Wastewater disposal is certainly not the most glamorous oilfield job, but it’s essential to keeping things running smoothly, especially in Wyoming and Colorado, where oil wells pump up significantly more water than oil. Some of that comes from the hydraulic fracturing process, and some occurs naturally underground (read this to learn more about what wastewater is and where it comes from). Either way, it’s an unwanted byproduct that has to go somewhere, and for one Colorado-based oil company, that somewhere is western Nebraska.
T-Rex Oil’s plan is to charge out-of-state oil companies to use their disposal site in Sioux County, Nebraska. It would be the largest of the existing 115 saltwater injection wells that already operate in the state. Eighty trucks a day would bring 10,000 barrels of wastewater to the site.
“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 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.
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.
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 low bond amount Nebraska requires to do well reclamation if the company walks away or goes bankrupt—$10,000 versus $75,000 or more in Wyoming and Colorado? T-Rex says no, the real reason is this: the company already owns the dried up oil well so why not turn it into something useful like an injection well?
As Inside Energy’s Leigh Paterson reported, there is demand for disposal. In 2013, Wyoming and Colorado produced around 2.4 billion barrels of wastewater—and it has to go somewhere.