New Mexico company sued by Carlsbad over brine well; state files $2.6 million compliance order

Carlsbad sues New Mexico company over brine well

SANTA FE, N.M. — The state of New Mexico and city of Carlsbad are legally pursuing an oilfield services company they said is responsible for a giant cavern that has formed a few hundred feet underground.

The city filed a lawsuit in state district court against I&W Inc. on Thursday, alleging that the company’s operation of a brine well at the site and its failure to mitigate a potential collapse of the well constitute a public nuisance that could result in irreparable harm.

The state Oil Conservation Division also issued a compliance order against the company on Thursday that spells out several violations — and demands more than $2.6 million in civil penalties.

“Between the state and the city, we are hoping that we will make more progress on getting I&W to devote resources to taking care of this,” said Pete Domenici Jr., an Albuquerque attorney representing the city.

I&W owner Eugene Irby could not be reached for comment. The company halted operations at the site last year.

The Oil Conservation Division installed an elaborate monitoring system at the site last year, hoping to detect signs of a cave-in that could possibly take with it part of a highway, a church, a trailer park, businesses and a major irrigation canal. The city is currently paying for the monitoring and early warning systems.

The well caught the attention of state regulators after two brine wells collapsed north of Carlsbad during a four-month span in 2008.

Officials are concerned because the I&W well shares some characteristics with the collapsed wells. They were all about the same age, drilled to similar depths and produced between six million and eight million barrels of brine from salt layers deep underground. Brine is often used by the oil and natural gas industry.

Unlike the well in Carlsbad, the others were far from homes and businesses. They left behind sinkholes that spanned hundreds of feet and were at least 100 feet deep.

The city of Carlsbad and the Eddy County Commission declared a state of emergency last fall because of the potential danger. They also established committees of local leaders, scientists and experts to find a way to prevent or at least mitigate a possible collapse.

Domenici said some of the experts recommend that a well at the site be reopened and a sonar study done to establish the extent of the cavern.

“The committee thinks this is necessary to develop a strategy to mitigate this situation in a way that will avoid making it bigger,” he said.

Consultants hired by the state last year used seismic surveys to get a rough estimate of the cavern’s size. It appears to stretch from the nearby highway to the Carlsbad Irrigation Canal, which serves hundreds of farmers south of the city.

Officials ensured residents that any significant change in the cavern’s ceiling or groundwater levels at the site will trigger an emergency plan to evacuate the area.

The state’s compliance order follows a letter sent in November that requested the company to reimburse the state $563,420 and turn in reports that had been required as part of its discharge permit. The reports would have included information on the size and integrity of the cavern.

The state also wanted I&W to submit a closure plan for its facility above the cavern and to take over monitoring of the site.

Jon Goldstein, head of the state Energy, Minerals and Natural Resources Department, said Thursday the Oil Conservation Division has taken numerous steps to work with I&W.

“Their failure to accept responsibility for the brine well they own, operate and profit from has forced the department to step in and require them with this enforceable order to do the right thing to protect human health and safety,” he said.

The state is giving I&W until April 22 to take corrective actions and pay the $2.6 million penalty. Otherwise, the company can request a public hearing or initiate settlement talks.

As for the court case, Domenici said the city of Carlsbad plans to ask the judge to schedule a hearing on the matter as quickly as possible.