stuck with the bill

Houston company to pay millions to remedy pollution concerns in Permian Basin

Apache Corp. will pay $4 million in penalties and spend more than $5 million on preventative measures to reduce emissions at its wells in the Permian Basin. Photo via Getty Images

A Houston company has reached a multimillion-dollar settlement with the federal government and the state of New Mexico to address air pollution concerns in the largest oil and gas producing region in the United States.

The agreement announced Tuesday with Apache Corp. calls for the company to pay $4 million in penalties and spend more than $5 million on preventative measures to reduce emissions at its wells in the Permian Basin, which spans parts of New Mexico and Texas.

Apache was accused in a civil lawsuit of failing to comply with federal and state requirements to capture and control emissions at some of its operations in the two states. Federal officials and regulators in New Mexico identified the alleged violations through field investigations and flyovers by helicopters outfitted with infrared cameras that can detect hydrocarbon vapors that are invisible to the naked eye.

Efforts by regulators to crack down on oil companies have ramped up in recent years through a combination of on-the-ground inspections, flyovers and now satellite imagery as they look for Clean Air Act violations across the Permian Basin and in other oil producing regions.

New Mexico Environment Secretary James Kenney said he's concerned about the compliance rate for companies operating in New Mexico, describing it as terrible.

“The ozone levels are rising, and you know, I think this is that moment where we have to hold up the mirror to industry and say, 'If you don’t like what you see, it’s a reflection of your own effort,” he said during an phone interview.

The civil complaint targeting Apache comes nearly a year after federal and state officials announced a similar agreement with another producer in the Permian Basin over violations. In 2022, an investigation by The Associated Press showed 533 oil and gas facilities in the region were emitting excessive amounts of methane.

Surveillance done by state and federal regulators in 2019, 2020 and 2022 turned up alleged violations at nearly two dozen of Apache’s sites.

The company said in an email that the consent decree announced Tuesday resolves alleged violations from years ago and that the company acted swiftly to remedy the issues. Changes have included modifications to allow for more measurement, monitoring and capture of emissions and increased site inspections and expedited maintenance timelines.

“Moving forward, the consent decree represents our commitment to continuous improvement across our facilities in the Permian Basin," the company said. "We also continue to collaborate with industry partners through organizations such as the Environmental Partnership and the U.N.’s Oil and Gas Methane Partnership in striving toward a more sustainable future.”

The agreement covers 422 of Apache's oil and gas well pads in New Mexico and Texas, ensuring that they will comply with state and federal clean air regulations and that past illegal emissions will be offset.

State and federal officials estimate that compliance will result in annual reductions of 900 tons of methane and more than 9,650 tons of volatile organic compounds, which contribute to smog.

In all, state officials said the recent consent decrees with energy companies cover about 15% of oil and gas production in New Mexico and about 9% of the wells.

While many operators in the Permian are complying with existing regulations, Kenney warned those that are skirting the rules will spur even greater federal and state enforcement over the entire industry if ozone levels continue to rise.

“Simply stated, the message is ‘Do better,’" Kenney said.

Apache's plan calls for making design improvements and installing new tank pressure monitoring systems that will provide advance notice of potential emissions and allow for an immediate response. Regular reports also will be submitted to the state.

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A View From HETI

MP Materials gets a boost from Apple and Defense Department investments. Courtesy photo

MP Materials, which runs the only American rare earths mine, announced a new $500 million agreement with tech giant Apple on Tuesday to produce more of the powerful magnets used in iPhones as well as other high-tech products like electric vehicles.

This news comes on the heels of last week’s announcement that the U.S. Defense Department agreed to invest $400 million in shares of the Las Vegas-based company. That will make the government the largest shareholder in MP Materials and help increase magnet production.

Despite their name, the 17 rare earth elements aren’t actually rare, but it’s hard to find them in a high enough concentration to make a mine worth the investment.

They are important ingredients in everything from smartphones and submarines to EVs and fighter jets, and it's those military applications that have made rare earths a key concern in ongoing U.S. trade talks. That's because China dominates the market and imposed new limits on exports after President Donald Trump announced his widespread tariffs. When shipments dried up, the two sides sat down in London.

The agreement with Apple will allow MP Materials to further expand its new factory in Texas to use recycled materials to produce the magnets that make iPhones vibrate. The company expects to start producing magnets for GM's electric vehicles later this year and this agreement will let it start producing magnets for Apple in 2027.

The Apple agreement represents a sliver of the company's pledge to invest $500 billion domestically during the Trump administration. And although the deal will provide a significant boost for MP Materials, the agreement with the Defense Department may be even more meaningful.

Neha Mukherjee, a rare earths analyst with Benchmark Mineral Intelligence, said in a research note that the Pentagon's 10-year promise to guarantee a minimum price for the key elements of neodymium and praseodymium will guarantee stable revenue for MP Minerals and protect it from potential price cuts by Chinese producers that are subsidized by their government.

“This is the kind of long-term commitment needed to reshape global rare earth supply chains," Mukherjee said.

Trump has made it a priority to try to reduce American reliance on China for rare earths. His administration is both helping MP Materials and trying to encourage the development of new mines that would take years to come to fruition. China has agreed to issue some permits for rare earth exports but not for military uses, and much uncertainty remains about their supply. The fear is that the trade war between the world’s two biggest economies could lead to a critical shortage of rare earth elements that could disrupt production of a variety of products. MP Materials can't satisfy all of the U.S. demand from its Mountain Pass mine in California’s Mojave Desert.

The deals by MP Materials come as Beijing and Washington have agreed to walk back on their non-tariff measures: China is to grant export permits for rare earth magnets to the U.S., and the U.S. is easing export controls on chip design software and jet engines. The truce is intended to ease tensions and prevent any catastrophic fall-off in bilateral relations, but is unlikely to address fundamental differences as both governments take steps to reduce dependency on each other.

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