A Colorado oil company’s plan to dispose of oil and gas wastewater by injecting it into a deep well in western Nebraska is drawing strong objections from residents who live near the proposed site.
Wastewater disposal is certainly not the most glamorous oilfield job, but it’s essential to keeping things running smoothly, especially in Colorado and Wyoming, where oil wells pump up significantly more water than oil.
The energy company, T-Rex Oil of Broomfield, is proposing what would be the largest operation of its type in Nebraska, accepting upwards of 80 truckloads and 10,000 barrels of wastewater a day at the Sioux County site, NET News in Nebraska and Inside Energy have learned. The wastewater would come from Colorado, Wyoming and possibly some from Nebraska.
The brine would then be processed on site before being pumped underground. Depths in injection wells can easily reach more than two miles.
“Our country needs oil and gas very badly,” T-Rex CEO Don Walford said. “This services that business. It makes it safer. It makes it more economical.”
But some Sioux Country residents would prefer that T-Rex keep the wastewater in its own backyard. Or at least not in their backyard.
The proposed well, and the company itself, have come under scrutiny.
“I just have reasonable doubts about the safety,” said Jane Grove, whose ranch sits near the well site. Brian Palm, a rancher and farmer in the county, worries that the disposal well could threaten fresh water aquifers – an invaluable resource on the arid Great Plains.
In 2013, Colorado produced almost 65 million barrels of oil, but almost 395 million barrels of wastewater – the super salty, sometimes chemical-laden fluid that comes up after a well is drilled, according to figures from the Colorado Oil and Gas Conservation Commission. The 2014 numbers are awaiting 4th quarter results.
One rule of thumb is that as a well becomes older in its operational life more water comes up with the oil.
Some of that comes from the hydraulic fracturing process, and some occurs naturally underground. Either way, it’s an unwanted byproduct that has to go somewhere.
“Without this water management, oil and gas doesn’t happen,” said Justin Haigler, president of Black Bison, Wyoming’s largest water services company.
Boston-based water consulting firm Bluefield Research estimates the U.S. hydraulic fracturing industry spent over $6 billion in 2014 on water management alone.
T-Rex Oil has also presented conflicting information about its plans. It was formed from the remnants of Rancher Energy Corp, a bankrupt oil firm, and had little cash on hand in 2014. According to the company’s SEC filing, T-Rex did not get insurance “against such things as blowouts and pollution risks because of the prohibitive expense.”
Even though that kind of insurance is not required by the state of Nebraska, it’s still a concern for Palm. “Where is there cash to do their due diligence and to do this right; to make it perfectly safe for our aquifer?” he asked. “What are they going to do to prove they can do this right?”
The company also suggested the Nebraska Oil and Gas Conservation Commission had given the project tacit approval, but director Bill Sydow said that just isn’t true. T-Rex has also given conflicting reports about the volume of wastewater it intends to dispose of at the site. The injection well application states “we expect to have an initial capacity of up to 10,000 barrels per day,” while the company’s December, 2014 SEC filing said the project would have potential injection rates of up to 15,000 barrels per day.
Perhaps the biggest question is why T-Rex wants to open up shop in Nebraska at all. The state is not a large oil and gas producer, and companies in Wyoming and Colorado would have to truck wastewater some distance to reach its site.
Could it be the relatively small amount required in Nebraska to be posted as bond in the event that something goes wrong – $10,000 versus $75,000 or more in Colorado and Wyoming?
T-Rex says no. The reason is that the company already owns the dried up oil well so why not turn it into something useful, like an injection well?
Marty Gottlob, the company’s geologist, says that low oil prices make this a good time to enter the wastewater business, because assets are cheap right now. “It’s like the stock market,” he said. “Buy low, sell high.”
But the company may face an uphill battle to get the required permit.
Like many industrial processes, injection wells do come with risks. Inside Energy has reported that in North Dakota, for example, the wastewater spill rate per well almost tripled between 2004 and 2013.
In Colorado, the Oil and Gas Conservation Commission reported more than 14,000 barrels of spilled wastewater, which can be deadly to soil and plant life, in 2013 and more than 13,500 barrels through the 3rd quarter of 2014.
Another concern is that scientists from Ohio to Oklahoma have linked increases in seismic activity to injection wells.