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HomeNewsState land office sues Texas oil company over lease payments

State land office sues Texas oil company over lease payments

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The New Mexico State Land Office is suing a Texas-based oil company for years of overdue fees and recent environmental cleanup costs at a waste-water injection well used by various oil producers.

Siana Operating of Midland, Texas, was notified Thursday of the lawsuit in Santa Fe District Court seeking compensation, punitive damages and access to the company’s accounting records. State Land Commissioner Aubrey Dunn says Siana continued to operate a salt-water injection well on state trust lands in southeastern New Mexico after its lease expired in 2011 while avoiding $114,000 in disposal fees.

In all, the agency says it is owed $284,000 in fees, cleanup costs and penalties. A Santa Fe-based attorney for Siana, Robert Stranahan, said his client was reviewing the lawsuit and had no immediate comment.

The lawsuit comes as New Mexico well regulators at the Oil Conservation Division struggle to hold the financially distressed company accountable for a string of spills of oil, salt water and other oil-field waste at a collection of wells outside the town of Eunice. Siana is a major provider of well-water disposal services in New Mexico, operating two disposal wells that injected over 13 million gallons underground in 2014, with relatively small-scale oil and natural gas extraction operations at nine wells.

Wastewater from drilling operations is typically delivered by truck to disposal sites such as Siana’s, where most oil is skimmed off before water is injected deep underground. Oil wells in southern New Mexico draw up large quantities of salt water from ancient aquifers as they extract oil and natural gas.

Beyond New Mexico, a Texas-based bank has filed a lawsuit in against Siana Operating, affiliate Siana Oil & Gas and corporate owner Tom Ragsdale seeking to ensure recovery of nearly $13 million in debts after the companies defaulted on loan payments.

Frost Bank asked a state district court in Texas to appoint a receiver to run the Siana companies. The bank alleges that the Siana businesses have defaulted on loan payments, while struggling to meet bonding requirements on Texas oil and gas leases and failing to pay vendors as lawsuits from creditors stack up.

The lawsuit states that “Siana Oil and Siana Operating have said in conversations with Frost (Bank) that they do not intend to pay their vendors and are simply waiting to negotiate their payables or be sued.”

Stanahan declined to comment that lawsuit.

The Siana attorney said a possible settlement is under negotiation with the New Mexico Oil Conservation Division. Division inspectors say Siana failed to report a spill of contaminated water and then significantly underestimated the spill after it was discovered by inspectors last year. Futher inspections at other wells turned up evidence of other unreported spills.

The division is seeking authority to ensure compliance by Siana or declare its wells abandoned, plug them and access security bonds.

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