New Mexico Attorney General Takes Action Against Texas Oil Operators Over Abandoned Wells

Overview of the Lawsuit

New Mexico Attorney General Raúl Torrez has initiated a civil lawsuit against three Texas oil and gas operators for allegedly exploiting a network of shell companies to evade their responsibilities related to hundreds of oil and gas wells in New Mexico. The lawsuit, filed in the 1st Judicial District Court in Santa Fe, accuses Everett Willard Gray, Marquis Fred Gilmore, and Robert Stitzel of orchestrating a scheme that left the state with significant cleanup costs for abandoned wells.

Allegations of Asset Stripping

According to the lawsuit, the three men acquired numerous low- and non-producing wells through their companies, Remnant Oil Operating LLC and Remnant Oil Company LLC. They are accused of driving these companies into bankruptcy while transferring profitable wells into newly formed entities such as Acacia Operating LLC and Solis Partners. This maneuver allegedly allowed them to retain valuable assets while offloading the environmental liabilities associated with unproductive wells onto the state.

“New Mexicans are suffering from adverse health risks and bear the brunt of environmental harms caused by these companies failing to uphold their agreed-upon duty to responsibly plug oil and gas wells when they are no longer in production,” Torrez stated, emphasizing the public health implications of the defendants’ actions.

Demands for Accountability

The lawsuit seeks several forms of relief, including:

• Order the defendants to plug and remediate inactive wells.
• Establish funds to cover future remediation costs.
• Reimburse New Mexico for past cleanup expenses.

This legal action reflects ongoing concerns in New Mexico regarding the financial and environmental burdens of orphaned oil and gas wells, which can pose serious risks to public health and safety. The state is often left to manage these liabilities when operators fail to fulfill their obligations.

The Broader Context

The issues raised in this lawsuit are not unique to New Mexico. Many states face similar challenges with oil and gas well abandonment, where operators exploit bankruptcy protections and corporate structures to avoid their remediation responsibilities. The New Mexico Oil Conservation Division has been proactive in addressing these concerns, yet the financial exposure continues to escalate as operators default on their obligations.

National Implications

Federal attention to orphan wells has increased, with funding initiatives aimed at assisting states in their cleanup efforts. Despite these efforts, gaps remain, particularly when operators utilize complex corporate structures to limit liability. The New Mexico lawsuit serves as a critical reminder of the need for stronger regulations and enforcement to protect both the environment and public health.

Conclusion

The outcome of this lawsuit could have far-reaching implications for both the oil industry and the residents of New Mexico. As the case unfolds, it will be pivotal for the state to assert its rights and ensure that those responsible for environmental damages are held accountable. This legal battle highlights the ongoing struggle to balance economic interests with the imperative of environmental stewardship.