An agreement between the State of New Mexico and Ridgeway Arizona Oil Corp. It will plug 299 of the company’s moribund and nonproductive oil wells, and the state will pay the costs and the company will reimburse the state $30,000 per month until the bill is paid.
Prices for obstructions can exceed $30 million, said Sidney Hill, public information officer for the New Mexico Department of Energy, Minerals and Natural Resources, which is the parent company of the Division of Petroleum Conservation, which is responsible for regulation and enforcement. Per month, the repayment procedure can take more than 83 years.
The agreement waives more than $270,000 in proposed fines for produced water violations and an extinguished torch at a Ridgeway-owned facility.
Hill said the deal provides “an opportunity to mitigate the monetary threat to the state of New Mexico while plugging idle wells and potentially venting . . . as soon as possible. “
Andrew Forkes-Gudmundson, senior director of state policy at Earthworks, a nonprofit watchdog for the minerals and fossil fuel industries, said in an interview that he understands the explanation for the deal between the department and Ridgeway and that it could be the most productive. available choice. . . in the light of the circumstances. ” But I’m not sure that makes the explanation justifiable. “
New Mexico “is doing this because it doesn’t have any other equipment available,” Forkes-Gudmundson continued. “It’s as smart as they can expect in their existing frame, so we desperately want to replace the frame. Because it’s not a smart deal for the rest of the people of New Mexico.
Officials at Ridgeway Arizona Oil Corp. and its parent company, Pedevco Corp. , responded to Capital’s requests for comment.
The framework discussed through Forkes-Gudmundson is the state’s Oil and Gas Act, the main law that outlines how oil and fuel are produced in New Mexico. It covers the entire life of a well, from drilling to plugging and everything in between. Hill had in the past said that the 1935 law had not undergone primary updates since the 1980s and 1990s, making it “obsolete. “
“I hope this is a wake-up call for the legislature to take action in this consultation to protect against a repeat of this disaster,” said Tannis Fox, senior counsel at the Western Environmental Law Center.
Since September, Fox, Forkes-Gudmundson, Oil Conservation Division representatives and roughly four dozen others from environmental protection groups and the oil and gas industry have been meeting to craft an update to the act, an effort initiated by Gov. Michelle Lujan Grisham’s office. The group is scheduled to unveil a draft bill by Dec. 22 to be introduced at the legislative session beginning in January. A similar bill, without the governor’s direct backing, died last session. Hill called the Ridgeway violations “important examples” in support of Oil and Gas Act reform.
* * *
In August 2022, Ridgeway in the midst of a Capital investigation
Dozens of corporations have shut down thousands of wells under the program. Ridgeway did not have the largest number of wells in the program as a whole, however, it was the one that had already halted production (some for years, others for decades) and have closed thousands of wells under the program. been covered up a long time ago. When asked about Ridgeway’s inactive wells in 2022, Adrienne Sandoval, then the department’s director, said Ridgeway was already on the agency’s radar. The initial breach notice the department sent to Ridgeway last April showed that the department had twice sent an inspector to audit the company’s cash operations — once after Capital sent an inspector to the company.
The company has been accused of violating several laws in its cash operations, but Ridgeway has complied with state-mandated money insurance obligations, which are also part of the Oil and Gas Act. Like other oil- and fuel-producing states and the federal government, New Mexico requires corporations to purchase insurance bonds that can be redeemed to pay for plugging and cleanup abandoned wells if the corporation goes bankrupt and abandons the wells. Ridgeway Arizona has the obligations required by state law. But Ridgeway is broke, so the state is. I wouldn’t have access to that money. Even if it did, Hill said it wouldn’t be enough (just $1. 25 million), pointing to what he called the “extreme disparity” between connection prices and New Mexico’s existing bond requirements. As a result, the ministry allowed the corporation to continue operating and gradually pay the bills for clogging and cleaning.
The settlement order stated that the department needed to “resolve the alleged violations without the costs and expenses of a hearing on questions of fact and law. ” Crucially, it no longer needed to dedicate its finances and limited human resources to a lengthy and expensive legal process. battle.
