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Fact Sheet - Commercial Disposal Facilities

Although drilling wastes from many onshore wells are managed at the well site, some wastes cannot be managed onsite. Likewise, some types of offshore drilling wastes cannot be discharged, so they are either injected underground at the platform (not yet common in the United States) or are hauled back to shore for disposal.

According to an American Petroleum Institute waste survey, the exploration and production segment of the U.S. oil and gas industry generated more than 360 million barrels (bbl) of drilling wastes in 1985. The report estimates that 28% of drilling wastes are sent to offsite commercial facilities for disposal (Wakim 1987). A similar American Petroleum Institute study conducted ten years later found that the volume of drilling waste had declined substantially to about 150 million bbl.

Why Use a Commercial Facility?

Oil and gas companies use commercial disposal facilities for various reasons. The primary reason is that the regulatory agency with jurisdiction may not allow onsite disposal for the type of drilling waste or the specific location. Examples of inappropriate wastes for onsite disposal may include saltwater muds or very oily cuttings. Examples of locations that are not appropriate for onsite burial or land application include areas with high seasonal water tables, marshy environments, or tundra.

A second reason for sending waste to commercial facilities is that it may be more cost-effective. If an operator has a relatively small volume of waste, it may make sense to send it offsite rather than have the responsibility for constructing, operating, and closing an onsite facility. Some operators may not want the responsibility of managing their waste and prefer to send the waste to a third party for management. Although this practice appears to shift the burden of responsibility and liability to the third party, the company that originally generates the waste maintains liability indefinitely under the U.S. Superfund law. If the disposal company improperly manages the waste, the government may come back to all companies that generated the wastes disposed of at the commercial facility to share in the cost of remediation. It is important to review the business practices and compliance history of an offsite commercial disposal company to minimize the risk of future liability.

Where Are Commercial Disposal Facilities Located?

In 1997, Argonne National Laboratory conducted interviews with oil and gas officials in 31 oil- and gas-producing states to learn how oil field wastes are disposed of in their states and to identify commercial offsite disposal companies (Veil 1997). Argonne then surveyed the identified disposal companies to learn what types of wastes they disposed of, what disposal methods they used, and how much they charged their customers. At that time, there were two major offsite disposal trends. Numerous commercial disposal companies that handle exclusively oil field wastes are located in nine oil- and gas-producing states. Twenty-two other oil- and gas-producing states contain few or no disposal companies dedicated to oil and gas industry waste. The only offsite commercial disposal companies available handle general industrial wastes or are sanitary landfills. In those states, operators needing to dispose of oil field wastes offsite must send them to a local landfill or out of state.

Offsite Commercial Disposal Facilitiesclick to view larger image
Offsite Commercial Disposal Facilities

The Argonne report mentioned above contains lengthy tables that list the state, disposal company name, disposal method, disposal costs, and other comments. Table 8 provides information for disposal of oil-based muds and cuttings, and Table 10 provides information for water-based muds and cuttings.

How Do the Disposal Companies Dispose of the Wastes?

The commercial disposal companies use many different approaches for disposing of the wastes they receive (Veil 1997). For areas away from the Gulf coast, land farming operations have a significant share of the commercial disposal market. Landfills and pits represent another important disposal option for solid and oily wastes. Two New Mexico facilities evaporate the liquid fraction of the waste and then send the solids to landfills. Several other disposal facilities treat the wastes before disposing of or reusing them. A Texas facility first chemically stabilizes the waste and then landfills it. Five California facilities biologically or chemically treat waste and then reuse the residues. Several facilities use thermal treatment or incineration followed by reuse or disposal of the residues. One California commercial facility evaporates liquid wastes in a surface impoundment. Several companies in both east and west Texas operate salt caverns for commercial disposal.

Commercial facilities often use land farming or disposal pits for disposing of water-based drilling wastes. Two New Mexico companies evaporate the liquids and landfill the solids. Three Pennsylvania companies treat water-based drilling wastes and discharge them to surface waters under an NPDES permit, while a fourth Pennsylvania company treats the wastes, then discharges them to a local sanitary sewer that leads to a municipal wastewater treatment plant. A Wyoming company operates a sophisticated industrial wastewater treatment plant that either injects the treated waste or discharges it to the sanitary sewer. One California company treats the wastes and reuses the solids as landfill cover.

