA is designed to protect and enhance the quality of our nation’s air; companies (or facilities) must continue to uphold that standard or expect to be held accountable when failing to safeguard public health.”

The Chisholm case was the second enforcement action take by the EPA this month in the Permian Basin.

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On March 3, the agency announced it reached a settlement with Permian Resources Operating, including $610,000 in fines on the Texas side of the basin.

Permian Resources was found in similar violation of the federal regulations during the same flyover investigation as Chisholm, taking corrective actions to remove 729,000 pounds of VOCs and 2.6 million pounds of methane pollution from the air.

Violations in that case came from misuse of flares that burn off excess gas, tanks and a combustor, the EPA reported.

“EPA developed an innovative way to detect potential violations from oil and gas facilities across the vast Permian Basin area, and now our enforcement team is following through with tough penalties and actions that reduce emissions,” Nance said.

“Companies must uphold their obligations to follow the Clean Air Act or expect to be held accountable when they don’t.”

NMED spokesman Matthew Maez said the EPA took 170 enforcement actions in New Mexico since 2019, while 77 were related to air pollution and just two were unrelated to oil and gas.

He said NMED's Air Quality Bureau has 58 active enforcement cases. More than half the caseload, 39 cases, were related to the oil and gas industry.

In 2020, the EPA approved the Bureau to inspect tank batteries and two of its cases are the result of such "alternative inspections," Maez said at the facilities that don't usually get inspected.

He said it was clear air quality in the Permian Basin was getting worse, tied to expanding extraction operations in the region.

"Our monitoring data shows ozone levels are rising in the Permian Basin and our compliance investigations consistently show failure to comply with federal and state laws," Maez said. "While some oil and gas operators are making the necessary investments in their operations to minimize emissions, far too many are not.

"Our compliance investigation resources are insufficient to accurately speak towards trends but air quality is clearly getting worse, not better."

Maez said the NMED will continue working with federal agencies to ensure compliance of air quality standards and other pollution controls, protecting the public and creating a "level playing field" for the industry.

"Those operators that invest in compliance are at a competitive disadvantage with those operators that skirt these requirements," Maez said. "Further, failing to reduce emissions causes unhealthy air quality resulting in increased asthma and other respiratory issues in the very communities these companies operate."

Adrian Hedden can be reached at 575-628-5516, or @AdrianHedden on Twitter.

This article originally appeared on Carlsbad Current-Argus: $440K in fines issued to Carlsbad-area oil and gas company for air pollution violations


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