Fox, of the Western Environmental Law Center, called the Ridgeway situation “emblematic of the need for financial security reform under the Oil and Gas Act. “
Ridgeway Arizona is a wholly owned unit of Pedevco Corp. , a smaller publicly traded company founded in Houston with two other oil production companies in its portfolio: EOR Operating Co. in New Mexico and Red Hawk Petroleum in Colorado . Kukes, Pedevco’s majority owner and CEO, bought his majority stake in the financially troubled company in 2018 for pennies on the dollar. He is a Russian-American who first came to prominence in the 1990s, during the post-Soviet struggle in the Russian oil industry. Kukes ran oil corporations, rarely in controversial ways, culminating in 2003 when Russian President Vladimir Putin appointed him head of Yukos Oil Co. , the country’s largest oil corporation at the time, after criminally indicting its former director. , Mikhail Khodorkovsky. After several years in the industry, Kukes returned to the spotlight in 2016 after donating $443,400 to various Republican committees and candidates, adding $273,000 to the Trump Victory Committee. According to reports at the time, he told a Russian official: “I am actively involved in Trump’s presidential campaign and am part of the election strategy group. ” »
* * *
In the United States, publicly traded corporations are required to file quarterly and annual reports with the Securities and Exchange Commission that describe (among other things) profits, losses, and potential legal liabilities. Pedevco’s most recent quarterly report, signed through Kukes on Nov. 9, makes no mention of the company’s legal troubles with New Mexico through Ridgeway, Arizona. Under the heading “Legal Proceedings,” it said: “We are not aware of any significant legal or governmental proceedings initiated against us or which are considered to be initiated against us. »
The report shows that the company increased total oil and natural gas sales volumes (measured in barrels of oil equivalent) by 43%. It also had a current capital surplus of $15. 1 million. This represents a $1. 2 million cut from 2022, due to the plugging and remediation of its non-producing wells, but due to the acquisition of new leases and the drilling of new wells. In addition, the company’s annual report states that its top four executives earned a total refund of $2. 3 million in 2022.
Pedevco owns Ridgeway through a holding company called Pedco. Hill said that when it comes to corporate structures like this, “in most cases, the subsidiary will be legally separate from the operator’s parent company and [the parent company has] some degree of coverage from the subsidiary’s liability. Attack to the parent company would require a “significant allocation of legal resources,” he added. Despite this, the Division of Petroleum Conservation “has waived its right to demand such liability and reimbursement from the parent companies. “
The division’s goal at this point is to keep Ridgeway operating. “If the operator is able to bring new wells online, its rate of reimbursement [to the state] will increase dramatically,” Hill said. “If Ridgeway is not able to bring new assets online, OCD projects that Ridgeway will only be able to make minimum payments.”
The plugging and remediation prices will likely come from the state’s orphan well recovery fund, Hill said.
“The state wants to take a very close look at this Ridgeway example and see how temporarily the numbers become vital to taxpayers,” Forkes-Gudmundson said. “I mean, $30 million is a lot of money. “
By comparison, in 2022, New Mexico started a new Office of Family Representation and Advocacy, which provides legal representation to underserved parents, children and guardians who appear before the state’s child welfare system. Its total annual budget is a little more than $10 million.
Forkes-Gudmundson praised the Division of Petroleum Conservation and Dylan Fuge, its director, for doing everything they do with the investment they get from the New Mexico Legislature.
And with at least 1,700 known abandoned wells in the state, he said, “the math gets scary very, very temporarily, and New Mexico wants to take it seriously. “
by Jerry Redfern, Capital
An agreement between the State of New Mexico and Ridgeway Arizona Oil Corp. It will plug 299 of the company’s moribund and nonproductive oil wells, and the state will pay the costs and the company will reimburse the state $30,000 per month until the bill is paid.
Plugging costs could top $30 million, said Sidney Hill, public information officer with the New Mexico Energy, Minerals and Natural Resources Department, the parent of the regulatory and enforcement Oil Conservation Division. At $30,000 a month, the repayment process could take more than 83 years.
