An independent energy company in Texas is being fined by the Environmental Protection Agency over their failure to properly operate and monitor 13 Permian Basin facilities. Callon Permian LLC has been issued with a consent agreement and final order from EPA which mandates several actions by them including site-specific corrective actions; inspection of flares, tanks and combustors; optical gas imaging surveys; tank pressure monitoring as well as permits reviews as well as paying a $1,285,000 penalty to resolve their alleged violations.
Callon’s action against the EPA signals that federal officials are taking steps to enforce new rules announced in March 2021 that seek to limit methane and other air emissions related to fossil fuel production. These rules were the result of calls by environmental groups as well as lawsuits filed against industry.
Permian Basin in southeast New Mexico and West Texas hosts thousands of drilling sites that extract natural gas from the region’s shale formations, most often processed at plants like Goldsmith gas plant in Ector County before being delivered via pipeline to markets, mostly along the Gulf Coast. Unfortunately, gas processing facilities like Goldsmith gas plant often release harmful pollutants into the air during normal operation – hydrogen sulfide, carbon dioxide emissions, volatile organic compounds or other pollutants can often be released as emissions into the air resulting from normal operations.
To address this problem, the Environmental Protection Agency (EPA) has set stringent standards for reducing pollutants. They aim to cut methane emissions by 4.6 million pounds each year while restricting harmful greenhouse gas emissions that threaten human health. As the new rules will have an impactful ripple-through, they would impact nearly all oil and gas producers nationwide rather than just those operating within Permian Basin’s borders.
Callon Energy Partners has become a dominant player in West Texas oil production over time, developing their acreage in both the Delaware and Midland Basins. Last year, Callon acquired tightly held Primexx Energy Partners bringing its total acreage in the Permian to more than 145,000 net acres.
Alberg revealed that Alamo Oil plans to spend 85% of its $725 million capital allocation this year on development of its assets in the Permian, and planned on using six to seven rigs and two completion crews across its expanded acreage position. Yet increasing production in spite of tight labor pools, supply chain issues for tubulars to sand, and an expected 43% decline in inventory of drilled-but-uncompleted wells (DUCs) may prove challenging.
Callon recently appointed its inaugural Head of Environmental Sustainability. Based out of Houston, this newly created position will work collaboratively with EHS, Legal, Strategic Planning, Sustainability Communications and Investor Relations teams to optimize environmental performance and compliance strategies across the company. Read more here about this exciting job opportunity!