The EPA Region 6 and the New Mexico Environment Department (NMED) recently released reports from their joint inspections of 124 facilities in the New Mexico Permian Basin conducted in April 2024. The findings revealed that 60% of the inspected facilities had emissions of Volatile Organic Compounds (VOCs), potentially leading to penalties and enforcement actions under the Clean Air Act (CAA).
Fourteen EPA inspectors and five NMED inspectors participated in the inspections, concluding that 75 facilities were emitting VOCs. These emissions contribute to the formation of ozone (smog), which poses serious health risks, including asthma, lung infections, bronchitis, and cancer. The inspections targeted eight companies, including major operators like Chevron U.S.A. Inc., XTO Energy, Inc., Permian Resources, Earthstone Energy, Inc., Tap Rock, Marathon, Franklin Mountain Energy, Inc., and Kaiser Francis Oil Company.
"All companies must comply with the Clean Air Act, including those in the Permian Basin that are contributing to the energy needs of our country," said Regional Administrator Dr. Earthea Nance. "These large-scale inspections demonstrate EPA’s commitment to preventing VOC and methane emissions in the Permian Basin."
As but one example from the long list of problems from the inspected companies, Chevron U.S.A. Inc.’s operations in the Permian Basin were called out for multiple emission violations. Inspectors observed emissions from numerous condensate tanks, water, oil, and storage tanks across 17 sites. These findings come at a time when Chevron is touting its technological advancements and increased production in the region.
Nicole Champenoy, Shale and Tight Asset Class Director at Chevron, recently discussed the challenges the industry faced a decade ago in tapping into the Permian Basin’s potential. Since then, innovations including horizontal drilling and hydraulic fracturing have transformed the basin's capacity. "The Permian Basin has become the gift that just keeps giving," Champenoy said. Chevron prides itself on its factory approach to drilling wells, which it says prioritizes the most promising sites, enhances efficiency and has tripled the pace of their drilling programs in the region. The company set a quarterly record in its fourth quarter of 2023, delivering 867,000 barrels of oil daily. “Increasing production beyond what we are doing today is a complex problem, and it is very rewarding to be part of this journey,” says Champenoy.
The inspections also revealed that 112 of the facilities are located in communities with environmental justice concerns due to higher levels of pollution exposure. Environment Department Cabinet Secretary James Kenney emphasized the urgency of addressing these issues: "The results of our federal and state oil and gas investigations are cause for alarm, with a meager 40% compliance rate. With the impacts of climate change ravaging our state and air quality degrading, we have no choice but to increase sanctions on polluters until we see a commitment to change behavior."
The recent Supreme Court decision overturning Chevron deference, a doctrine that previously mandated judicial deference to agency interpretations of ambiguous statutes, adds a layer of complexity to this situation. Without Chevron deference, courts may now scrutinize EPA’s interpretations of the CAA more closely, potentially leading to increased litigation and challenges to the agency’s enforcement actions.
As drilling operations expand in the Permian Basin, companies must address the regulatory and environmental challenges highlighted by these recent inspections. The U.S. Energy Information Administration (EIA) reported last month that crude oil production in the Permian Basin is expected to increase 8% from last year, averaging 6.3 million barrels daily in 2024.
Drilling companies' commitment to safety and production efficiency in the region must be balanced with adherence to environmental laws to ensure sustainable operations in one of the country’s most vital energy-producing regions. The EPA and NMED’s findings underscore the need for strict compliance with environmental regulations to protect public health and the environment.