The settlement also waives more than $270,000 in proposed fines for produced water violations and an unlit flare at a facility owned by Ridgeway.
Hill said the deal provides “an opportunity to mitigate the monetary threat to the state of New Mexico while plugging idle wells and potentially venting . . . as soon as possible. “
Andrew Forkes-Gudmundson, senior director of state policy at Earthworks, a nonprofit watchdog for the mineral and fossil fuel industries, said in an interview that he understands the explanation for the agreement between the department and Ridgeway and that it could be the More productive. option available. . . taking into account the circumstances. “But I’m not sure that makes that explanation justifiable. “
New Mexico “is doing this because it doesn’t have any other equipment available,” Forkes-Gudmundson continued. “It’s as smart as they can expect in their existing frame, so we desperately want to replace the frame. Because it’s not a smart deal for the rest of the people of New Mexico.
Officials at Ridgeway Arizona Oil Corp. and its parent company, Pedevco Corp. , responded to Capital’s requests for comment.
The framework discussed by Forkes-Gudmundson is the state’s Oil and Gas Act, the number one law outlining how oil and fuel are produced in New Mexico. It covers the entire life of a well, from drilling to plugging and everything in between. Hill has said in the past that the 1935 law had not had any primary updates since the 1980s and 1990s, making it “obsolete. “
“I hope this is a wake up call for the legislature to take action this session to protect against this catastrophe repeating itself,” said Tannis Fox, senior attorney with the Western Environmental Law Center.
Since September, representatives from Fox, Forkes-Gudmundson, the Division of Petroleum Conservation and about four dozen other members of environmental and oil and fuel industry teams have gathered to expand an update to the law, an effort initiated through the administration of Gov. Michelle Lujan Grisham. The organization is expected to submit a bill by Dec. 22 that will be presented at the legislative consultation that begins in January. A similar bill, without the governor’s direct support, died in the last consultation. Hill called Ridgeway’s violations “important examples” in favor of reforming the Oil and Gas Act.
* * *
In August 2022, Ridgeway in the midst of a Capital investigation
Dozens of corporations have shut down thousands of wells under the program. Ridgeway did not have the largest number of wells in the program as a whole, however, it was the one that had already halted production (some for years, others for decades) and have closed thousands of wells under the program. been covered up a long time ago. When asked about Ridgeway’s inactive wells in 2022, Adrienne Sandoval, then the department’s director, said Ridgeway was already on the agency’s radar. The initial breach notice the department sent to Ridgeway last April showed that the department had twice sent an inspector to audit the company’s cash operations — once after Capital sent an inspector to the company.
The company has been accused of violating several laws in its cash operations, but Ridgeway has complied with state-mandated money insurance obligations, which are also part of the Oil and Gas Act. Like other oil- and fuel-producing states and the federal government, New Mexico requires corporations to purchase insurance bonds that can be redeemed to pay for plugging and cleanup abandoned wells if the corporation goes bankrupt and abandons the wells. Ridgeway Arizona has the obligations required by state law. But Ridgeway is broke, so the state is. I wouldn’t have access to that money. Even if it did, Hill said it wouldn’t be enough (just $1. 25 million), pointing to what he called the “extreme disparity” between connection prices and New Mexico’s existing bond requirements. As a result, the ministry allowed the corporation to continue operating and gradually pay the bills for clogging and cleaning.
The settlement order stated that the department needed to “resolve the alleged violations without the costs and expenses of a hearing on issues of fact and law. “Crucially, he no longer needed to devote his finances and limited human resources to a lengthy and expensive legal process. battle.
