Louisiana Orphaned Reserve Pit Cost Assessment

Abstract

Abstract In the oilfield, a reserve pit is any site (usually an earthen-pit) that is used for the collection of used drilling fluid. These sites must be closed (cleaned up and disposed off) in order to meet certain federal and local requirements. The costs associated with this are directly affected by environmental regulations, contamination levels, geographic/ecological location, and distance to an approved disposal site. Since 1983, states have had the option to set unique standards for reserve pit closure. Louisiana enacted its standards in Act 404 of the 1993 Regular Legislative Session. The work presented in this paper can be used to estimate the cost to close a single, unique reserve pit in order to meet federal and Louisiana state regulations for reserve pit closures. State approved contractors where contacted to obtain closure cost estimates for comparison with historical closure costs obtained from government records. Relationships for cost versus size and contamination levels were established. A computer program facilitates the cost estimation procedure. In the program, the state and federal regulations, and the cost estimates for various closure techniques have been compiled into a Visual Basic-driven Excel spreadsheet. All an individual user must do to generate a cost estimate for a particular reserve pit is to input data from samples taken from that pit. The study has shown that cost prediction is reasonably accurate for "normal" reserve pits that require little or no chemical remediation. However, when serious chemical remediation is needed for pits contaminated with salt or oil, the prediction loses precision due to the large number of variables and wide range of costs associated with those variables. This work has become of paramount importance for the State of Louisiana because there are currently over 1,500 "orphaned" reserve pits in Louisiana, i.e. sites for which no liable party/company can be found. The State has had to assume financial responsibility for closing these orphaned reserve pits using the statewide tax on natural gas production. The State has expressed serious interest in understanding the scope and significance of the problem that they are currently dealing with.