The leadership at Waste Analytics has more than 25 years of waste management and environmental experience in the oil and gas industry. We gather and provide information regarding upstream oil and gas wastes, all based on GRI standards. Our data includes the type and volume of wastes generated, the disposal methods used, and our FEER Rating™, which can be used to compare and contrast the waste management practices, and potential liabilities, of oil and gas companies.
The Waste Analytics FEER Rating™ provides an easy way for investors to compare and contrast the waste management performance of oil and gas companies. We developed the rating system to take into account both the economic and environmental aspects of drilling wastes so that investors can glean insight into how a company is managing waste in relation to the EPA Waste Management Hierarchy, as well as how their Estimated Environmental Liability (EEL) compares to their financial standing.
Most oil and gas companies disclose in their 10-K filings that changes to regulations surrounding drilling wastes could have a material adverse effect on their business and prospects but don’t disclose to what degree. Utilizing our extensive experience in managing drilling wastes, along with standard methods for calculating monetary costs and liabilities for environmental matters, we have calculated the Estimated Environmental Liability (EEL) for each company’s drilling wastes, based on the amount of waste generated and the chosen disposal method in a given year. This information can be useful when assessing the risk of a particular investment.
The Global Reporting Initiative recommends that companies report on their wastes by type and disposal method; yet most oil and gas companies do not track or provide this information to investors. Waste Analytics compiles information through various sources and derives this information. We report the volumes of drilling waste generated by each company, the type of drilling waste, and the disposal methods used. This information is comparable across the sector.
We have often compared drilling waste (e.g. fracking waste) to coal ash. The oil and gas and utilities sectors both produce similar volumes of solid waste each year; both industries received exemptions from RCRA Subtitle C; and, the rules and regulations for both industries have been rather lax. Generally speaking, neither coal ash nor drilling wastes have been managed appropriately, and now companies, regulators, investors, and taxpayers are fighting over who will have to address the issue. Although it hasn't received the same amount of attention up to this point, drilling waste will become as big of an issue for the oil and gas sector as coal ash has become for utilities.
Click below to download a thought leadership article by Jeff Tyson, Head of Environmental Research and Analytics. Jeff discusses how ESG engagement can have unintended consequences, especially if we are aren't tracking or engaging all of the relevant issues.
This case study by Jeff Tyson, our Head of Environmental Research and Analytics, outlines our findings after reviewing ESG/Sustainability disclosures of 46 public oil and gas companies in the U.S. Overall, these companies are not disclosing information about the wastes they generate. This paper explains why, and provides information on potential use cases of waste data for ESG and SRI investing.
In 2016, EPA was sued by several Environmental Non-Government Organizations claiming it had failed to perform its duties under RCRA to review and revise the Subtitle D criteria for oil and gas wastes and the state plan guidelines for oil and gas wastes. EPA agreed to perform a review and, as a result, published a document to "summarize the information currently available to EPA about the generation, management and ultimate disposition of wastes from E&P operations currently exempt from regulation under RCRA Subtitle C." The document, published in April 2019, is entitled "Management of Exploration, Development and Production Wastes: Factors Informing a Decision on the Need for Regulatory Action." Waste Analytics has reviewed this document and offers our opinion of its contents as it relates to the exploration and production industry, as well as to individuals that are choosing to invest in the industry.
There are many myths about drilling waste, both within and outside the oil and gas industry. This factsheet points out some of the more common myths that we hear, and explains some important facts about drilling waste.
All oil and gas wells that are drilled generate drilling wastes. An estimated 392,000,000 barrels of drilling wastes were generated in 2014 alone in the United States. This volume of waste rivals that of coal ash. Like E&P wastes, coal ash was also exempt from federal hazardous waste rules; however, additional guidance and limits were ultimately placed on the proper disposal and reuse of coal ash, while drilling wastes remain under the radar.
Drilling wastes often contain various chemicals of potential concern, and can be a significant component of an operator's well cost and liability. Although most oil and gas companies are managing their drilling wastes according to applicable regulations, there is still potential for contamination to occur. Common constituents in drilling wastes include salts, heavy metals, and hydrocarbons, along with other proprietary chemicals.
E&P wastes are exempt from federal hazardous waste rules, and are therefore regulated by each state. There are currently no minimum national standards for the disposal of E&P wastes. The United States EPA has a statutory duty to review E&P wastes every three years and, if necessary, draft new rules or guidelines; however, they have not done so since 1988. In 2016, EPA was sued by multiple ENGOs and entered into a consent decree to determine whether new rules for E&P wastes are warranted.
While many publicly traded oil and gas companies in the U.S. have begun some form of ESG and CSR reporting, they have continued to ignore the largest solid waste stream that they generate. Although the Global Reporting Initiative GRI 306-2 Standard on Wastes and Effluents requires companies to report the total weight of hazardous and non-hazardous wastes generated, the IPIECA standard tells the oil and gas sector that there is no reason to report on their drilling mud and cuttings. This lack of reporting, whether intentional or not, results in Greenwashing.
Drilling wastes are commonly disposed of by simply burying the wastes on-site, slinging it onto fields, and spreading it up and down county roads, often without appropriate testing prior to disposal. An example of groundwater contamination from drilling wastes is in Pavillion, Wyoming, where experts state that unlined disposal pits definitely polluted groundwater. Read more at the Casper Star Tribune.
As an investor, you want to put your money into companies who are profitable and sustainable. One characteristic of a sustainable company is the proper reporting of their liabilities. Some companies, however, are able to underestimate their liabilities by not reporting, or grossly underreporting, certain facets of their business, such as decommissioning and environmental liabilities. For example, THE STAR reported that Alberta Energy Regulator internal documents warn that cleaning up the Alberta oil patch could cost an estimated $260 billion. If companies are underestimating their liabilities, they are not as profitable, or sustainable, as they lead you to believe.