The US Environmental Protection Agency (EPA) has fined Callon Petroleum subsidiary Callon Permian LLC approximately $1.3 million for excess emissions at the company’s oil and gas facilities in the basin of the Permian of West Texas, according to a statement from the agency on Thursday.
The EPA detected emissions from tanks, flares and other equipment using a helicopter equipped with a special infrared camera that detects hydrocarbon leaks. Callon Permian failed to meet requirements for flares, tanks and combustors, as well as the general requirements of the federally approved Texas State Enforcement Plan, the agency said.
In a consent agreement and final order issued by EPA, Callon Permian is required to perform site-specific corrective actions, inspections, equipment upgrades, and permit and operations reviews. The agreement also requires the company to conduct optical gas imaging surveys at each of its facilities, tank pressure monitoring and combustion control device monitoring to ensure future compliance.
According to the statement, Callon Permian will take corrective actions at 13 of the company’s oil and gas facilities in the Permian Basin of West Texas, resulting in an estimated reduction of more than 1.2 million free of emissions of volatile organic compounds, which “contribute to the formation of ozone (smog), which can lead to health problems such as asthma, lung infections, bronchitis and cancer,” the EPA said. The agreement will also reduce approximately 4.6 million pounds of methane emissions.
“This settlement will help protect Permian Basin residents from hazardous emissions and sends a strong message to facilities in the area that violate health standards set forth in the Clean Air Act,” said the EPA Regional Administrator Earthea Nance. “Using state-of-the-art technology and helicopter surveillance, we are able to detect these hazardous emissions over a large geographic area. EPA will continue to deliver cleaner air for communities by holding businesses accountable by ‘application and compliance’.
Callon Petroleum has approximately 145,000 net acres in the core of the Permian Basin, according to the company’s website. Its operations are centered in the oil-heavy Delaware and Midland basins in west Texas. The Company has focused primarily on the horizontal development of several potential intervals, including several Wolfcamp and Bone Springs levels in the Delaware Basin. In the Midland Basin, the Company’s principal intervals include the Wolfcamp and Spraberry shales.
Recent asset transactions
Callon Petroleum recently closed its acquisition of Percussion Petroleum Operating II LLC’s Delaware Basin assets and the sale of its Eagle Ford assets to Ridgemar Energy Operating LLC, according to a previous news release.
Callon Petroleum paid $249 million in cash and approximately 6.3 million shares of Callon Petroleum common stock to Percussion. For the sale of its Eagle Ford assets, Callon Petroleum received $551 million in cash from Ridgemar at the closing of the sale. Both transactions reflect an effective date of January 1, 2023 and are subject to customary post-closing adjustments, according to the press release.
“We are pleased to announce the completion of another important strategic move for Callon and its shareholders. Through these two transactions, we have created a singular focus on the Permian Basin, reduced our absolute debt position and put a return to shareholders plan is underway.” Callon Petroleum CEO and President Joe Gatto said. “The Screw Percussion transaction enhances our Delaware inventory depth and also lowers our cost structure.”
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