Don Schreiber can look out from his house and see 10 oil wells on his cattle ranch, a sight he finds more disconcerting since a recent study deemed the operator the worst methane polluter in the country.
The wells dotting his ranchland like unwanted shrubs are part of the 120 wells that Hilcorp Energy Co. operates after buying a declining oil field from ConocoPhillips in the Farmington area four years ago.
The Houston-based company’s methane emissions are the highest in the U.S. — and six times the national average — even though it is only the 19th largest fossil fuel producer, according to a report based largely on U.S. Environmental Protection Agency data.
“They didn’t get to be the worst polluter in the country just because they bought an aging field but because of how they operate this field and their company philosophy,” said Schreiber, who is also a staunch anti-oil industry activist.
The Clean Air Task Force, an environmental group, and Ceres, an eco-conscious investor network, commissioned the study, which compares methane releases from companies large and small, including in New Mexico’s San Juan and Permian basins.
Some of the worst offenders are smaller companies such as Hilcorp that emit large amounts of methane, a potent greenhouse gas, relative to the quantity of oil they produce — or at a “greater intensity,” said David McCabe, a staff scientist with the task force.
While the 195 smallest producers in the nation collectively account for just 9 percent of production, they are responsible for 22 percent of total reported emissions, according to the study.
The Permian Basin’s reported emissions fall in the middle of the pack nationally, but when unreported releases are taken into account — based on monitoring data by state agencies and advocacy groups — the Permian has some of the country’s highest emissions, McCabe said.
“Because it’s such a huge basin, it’s a huge concern,” McCabe said.
In an email, state Environment Department spokeswoman Maddy Hayden wrote that the study’s findings are line with the agency’s observations during the coronavirus pandemic.
“This report is no surprise to us — in 2020, we saw significant increases in unlawful emissions from oil and gas operations in New Mexico,” Hayden wrote. “It’s clear that voluntary emission reductions are not enough to solve the widespread compliance issues in the San Juan and Permian Basins.”
A Hilcorp spokesman wrote in an email the study unfairly maligned the company.
“The formula used in this report is based on estimates of emissions that don’t reflect actual conditions,” Nick Piatek wrote. “Most troubling, the estimates do not take into account any of the modernization of equipment or operational improvements that Hilcorp routinely implements when we acquire legacy assets. This is a critical flaw in the study’s approach.”
Piatek contends the company invests to enhance production and extend the life of older oil fields.
But Hayden noted the EPA received a complaint in 2018 about how Hilcorp was running its operations in San Juan and Rio Arriba counties. State and federal regulators cited the company for allegedly breaching pollution control standards, she added.
The investigation has since expanded to include more possible infractions at several Hilcorp facilities in New Mexico, Hayden wrote.
McCabe said a big reason smaller operators tend to be bigger polluters is because they use pneumatic control systems in which pressurized natural gas opens and closes valves, releasing methane into the atmosphere.
Regulators, conservationists and many lawmakers are pushing to have air compressors replace this outdated equipment, but some companies — including Hilcorp — are resisting, McCabe said.
“They [Hilcorp] have got a tremendous number of pneumatic controllers,” McCabe said.
Schreiber said leaking methane is not only bad for the environment, but it’s bad business because the product is going up in the air.
“But Hilcorp won’t make the very modest investments that will control these emissions and pollutions,” Schreiber said.
New Mexico regulators seek to phase out the pneumatic controllers by 2030, McCabe said. His group considers that too slow and is pushing the state to move faster.
The EPA’s data used in the study doesn’t tell the whole story because it’s based solely on data companies submit to the agency, which means a huge amount of unreported emissions is not being counted, said Tom Singer, senior policy adviser at the Western Environmental Law Center.
New industry regulations the Environment Department and the Oil Conservation Division recently approved require more detailed reporting that should boost accountability, Singer said.
“Our understanding of which companies are climate polluters and which aren’t and why is going to improve dramatically,” Singer said. “Hence the state’s ability to regulate the so-called bad actors.”