New Mexico's oil and gas regulator issues $1.62 million in violations to Hilcorp

Noel Lyn Smith
Farmington Daily Times
Hilcorp Energy Company was operating 96 gas wells in 2019 inside the Aztec city limits, including this site off of Western Drive.

GALLUP — The state's primary oil and gas regulator has issued a notice of violation to Hilcorp Energy Company for allegedly improper remediation work at six locations in the San Juan Basin.

The New Mexico Oil Conservation Division stated in a Sept. 1 news release that Hilcorp failed to remediate unauthorized releases at the sites and is out of compliance with plans approved for operations and reporting conditions.

The violations total $1.62 million, and the amount is based on an assessment the division's inspectors completed in August, according to the division's news release.

"Hilcorp prides itself on the safe and environmentally sound operation of its thousands of wells in the San Juan Basin. We are reviewing this document, evaluating the merit of the allegations. We look forward to engaging with the department," company spokesman Nick Piatek said on Sept. 2 in a statement to The Daily Times.

Oil Conservation Division Director Adrienne Sandoval said in the division's news release that this is the largest civil penalty issued since the division's ability to assess penalties was reinstated in 2020 – sending the message that the division takes compliance obligations seriously.

"Failure to comply with remediation plans and reporting requirements is a serious violation as it makes it difficult for the OCD to ensure that human health and the environment are being protected. The OCD remains committed to ensuring compliance of the Oil and Gas Act by operators in New Mexico," Sandoval said.

The division regained enforcement power in 2020 after state lawmakers restored that authority a year earlier by amending the state's Oil and Gas Act.

According to the division, the sites use a technique known as soil vapor extraction, which uses vacuum pressure to remove volatile and some semi-volatile contaminants, such as petroleum, from the soil.

This method extracts contaminants from the soil in vapor form and does not require excavation of the contaminated soil.

Susan Torres, a spokeswoman for the state Energy, Minerals and Natural Resources Department, said the division was alerted to some potential problems at one site. Upon inspection of records and the facility, the division found non-compliance which precipitated a broader review of additional sites, she said.

According to its website, Hilcorp's corporate office is in Houston and it has field operations in Aztec and Bloomfield.

The company can continue operations at the sites, but "must take a number of steps within 30 days, some of which require ongoing remediation activities," Torres said.

Under the division's procedures, Hilcorp has time to reach a resolution with the division. If that does not occur, then the division will hold a hearing on Nov. 10.

"At that hearing, OCD will seek an order compelling Hilcorp to pay 10 separate penalties, which currently total $1.62 million," Torres said.

Noel Lyn Smith covers the Navajo Nation for The Daily Times. She can be reached at 505-564-4636 or by email at nsmith@daily-times.com.

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