The state of New Mexico is accusing three Texas oil executives of orchestrating “a fraudulent scheme” to pocket income from a whole bunch of oil and fuel wells in New Mexico and offload the price of plugging and cleansing up the wells onto the state’s taxpayers. The swimsuit, filed in late December by the New Mexico legal professional normal’s workplace, is the most recent salvo within the state’s struggle towards oil and fuel executives accused of foisting previous wells onto the general public.
The 72-page grievance alleges a yearslong sample of fraud and self-dealing by which the oil executives — Everett Willard Grey II, Robert Stitzel and Marquis Reed Gilmore Jr., all of Midland, Texas — repeatedly transferred wells amongst “a collection of shell companies, LLCs, and partnerships they created.” On a number of events, the lads positioned corporations out of business safety, solely to maneuver their worthwhile wells to different corporations they owned or managed exterior the chapter proceedings, the swimsuit mentioned.
New Mexico faces hundreds of thousands of {dollars} in prices to plug wells the businesses shed by way of the bankruptcies. Unplugged oil and fuel wells can emit climate-warming methane and carcinogenic gases and infrequently leak briny, radioactive wastewater, as ProPublica and Capital & Major detailed in a 2024 investigation. The newsrooms uncovered Grey, Stitzel and Gilmore’s early enterprise dealings and use of chapter proceedings.
“I cannot stand by whereas unhealthy actors benefit from the system — avoiding accountability, burdening the state with expensive remediation, and recklessly endangering the well being of New Mexicans,” Raúl Torrez, the state’s legal professional normal, mentioned in an announcement.
As a part of ProPublica and Capital & Major’s 2024 investigation, the information organizations toured dozens of wells belonging to Remnant, the group of corporations by way of which the lads launched their enterprise. Some wells leaked such excessive volumes of methane that, if ignited, the air might explode; others emitted hydrogen sulfide at probably deadly concentrations; and several other have been surrounded by oil and wastewater spills. On the time, the proprietor of an oil subject providers firm that had labored on Remnant’s wells mentioned that the lads filed for chapter safety with out paying his firm what it was owed.
The current lawsuit is “meritless” and constructed on “baseless claims,” Grey mentioned in an announcement responding to questions from ProPublica and Capital & Major. “I’ve at all times acted ethically and by no means been concerned in any actions to defraud the state of New Mexico. I strongly deny any wrongdoing on this matter,” he mentioned.
New Period Power & Digital, one in all Grey’s corporations named within the state’s grievance, ended up with 87 of the group’s greatest fuel wells, and the corporate mentioned in a press launch that these “now not align with the Firm’s enterprise mannequin.” New Period is targeted as an alternative on constructing an AI knowledge middle powered by a yet-to-be-built nuclear energy station, it mentioned.
Stitzel and Gilmore didn’t reply to requests for remark.
The techniques alleged by the legal professional normal are generally used within the business to squeeze income from previous wells earlier than corporations go bankrupt. Oil and fuel executives so steadily observe the same sample that environmentalists name it “the playbook.”
Oil corporations and commerce teams argue that the majority orphan wells are from an earlier period and that trendy operators are serving to handle the issue by paying into numerous government-managed funds that pay for the plugging of some previous wells.
The precise variety of orphan wells awaiting cleanup nationwide is unknown, however the determine is believed to be within the a whole bunch of hundreds, if not increased. New Mexico faces as a lot as a $1.6 billion invoice to plug such wells, in accordance with a June 2025 Legislative Finance Committee report.
“Because the oil growth is growing old and quite a lot of the wells have gotten low-producing, the danger is rising,” mentioned Mandy Sackett, the lead New Mexico campaigner for environmental group Earthworks. The potential for taxpayers to be saddled with plugging oil corporations’ orphan wells, she mentioned, “poses such a large monetary threat.”
“Out of the Darkish Ages”
The issue of Remnant and different corporations leaving wells as orphans is informing a broader reckoning amongst legislators and regulatory businesses concerning the inadequacy of New Mexico’s safeguards.
Oil corporations are required to put aside funds, known as bonds, that the state can name on to pay for properly plugging and environmental cleanup. These bonds are supposed to shield taxpayers from shouldering such prices within the occasion that an organization goes bankrupt or walks away.
However like all oil-producing states, New Mexico’s bonds cowl solely a fraction of the true price of cleanup. A 2024 ProPublica and Capital & Major evaluation discovered that the 15 states that account for practically all of the nation’s oil and fuel manufacturing held bonds that might cowl lower than 2% of the projected $151.3 billion price to plug the wells of their states.