The largest market for offsite commercial disposal in the United States occurs when Gulf of Mexico offshore wastes are hauled back to shore. For most of the past decade, one disposal company has dominated the market. This company established a network of marine transfer facilities along the coast of Louisiana and Texas, at which operators can unload drilling wastes from work boats to barges. The barges are towed through the intracoastal waterway to Port Arthur, Texas, where the wastes are loaded into tank trucks. The trucks are driven 20 miles inland to a site where the wastes are screened and then injected underground. The site has unique geological conditions that allow huge volumes of slurried wastes to be pumped into a series of injection wells at very low pressure. According to Marinello et al. (2001), as of 2001, more than 22 million bbl of slurried waste had been injected using this mechanism, including more than 80% of the Gulf of Mexico offshore drilling waste brought back to shore and more than 90% of the naturally occurring radioactive material (NORM) from U.S. oil fields.

In the past few years, this disposal company has received some direct competition from another company that also operates a series of transfer stations along the coast. The newer company disposes of the wastes in a salt cavern located near the coast in east Texas. Other companies are in the process of permitting additional disposal caverns along the coast.

Waste Receiving Areaclick to view larger image
Waste Receiving Area at East Texas Salt Cavern Disposal Facility
Above-ground Facilitiesclick to view larger image
Above-ground Facilities at East Texas Salt Cavern Disposal Facility

Costs

The cost of offsite commercial disposal varies, depending on the disposal method used, the state in which the disposal company is located, and the degree of competition in the area. In 1997, disposal costs reported by offsite commercial disposal facilities for oil-based drilling wastes ranged from $0 to $57/bbl, $6.50 to $50/yd, and $12 to $150/ton. Disposal costs for water-based drilling wastes ranged from $0.20 to $14.70/bbl, $5 to $37.50/yd, and $15 to $55/ton (Veil 1997).

In a separate 1998 study, in which offshore operators rather than disposal companies were interviewed, the reported disposal costs were somewhat different (Veil 1998). Several companies reported onshore disposal costs, which ranged from $7.50/bbl to $350/bbl. It is highly probable that the operator costs included the cost of additional waste handling equipment, transportation, and other items while vendors quoted their disposal fees. Therefore, these two sets of cost are not readily comparable.

Another important consideration is the transportation cost. Large volumes and weights of drilling wastes are generated at each well that is drilled. For onshore wells, disposal facilities must generally be located within a 50- to 75-mile radius of the wells in order for transportation costs to be manageable.

The company that has received most of the Gulf of Mexico offshore wastes charges $7.50/bbl for disposing of water-based cuttings and from $8.50/bbl to $11/bbl for disposal of oil-based muds and cuttings. If wastes are delivered to the transfer stations, there is an additional offloading fee of $3/bbl to $3.50/bbl. Typically the operators' drilling waste containers must be washed out, and the resulting washwater must be disposed of, too. This step adds several dollars per barrel to the total cost. There are new bulk waste transport technologies emerging that may significantly reduce the complexity and costs associated with transporting drilling wastes (e.g., cuttings pumps and pneumatic conveyance).

References

Marinello, S.A., F.L. Lyon, and W.T. Ballantine, 2001, "Disposal of E&P Waste by Injection: An Assessment of Technology and Regulatory Impacts," SPE 66521, presented at the SPE/EPA/DOE Exploration & Production Environmental Conference, San Antonio, TX, February 26-28.

Veil, J.A., 1997, "Costs for Offsite Disposal of Nonhazardous Oil Field Wastes: Salt Caverns versus Other Disposal Methods," prepared for DOE's Office of Fossil Energy, April; also published by DOE- National Petroleum Technology Office as DOE/BC/W-31-109-ENG-38-3, DE97008692, September, 56 pp.

Veil, J.A., 1998, "Data Summary of Offshore Drilling Waste Disposal Practices," prepared for U.S. Environmental Protection Agency, Engineering and Analysis Division, and U.S. Department of Energy, Office of Fossil Energy, November, 35 pp.

Wakim, P.G., 1987, "API 1985 Production Waste Survey, Statistical Analysis and Survey Results," American Petroleum Institute, Washington, DC, October.