Fox, of the Western Environmental Law Center, called the Ridgeway situation “emblematic of the need for financial security reform under the Oil and Gas Act. “
Ridgeway Arizona is a wholly owned unit of Pedevco Corp. , a smaller publicly traded company founded in Houston with two other oil production corporations in its portfolio: EOR Operating Co. in New Mexico and Red Hawk Petroleum in Colorado . Kukes, Pedevco’s majority owner and CEO, bought his majority stake in the financially troubled company in 2018 for pennies on the dollar. He is a Russian-American who first came to prominence in the 1990s, during the post-Soviet struggle in the Russian oil industry. Kukes ran oil corporations, rarely in controversial ways, culminating in 2003 when Russian President Vladimir Putin appointed him head of Yukos Oil Co. , the country’s largest oil corporation at the time, after criminally indicting its former director. , Mikhail Khodorkovsky. After several years in the industry, Kukes returned to the spotlight in 2016 after donating $443,400 to various Republican committees and candidates, adding $273,000 to the Trump Victory Committee. According to reports at the time, he told a Russian official: “I am actively involved in Trump’s presidential campaign and am part of the election strategy group. ” »
* * *
In the U. S. , publicly traded corporations are required to file quarterly and annual reports with the Securities and Exchange Commission that describe (among other things) potential profits, losses, and legal liabilities. Pedevco’s most recent quarterly report, signed through Kukes on Nov. 9, makes no mention of the company’s legal troubles with New Mexico Ridgeway in Arizona. Under the heading “Legal Proceedings,” it said, “We are not aware of any significant legal or governmental proceedings opposing us or that are deemed to be brought against us. “
The report shows that the company increased total oil and natural gas sales volumes (measured in barrels of oil equivalent) by 43%. It also had a current capital surplus of $15. 1 million. This represents a $1. 2 million cut from 2022, due to the plugging and remediation of its non-producing wells, but due to the acquisition of new leases and the drilling of new wells. In addition, the company’s annual report states that its top four executives earned a total refund of $2. 3 million in 2022.
Pedevco owns Ridgeway through a holding company called Pedco. Hill said that when dealing with corporate structures like this, “In most cases, the subsidiary will be legally distinct from the operator’s parent corporation and [the parent is] afforded a degree of protection from the liability of the subsidiary.” Going after the parent would require a “significant allocation of legal resources,” he added. Even so, the Oil Conservation Division “has not waived its right to seek such responsibility and indemnification from parent corporations.”
The purpose of the division at this time is to keep Ridgeway in business. “If the operator is able to bring new wells online, their rate of reimbursement [to the state] will increase significantly,” Hill said. “If Ridgeway is unable to bring new assets online, OCD anticipates that Ridgeway will only make minimum payments. “
Plugging and remediation prices will likely come from the state’s orphan well reclamation fund, Hill said.
“The state wants to take a very close look at this Ridgeway example and see how temporarily the numbers become vital to taxpayers,” Forkes-Gudmundson said. “I mean, $30 million is a lot of money. “
For comparison, in 2022, New Mexico introduced a new Office of Family Representation and Advocacy, which provides legal representation to underserved parents, children, and guardians who appear before the state’s child welfare system. the state. Its total annual budget is just over $10 million.
Forkes-Gudmundson praised the Division of Petroleum Conservation and Dylan Fuge, its director, for doing everything they do with the investment they get from the New Mexico Legislature.
“They clearly don’t have the support that they need,” Forkes-Gudmundson said. And with at least 1,700 known abandoned wells in the state, he said, “the math gets really scary really, really quickly — and New Mexico needs to grapple with that really seriously.”
The New Mexico is a member of States Newsroom, a network of grant-funded news bureaus and a coalition of donors as a 501c public charity(3). Source: New Mexico maintains its editorial independence. Please contact editor Shaun Griswold if you have questions: info@sourcenm. com. Follow Source New Mexico on Facebook and Twitter.
Visual journalist Jerry Redfern covers environmental and humanitarian issues in Southeast Asia and other emerging regions, as well as in the United States. His paintings range from the aftermath of U. S. bombings in Laos to agroforestry in Belize and life in the midst of logging in Borneo. Jerry’s photographs have appeared in The New York Times, The Wall Street Journal, Forbes, and Der Spiegel, among others. He has contributed to four eBook projects, including Eternal Harvest: The Legacy of American Bombs in Laos (co-authored). with Karen Coates), an IRE Book Award finalist.
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