Ovintiv Inc. OVV, a Denver-based oil and gas company, has reached a settlement agreement with the U.S. environmental and justice officials over alleged violations of the Clean Air Act. The company has been asked to implement remediation measures as part of the settlement agreement and pay a civil penalty for the alleged breaches.
Emissions Linked to OVV’s Production Facilities
Per a statement by the U.S. Environmental Protection Agency (“EPA”), the United States and the state of Utah have jointly sued Ovintiv for not following the federal and state air pollution laws. The company has been accused of failing to control emissions as per state and federal requirements. It has also been convicted of failing to adhere to inspection, monitoring and recordkeeping regulations at 22 of its production facilities within the Uinta Basin. This settlement agreement resolves the civil lawsuit against Ovintiv concerning the violations made at its oil and gas production facilities in the Uinta Basin.
The breach of the Clean Air Act led to the emission of volatile organic compounds (VOCs) and greenhouse gases (GHGs). The emission of VOCs is known to cause asthma and increase the likelihood of respiratory illnesses among vulnerable populations. Additionally, the company was held responsible for emitting large amounts of GHGs, including methane, a major contributor to global warming and climate change.
OVV’s Settlement Fine and Remediation Measures
Ovintiv must pay a civil penalty of $5.5 million, as per the settlement agreement. Additionally, it has to take corrective measures to reduce the emission of harmful gases at 139 of its facilities across Utah. These initiatives are expected to cost more than $10 million. The company also has to take extensive measures to ensure regulatory compliance. These include developing a proper design to capture VOC emissions from its oil and gas facilities and direct them to a suitable control device. The captured emissions may later be used in a productive manner.
EPA’s Efforts to Curb Methane Emissions
The EPA mentioned that the compliance measures necessitate the use of infrared cameras to conduct periodic inspections and the installation of storage tank pressure monitors to keep a check on the pressure levels at all of its facilities. The company should also improve its maintenance requirements, per the EPA website. These measures should result in the elimination of more than 2,000 tons of VOC emissions annually. Furthermore, it could reduce methane emissions equivalent to more than 50,000 metric tons of carbon dioxide (CO2) per year.
With the rise in climate change and its effect on communities across the country, the EPA is actively working toward reducing methane emissions, which are a major contributor to the environmental debacle. The settlement agreement with OVV should aid in reducing methane emissions across its 139 production facilities on Tribal and state lands.
OVV’s Zacks Rank and Key Picks
Currently, OVV carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the energy sector are PEDEVCO Corp. PED,Archrock Inc. AROC and FuelCell Energy FCEL. PEDEVCO and Archrock presently sport a Zacks Rank #1 (Strong Buy) each, while FuelCell Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PEDEVCO is engaged in the acquisition and development of energy assets in the United States and Pacific Rim countries. PED stands to benefit significantly from its holdings in the Permian Basin, one of the most prolific oil-producing regions in the United States and the D-J Basin in Colorado, which includes more than 150 high-quality drilling locations. Combined with bullish oil prices, this is expected to boost the company's production and overall profitability.
Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.
FuelCell Energy is a clean energy company offering low-carbon energy solutions. It generates power using flexible fuel sources such as biogas, natural gas and hydrogen. The company designs fuel cells that generate electricity through an electrochemical process that combines fuel with air, resulting in reduced carbon emissions and minimizing the environmental impact of power generation. As such, the company is anticipated to play a crucial role in the energy transition by enabling industries and communities to shift from traditional fossil fuels to low-carbon alternatives.
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