New Mexico State Land Office Sues Midland Company Over Abandoned Wells

A Midland oil and gas company has been sued by the New Mexico State Land Office after regulators found its facilities abandoned on state land in Chaves County, just north of the Permian Basin in the southeast from New Mexico.

Midland-based Northstar Operating Company and its two well operators Cano Petro and Cross Border Resources were sued in trial court by the State Land Office for failing to clear approximately 1,000 acres of land owned by the Condition, according to records.

A representative for Northstar Operating declined to comment for this story.

Filed on May 27, the area targeted by the lawsuit was part of a bigger former oil and gas development site on state, federal and private lands in the area known as the Cato Unit.

The Land Office argued that the companies had failed to honor their contractual responsibilities of plugging 11 abandoned wells in the unit and restoring the land by removing well pads, roads and other equipment, waste and trash.

The lawsuit also alleged that the defendants owed fines for trespassing on State Trust land after the leases expired in March 2019.

New Mexico State Lands Commissioner Stephanie Garcia Richard said the case – the 17th in her office since her accountability and enforcement program began in November 2020 – was about holding users state trust lands such as oil and gas companies responsible for the impacts of their activities.

“I take very seriously my responsibility to manage the state land entrusted to me, and that is why we continue to sue companies when they evade their legal responsibility to clear the land,” Garcia Richard said.

“While many companies are working with us, our legal efforts so far have proven to be successful and we will continue to take legal action when the companies walk away without cleaning up. “

The original lease at issue in the case was issued by the State Land Office on December 17, 1963, according to records, for five years or as long as oil and gas are produced – a standard term for State Trust land leases.

In 2001, the lease was assigned by original lessee R. Ken Williams to Limark Corporation, which merged with Northstar in 2003, giving Northstar the exclusive right to occupy and use the land.

Cano Petro operated seven of the wells, while Cross Border operated three.

In March 2019, State Land Office records showed that the wells had stopped producing oil and gas in paid quantities, and the wells were to be plugged by June 2020.

The Land Office said, in accordance with the lawsuit, that it informed Northstar by letter on February 23, 2021 that the lease had expired and that it had 60 days from the expiration to remove all equipment and materials. debris and restore this land to its original condition.

“State Land Office tenants, like Northstar, are required to ensure that when a well ceases to operate, or when a lease expires or is canceled, the wells must be plugged. in accordance with standards (Oil Conservation Division), “the complaint said.

“Northstar has failed to plug or secure plugged at least 11 wells, in violation of its obligations to the State Land Office.”

Infrastructure such as battery tanks, pump jacks and pipelines were left on the ground and wells were left unplugged, which constituted an intrusion, according to the lawsuit.

The State Land Office notified Northstar of the problem again on March 29, 2021, but the company took no action, according to the lawsuit.

“The defendants have not taken any of the required corrective action or fulfilled their responsibilities under state law and state land office rules,” the lawsuit read.

In response to the allegedly illegal inaction by Northstar and its operators, the State Land Office sought compensation for the damages it accused the companies, while calling for an injunction to force the defendants to clean up the land.

State Land Office spokeswoman Angie Poss said fines for trespassing could be as high as $ 500 per day, and the office was looking at the full cost of hiring contractors to plug wells and repair the land. as well as the potential loss of income for the Trust after the site is abandoned and unable to be used.

She said the Bureau estimated the total cost of the trial to be in the “high six-figure range.”

In the March 29 notice of non-compliance to Northstar, state land office general counsel Ari Biernoff said the office expects the company and its subsidiaries to fulfill obligations agreed upon after the end of oil and gas operations on the site, even without the participation of the two operators.

The State Land Office expects Northstar to move quickly to meet its obligations to decontaminate and reclaim the rental site, and that Northstar will work with its operators, or step into their shoes as necessary, to initiate promptly plugging of inactive wells noted above, ”the notice read.

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Gregory M. Roy