Hilcorp Energy Company, New Mexico Clean Air Act Stationary Source Settlement

On October 17, 2024, the U.S. Environmental Protection Agency (EPA) and U.S. Department of Justice (DOJ) announced a settlement with Hilcorp Energy Company resolving Clean Air Act (CAA) and New Mexico Air Quality Control Act (AQCA) violations at the company’s oil and gas production operations in New Mexico. 

The case is the first of its kind against an oil and gas producer for violations under the CAA and AQCA associated with well completion operations, which is the process of bringing oil or natural gas to the surface after drilling has been completed.  

Under the settlement, Hilcorp will pay a civil penalty of $9.4 million for the violations. Going forward, the settlement will achieve major reductions by requiring Hilcorp to recover or control emissions from well completions in New Mexico and by requiring Hilcorp to use non-emitting process control equipment at facilities on Tribal lands in northwestern New Mexico.   

The settlement is part of the EPA’s National Enforcement and Compliance Initiative to mitigate climate change and the agency’s larger effort to hold oil and gas companies accountable for widespread violations throughout the country. Like all of the EPA’s national enforcement initiatives, this initiative prioritizes communities already overburdened by pollution and with other potential environmental justice concerns. 

• Overview of Hilcorp Energy Company
• Summary of Violations
• Summary of Environmental Impacts
• Environmental Benefits
• Overview of Consent Decree
• Comment Period
• Contact Information

Overview of Hilcorp Energy Company

Hilcorp Energy Company is one of the nation’s largest privately-owned oil and gas exploration and production companies and was the top producer of natural gas in New Mexico between 2018-2021.  

The majority of Hilcorp’s oil and gas production facilities in New Mexico are in the San Juan basin. The San Juan Basin is a significant source of oil and gas resources located near the common corners of New Mexico, Arizona, Utah, and Colorado. Hilcorp’s San Juan Basin operation is the largest emitter of methane, a climate super pollutant, from the United States onshore oil and gas industry according to greenhouse gas (GHG) data reported to EPA for 2022. 

Summary of the Violations 

Based on the EPA’s investigations, the U.S. alleges that during the period from August 2, 2017, through August 1, 2019, Hilcorp conducted 192 well completion operations in Rio Arriba County and San Juan County, New Mexico where the company unlawfully emitted significant quantities of methane and other VOCs directly to the atmosphere in violation of the requirements. 

Hilcorp uses hydraulic fracturing, commonly referred to as fracking, as its method of gas extraction in the San Juan Basin. Once the fracking process is completed, the internal pressure of the rock formation causes fluid known as “flowback” to return to the surface through the wellbore. This fluid contains hydrocarbons, including volatile organic compounds (VOCs) and methane, which without recovery or control, are emitted directly to the environment. The applicable state and federal air emissions standards for well completions require operators to recover or control methane and VOC emissions from the flowback. 

At 145 of these well completions, Hilcorp captured none of the gas and instead released into the atmosphere all gas that flowed back following fracking. At the remainder of well completions, Hilcorp captured a portion of the gas and directed it to a flare but did not demonstrate that all green completion options were infeasible.  At the remaining 47 well completions, Hilcorp failed to justify routing gas to flare by demonstrating the necessary controls were technically infeasible. Hilcorp also failed to meet reporting requirements related to well completion and flowback operations, in violation of the regulations.

Summary of Environmental Impacts

Overview of Consent Decree

Under the settlement agreement, Hilcorp will comply with the applicable well completion air emissions standards under state and federal law. These standards require recovering or controlling gas emissions during flowback. Hilcorp will be required to capture and direct all separated gas to a completion combustion device when recovery options are determined to be technically infeasible. 

The settlement agreement also requires a third party to verify Hilcorp’s compliance at its well completion operations. The consent decree further requires Hilcorp to pay a civil penalty in the amount of $9.4 million. 

In addition, Hilcorp must undertake a mitigation project that will address harmful emissions resulting from its past violations where the company failed to capture the gas produced during well completion operations. This mitigation project requires Hilcorp to replace old process control equipment with equipment that does not emit air pollution on a faster timeline than is required by federal regulations. The mitigation project will occur on Tribal lands of the Jicarilla Apache Nation Reservation and Navajo Nation in the counties of San Juan, Rio Arriba and Sandoval, New Mexico, all of which are areas with potential environmental justice concerns.  

Comment Period

The consent decree was filed with the United States District Court, District of New Mexico and is subject to a 30-day comment period. Information on providing public comment and the complaint and proposed consent decree are available on the DOJ's Proposed Consent Decree webpage. 

Contact Information

For additional information on this settlement, please contact: 

Robert G. Klepp 
Attorney-Adviser 
(202) 564-5805
klepp.robert@epa.gov 

Daniel Hoyt 
Environmental Engineer 
(202) 564-7898 
hoyt.daniel@epa.gov
Office of Civil Enforcement  
Air Enforcement Division
U.S. Environmental Protection Agency 
1200 Pennsylvania Avenue NW, Mail Code 2242A
Washington D.C. 20460