Natural gas company fined $150K by State of New Mexico for air pollution violations

Adrian Hedden, Carlsbad Current-Argus
Wed, July 26, 202

A natural gas company based in Midland, Texas that formerly operated in southeast New Mexico was fined about $150,000 by state regulators for air pollution violations dating back to 2020.

An inspection by the New Mexico Environment Department in 2020 revealed a series of permit violations at the Denton Gas Plant in Lea County near Lovington owned at the time by Davis Gas Processing.

That company no longer operates in New Mexico after the plant was closed in December 2021, but on July 20 signed a settlement agreement with NMED and agreed to pay a total of $150,243 for the past violations.

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The violations of Davis’ permit with NMED stemmed from its reported failure to notify the agency of engine testing and its use of an unapproved testing method.

Representatives from the company did not respond to a request for comment from the Carlsbad Current-Argus.

The facility which processed extracted natural gas operated under permits issued by NMED in May 2017 and May 2020, records show.

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The 2017 permit required the company to notify NMED of any engine testing to allow an inspector to be present and set conditions for such a test and how emissions were calculated.

On Dec. 15, 2020, records show an inspector from NMED’s Air Quality Bureau reviewed records of the facility’s emissions reports, noticing pre-test notifications were never submitted.

This was confirmed via a phone call with Davis that same day, read the settlement.

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The inspector reviewed 16 stack test reports from between January 2019 and December 2020, finding Davis conducted the tests without following state protocols for emissions calculations.

Test did not use the NMED-approved method of using a fuel flow meter and used samples more than three months old, violating state requirements, read the settlement.

Instead, the company relied on data from the manufacturer of the equipment, a tactic unapproved by NMED.

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A notice of violation was issued to Davis, and the Bureau offered a settlement of $168,000 in civil penalties for the company to pay.

Davis responded that the fine was “disproportionately high,” records show, arguing neither violation impacted human health or the environment.

The company pointed to the closure of the plant in 2021, contending the permits were cancelled and that the violations should be classified as “minimal” or “minor,” read the settlement, and that a variance was submitted for the testing.

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Davis told NMED it would consider an alternate penalty of $22,400 for the lack of a gas meter used in testing, the settlement read.

The Bureau did not agree with Davis’ assessment of the situation, and after negotiations the parties compromised on the final penalty amount.

“The Bureau stated they disagreed that the penalty of $168,000 was disproportionately high, as Davis did not offer any factual basis for a penalty amount reduction,” read the settlement. “The Bureau explained that the alleged testing notification violation jeopardized the integrity of the regulatory program, and thereby represents a significant indirect harm to human health and the environment.”

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If Davis does not make “timely” payments of the penalty, it could be fined another $1,500 per day under the settlement and cannot contest the final order.

NMED Air Quality Bureau Chief Liz Bisbey-Kuehn said the State intends to hold companies accountable for violations even after they shutter New Mexico operations.

“This penalty sends a strong message to this company and to the entire oil and gas industry that NMED takes compliance seriously,” she said. “We will continue to pursue enforcement actions against companies, even after they shutter their operations in New Mexico.”

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The Davis settlement followed a series of enforcement actions taken by NMED in recent months against oil and gas companies in the state’s southeast Permian Basin region.

On June 29, NMED fined Ameredev Operating, based in Austin, Texas, about $40 million for violations reported at five facilities in Lea County NMED said were found excessively flaring – burning off excess natural gas instead of developing a means to store or transport the gas.

That penalty could be negotiated as Ameredev had 30 days after the issuance to respond to NMED’s allegations.

The NMED also reached a $6.2 million settlement in March with Matador Production Company after a complaint was filed jointly by the State and the U.S. Environmental Protection Agency that said Matador failed to properly control emissions at 25 oil and gas facilities in New Mexico.

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

This article originally appeared on Carlsbad Current-Argus: $150K fine issued to natural gas company by State of New Mexico