New Mexico settles with Texas well operator

By Morgan Lee

SANTA FE, N.M. (AP) — New Mexico oilfield regulators have reached a settlement agreement with a Texas well operator in response to spills of oily salt water at the company’s waste-water injection sites and oil wells.

The New Mexico Oil Conservation Division confirmed Tuesday the agreement with Siana Operating of Midland, Texas, that outlines a timeline for cleaning up spills at two clusters of wells outside Eunice, in the southeastern corner of New Mexico.

Separately, the State Land Office continues to pursue a lawsuit seeking compensation from Siana on accusations that the company spilled waste at a well site on state trust lands where it had stopped making lease payments several years ago. In all, the agency says it is owed $284,000 in fees, cleanup costs and penalties. The land office has collected $10,000 from a bond that Siana posted in 2012 to guarantee lease payments and pay for potential damages to the site.

The settlement agreement with the Oil Conservation Division describes how Siana for months ignored warnings from state regulators on spills and continued to operate injection wells after its authority was revoked. A Santa Fe-based attorney for Siana Operating could not be reached Wednesday.

The company would pay a penalty of $19,000 over the course of a year and could resume operations at most of its wells if terms are met.

Those terms may help keep Siana solvent, as it attempts to satisfy creditors including a Texas-based bank. Frost Bank has filed a lawsuit against Siana and affiliate Siana Oil & Gas to ensure recovery of $13 million in debts after the company defaulted on loan payments.

Siana is a major provider of wastewater disposal services in New Mexico, operating two wells that injected over 13 million gallons underground in 2014, with relatively small-scale oil and natural gas extraction operations at nine wells.

Wastewater from drilling operations is typically delivered by truck to disposal sites like Siana’s, where most oil is skimmed off before water is injected deep underground. Oil wells in southern New Mexico also draw up salt water from an ancient, underground aquifer.

To ensure the upkeep of active wells and that abandoned wells are securely capped, Siana has posted additional bonds of $50,000 and $18,000.

It is unclear whether cleanup and capping costs would exceed those guarantees if Siana were to go out of business. New Mexico’s oil and natural gas reclamation fund ensures abandoned wells are plugged.