State alleges executives profited while communities inherited pollution and massive cleanup bills.
The state of New Mexico has filed a lawsuit accusing three oil executives from Texas of running a long-running business scheme that left taxpayers responsible for cleaning up abandoned oil and gas wells. According to the complaint, the oil executives made money from hundreds of wells and then shifted the cost of sealing and repairing those sites onto the public after their companies collapsed. The lawsuit, filed by the state attorney general in late December, describes a pattern of company transfers, bankruptcies, and paper transactions that allowed profitable wells to be kept while unprofitable and damaged sites were left behind.
State officials say the executives moved wells between a web of companies they controlled, often placing one firm into bankruptcy while shifting better wells into another company outside the court process. This left New Mexico with wells that were no longer producing but still leaking gas, oil, and polluted water into the ground. Many of these wells were never properly sealed. Such sites can release methane into the air and leak harmful wastewater into soil and groundwater, creating health and safety risks for nearby communities.
Investigations by nonprofit newsrooms in 2024 documented leaking wells once operated by companies linked to the executives. Some sites released so much gas that the air nearby could ignite, while others produced dangerous levels of toxic fumes. Oil and wastewater spills were also found around several wells. Contractors who worked at these sites reported not being paid before companies entered bankruptcy, leaving workers and landowners with few options.
One of the executives has denied all wrongdoing, stating that actions were legal and ethical. The other two did not respond to requests for comment. Despite these denials, state officials argue that the pattern of activity fits a common industry practice in which companies squeeze the last value out of aging wells and then walk away when cleanup costs become unavoidable.
New Mexico now faces a massive financial burden. State estimates suggest the cost to plug orphaned wells could reach into the billions. Across the country, the true number of abandoned wells is unknown, but experts believe it may be in the hundreds of thousands. These wells are often decades old and were drilled under weaker rules that did not require companies to set aside enough money for cleanup.
Oil companies are required to post bonds that the state can use if a company fails to clean up its wells. In practice, these bonds cover only a small share of real costs. Studies have shown that bonds nationwide would pay for only a tiny fraction of needed cleanup work. In New Mexico, a single bond collected from one failed company was worth only $20,000, even though the remaining wells may cost tens of millions to seal.
In response, state agencies are considering new rules that would require higher bonds, especially for wells that are inactive or barely producing. These wells are more likely to become abandoned. Proposed changes would also place limits on how long wells can sit unused and increase oversight when wells are sold to companies with limited financial backing.
Industry groups have pushed back, arguing that higher bond requirements could drive smaller operators out of business. Environmental advocates counter that without stronger rules, the public will continue to pay for private profits. State officials say recent events show that current safeguards are outdated and fail to protect taxpayers.
The lawsuit and proposed rule changes highlight a growing tension between oil production and public responsibility. As wells age and profits shrink, the risk that companies will walk away increases. New Mexico’s case reflects a wider national problem, where old wells remain scattered across the landscape, slowly leaking and waiting for someone else to pay the bill.
Sources:
“A Fraudulent Scheme”: New Mexico Sues Texas Oil Companies for Walking Away From Their Leaking Wells
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