A state agency reached a settlement agreement with an oil and gas company as New Mexico continues to crack down on air pollution from that sector.

The New Mexico Environment Department announced the $24.5 million settlement with Ameredev II, LLC on Monday. This is the largest settlement that NMED has ever reached for violations of regulations governing oil and gas and the majority of that money will go to the state’s general fund.

The state alleges that Ameredev flared off natural gas at five facilities between October 2018 and April 2020 because it did not have the ability to transport that gas to downstream processing facilities.

Gov. Michelle Lujan Grisham praised the settlement as holding bad actors accountable for emissions. The governor, who has tried to present herself as a leader in addressing climate change, vowed to address emission from the oil and gas industry in 2019 after taking office.

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

A company spokesman said that Ameredev is taking the issue seriously and has not had any excess flaring-related emissions over the last four years. This is in part because of Ameredev’s significant and ongoing investments in advanced technologies and operational enhancements, he said.

“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,” Ameredev said in the statement emailed to NM Political Report. 

While the settlement is the largest that NMED has reached for oil and gas emissions violations, it is much less than the company could have paid had it not agreed to the settlement and taken actions to address the pollution. NMED’s Environmental Protection Division fined Ameredev $40.3 million through an administrative compliance order in June.

“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,” Environment Department Cabinet Secretary James Kenney said in a press release. “The only option to avoid enforcement is to comply with state rules and permits.” 

NMED’s inspection of Ameredev facilities in 2019 came after Lea County residents who were concerned about the flaring contacted the state agency.

During a year and a half of operations, Ameredev allegedly flared off more than 3.2 million thousand cubic feet of natural gas. That gas released emissions equivalent to heating 16,640 homes for an entire year. In addition, the flaring also resulted in more than 7.6 million pounds of excess hydrogen sulfide, sulfur dioxide, nitrogen oxides, carbon monoxide and volatile organic compounds being released into the atmosphere.

“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,” General Counsel Zachary Ogaz said in a press release. “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.”

Nitrogen oxides and volatile organic compounds react with sunlight to form ozone, or smog, which can lead to unhealthy air quality. Areas of New Mexico where oil and gas production is common tend to have higher levels of ozone and some of them are facing what is known as noncompliance. Noncompliance occurs when ozone levels exceed federal air quality standards. This can lead to sanctions from the federal government, including loss of funding for transportation projects.

Hydrogen sulfide and sulfur dioxide can also cause health problems, including respiratory issues. 

NMED states that the pollutants can also lead to impaired cognition and convulsions among those exposed and also contributing to climate change.

Prior to NMED issuing the administrative compliance order, Ameredev hired a third-party contractor to review how the company was complying with state requirements. The company also provided those results to NMED’s Air Quality Bureau.

According to NMED, Ameredev is now in compliance with the state rules and regulations.

As part of the settlement agreement, the company will hire a third-party contractor to perform an independent audit of its operations at all of the facilities it operates or owns in the state. It will also submit monthly reports that include calculations of actual emissions rates from facilities in New Mexico. 

It will also propose a mitigation project that NMED may approve that will lead to weekly optical gas imaging inspections at facilities or the implementation of leak and repair monitoring technology. 

Finally, Ameredev agreed to remove equipment from the Azalea Central Tank Battery.

The settlement comes amid a crackdown on pollution that has led to various agreements, including settlements with Apache Corporation, Matador Production Company and Mewborne Oil Company. The settlements stem from alleged emissions that occurred prior to the ozone precursor rule that went into effect in 2022.

Should Ameredev fail to fulfill its obligations under the settlement agreement, the company could face fines of $2,000 per day.

“I am grateful to our dedicated and hard-working compliance and enforcement staff who worked diligently to bring this case to fruition,” NMED Compliance and Enforcement Section Chief Cindy Hollenberg said in a press release. “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.”