In New Mexico, a contemporary try at bonding reform kicked off with hearings in October, because the state’s Oil Conservation Fee started updating bonding guidelines. The proposed amendments, that are backed by a coalition of environmental teams, would require corporations to place ahead a $150,000 bond for every inactive or low-producing properly. Analysis has proven that these are disproportionately prone to change into orphans and the state’s accountability to plug.
The proposed laws goal corporations with massive collections of those dangerous wells and would require corporations whose portfolios are made up of no less than 15% inactive or low-producing wells to purchase bonds for every of their wells. The proposals would additionally place different layers of regulatory scrutiny on gross sales of wells to poorly capitalized corporations and restrict the time that wells might stay idle earlier than needing to be plugged.
Oil Conservation Division officers mentioned in an announcement that “the events are at the moment engaged in settlement talks” for the bonding rulemaking. The company declined to touch upon the legal professional normal’s lawsuit.
New Mexico’s State Land Workplace, which oversees the state’s publicly owned land, just lately initiated the same course of to extend the sum of money put aside in bonds to plug wells inside its jurisdiction. The company estimates that there are 15,000 unplugged oil and fuel wells on land it manages.
Ari Biernoff, normal counsel of the State Land Workplace, mentioned that these reforms would deliver bonding necessities “out of the Darkish Ages” and nearer to what the company would want to fund cleanup ought to corporations stroll away.
“Any affordable observer would conclude we now have grossly insufficient bonding,” Biernoff mentioned.
Business teams have expressed dissatisfaction with the proposed guidelines.
The New Mexico Oil & Gasoline Affiliation and Unbiased Petroleum Affiliation of New Mexico submitted counterproposals with considerably decreased bonding will increase. The latter mentioned in feedback submitted to the state that its suggestion “will hold smaller operators from going out of enterprise.”
“We don’t consider it’s in New Mexico’s greatest curiosity for the State Land Workplace to kill quite a lot of smaller, state-based, good operators to go away solely a handful of supermajors,” Jim Winchester, government director of the Unbiased Petroleum Affiliation of New Mexico, wrote to the company.
Remnants of the Oil Business
Starting in 2015, Grey, Stitzel and Gilmore aggregated a number of hundred wells in southeastern New Mexico underneath the Remnant corporations, subsequently racking up regulatory violations, together with having too many inactive, unplugged wells. The state’s Oil Conservation Division gave Remnant a deadline of July 2019 to plug a few of its wells. Fifteen days earlier than the deadline, the lads positioned the corporate out of business safety.
Remnant’s dissolution kicked off a fancy and disputed collection of transactions among the many three males. In line with the legal professional normal’s grievance, Stitzel and Gilmore created a number of corporations underneath the identify Acacia and bought most of Remnant’s wells from themselves. Grey, in the meantime, created Solis Companions — an entirely owned subsidiary of Grey’s New Period — and ended up with 87 of the group’s most profitable gas-producing wells. The invoice of sale that landed the wells with Grey’s firm was for $10, and Grey signed on behalf of Remnant a change-of-operator software that despatched wells to Solis Companions.
Then, in December 2024, a significant oil firm that the state had requested to plug a few of Acacia’s wells sued Acacia to power it to wash up its personal mess. Two weeks later, Acacia filed to liquidate by way of chapter.
Of Remnant’s and Acacia’s wells, 172 ended up because the accountability of the State Land Workplace, in accordance with the company. Eleven of these have been plugged, all however one by different oil corporations that maintain leases with the company and stepped as much as do the work. Primarily based on the state’s estimated per-well cleanup price, the remaining wells might price a complete of greater than $25 million to plug.
The company was capable of declare a single bond from Remnant value $20,000.
“This can be a very vivid demonstration of why we want an improve to the bonding rule,” mentioned Biernoff, the State Land Workplace normal counsel.
Probably the most profitable wells from Grey, Stitzel and Gilmore’s foray into New Mexico’s oil and fuel business belong to Solis Companions. However even that firm seems susceptible to leaving them as orphans, because it has about 120 inactive wells on state belief land, in accordance with the State Land Workplace. Its mum or dad firm, New Period, which is pitching plans for a 3,500-acre AI knowledge middle campus in southeastern New Mexico, mentioned it’s promoting the wells.
“Having enriched themselves with the income from Solis Companions’ and Acacia’s oil and fuel manufacturing, the Particular person Defendants are as soon as once more in search of to stroll away from the plugging and remediation prices,” the legal professional normal’s grievance alleged.
Charlie Barrett is an ecologist with environmental group Oilfield Witness who has chronicled air pollution at Remnant’s and Acacia’s wells for years. “They’re previous, they’re simply falling aside,” he mentioned. They’re additionally, he mentioned, emblematic of the small oil and fuel operators that symbolize the ultimate stage of the business leaving its wells as orphans.
“I want I might say that it’s distinctive,” Barrett mentioned, “nevertheless it isn’t.”
