LOCAL

XTO Energy cancels plans for Eddy County oil and gas plant, group points to air pollution

Adrian Hedden
Carlsbad Current-Argus

A major oil and gas producer in the Permian Basin withdrew its application for a permit to construct and operate a natural gas facility in Eddy County, citing future infrastructure plans in the area.

XTO Energy, a subsidiary of ExxonMobil withdrew the permit application in an Aug. 31 letter to the New Mexico Environment Department.

The air quality permit application was filed by the company on Oct. 24, 2019 and was received by NMED five days later, records show.

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The application was for two facilities known as the Husky Gas Plant and Central Delivery Point planned to operate in Eddy County about 14 miles northeast of Loving, which would have had capacity to process about 200,000 barrels per day of oil stabilization, along with natural gas and natural gas liquids (NGL).

NMED records show the facility was expected to emit on an annual basis about 257 tons of nitrogen oxides (NOx), 226 tons of carbon monoxide, 742 tons of volatile organic compounds (VOCs) and 182 tons of particulate matter.

Overall, the facility was also expected to emit about 2.7 million tons per year of greenhouse gas.

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Records show NMED found the expected emissions would not exceed air quality standards, and on Aug. 4 announced its intent to approve the permit by Sept. 7.

In the letter withdrawing the permit, Ethan Boor, an environmental engineer with XTO Energy said the permit was to be withdrawn in response to “future infrastructure development plans” in Eddy County.

XTO did not respond to request for additional comments from the Current-Argus regarding the reason for the withdrawal.

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In the letter, Boor wrote that the Delaware Basin, an oil-rich western section of the greater Permian Basin which straddles the New Mexico-Texas state line, remained an important area for XTO’s ongoing fossil fuel development operations.

He noted the company recently began operations at its Cowboy Central Delivery Point, a natural gas processing plant in Lea County about 18 miles southeast of Loving and will continue to use existing infrastructure to develop in the Permian with a “smaller environmental footprint.”

“The Delaware Basin remains a key component of XTO’s future growth and the current decision has no impact on the existing operations in New Mexico,” Boor wrote. “XTO recently started up the Cowboy Central Delivery Pint and will leverage this facility and other infrastructure to continue to efficiently develop the Permian Basin with a smaller physical and environmental footprint.”

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Jeremy Nichols, climate and energy program director at Santa Fe-based environmental group WildEarth Guardians said the organization opposed the project from its start, citing its impact on air quality if the plant was built and operated.

He said that while NMED at the XTO did not acknowledge the reason for the withdrawal of the permit, Nichols suspected air quality concerns raised by WildEarth Guardians likely played a role in the decision.

"While NMED's response to our comments only says that XTO withdrew its application, it seems pretty clear that air quality concerns factored into the company's decision,” Nichols said.

“This gas plant was set to be a major installation and it seems like XTO has already invested considerably in its planning.  At the end of the day, this probably reflects the fact that XTO saw this as a losing investment, both from an economic and environmental standpoint.

“Whatever the reason, this is great news for clean air and health in southeast New Mexico and it underscores the headwinds facing industry as they own up to their true environmental liabilities.”

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In comments submitted by WildEarth Guardians in January 2019 to NMED, the group pointed to the region of the proposed plant in southeast New Mexico as one known to exceed allowable ozone levels prescribed in the National Ambient Air Quality Standard (NAAQS).

The NAAQS maximum set in 2015, is 70 parts per billion (ppb) of ozone, and New Mexico’s statutes require action if any area records 95 percent of the standard or 67 ppb taken as a three-year average.

Ozone, an air pollutant known to cause asthma and other respiratory problems, is created when NOx or VOCs interact with sunlight at the ground level.

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Exceeding the federal standard could trigger stricter restrictions from the Environmental Protection Agency and increase requirements for future permitting and operations in the area.  

State records show that between 2017 and 2019 Carlsbad in Eddy County had an average of 79 ppb of ozone, while Hobbs in neighboring Lea County also known for heavy oil and gas operations posted an average of 71 ppb.

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"We are very concerned over NMED’s conclusion that construction and operation of the Husky Gas Plant and Central Delivery Point will comply with all applicable requirements under the federal Clean Air Act and New Mexico Air Quality Control Act,” he wrote.

“In light of ozone levels in Eddy County, there is no possible way for XTO or NMED to conclude that construction and operation of the Husky Gas Plant and Central Delivery Point would not cause or contribute to violations of the ozone NAAQS.”

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.