P.1 

RCRA Box 321 

Prepped by Ryan Dugan 

Document Number: 

258) OGRC-S0043 

Docket Number: 

F-93-OGRC-FFFFF 

Printed 5/8/2007 3:36:34 PM Sheet 258 of 259 
P.2 

0GRC~S0(M3 

ECONOMIC IMPACT OF THE TOXICITY CHARACTERISTIC RULE 

ON THE CRUDE OIL RECLAIMING INDUSTRY 

Submitted to: 

U.S. Environmental Protection Agency 

Office of Solid Waste 

2800 Crystal Drive 

Washington, D.C. 20460 

Submitted by: 

Science Applications International Corporation 

8400 Westpark Drive 

McLean, Virginia 22102 

November 30, 1990 

EPA Contract No. 68-WO-0025 

SAIC Project No. 1-824-03-322-05 
P.3 

ECONOMIC IMPACT OF THE TOXICITY CHARACTERISTIC RULE 

ON THE CRUDE OIL RECLAIMING INDUSTRY 

Industry Profile 

Crude oil reclaimers perform a service for the petroleum industry by collecting tank 

bottoms, produced water, and produced water skimmings, all of which contain recoverable 

quantities of crude oil. The inputs for the reclaiming industry are derived from the primary 

production and exploration (P&E) field operations and from Class II UIC wells which are 

used to dispose of produced water. Reclaimers primarily use heat treatment and 

demulsifying agents to separate the recoverable crude from the basin sediment and water 

(BS&W) inherent in the various P&E wastestreams. The reclaimed crude oil is sold to 

pipelines and the BS&W is disposed of. 

Under the Toxicity Characteristic rule promulgated on March 29, 1990, crude oil 

reclaimers' previously non-hazardous wastes that exhibit the Toxicity Characteristic (TC) are 

to be managed under Subtitle C as hazardous wastes. While EPA does not have conclusive 

data showing that crude oil reclaimers' wastes do or do not exhibit the TC, preliminary 

information indicates that reclaimers believe at least some of the wastes will fail the TC due 

to benzene. Furthermore, due to the variable conditions of oilfield wastes, frequent testing 

would be required to determine whether the wastes fail the TC, unless the reclaimer 

assumes that all wastes will fail the TC. For the purposes of this analysis, it is assumed that 

all sediment wastes will exhibit the TC. It is also assumed that produced water is exempt 

from Subtitle C. 

The TC rule will impose new compliance costs for the crude oil reclaimers. These new 

costs will involve the cost differential between disposing of non-hazardous wastes in a 

Subtitle D facility and disposing of the now hazardous wastes in a Subtitle C facility. The 

following analysis will examine the effect that this cost increase will have on projected net 

revenues of the crude oil industry. In this cost analysis an assumption is made that solid or 

sludge wastes are disposed of in landfills; also, no reclaimer will convert his on-site Subtitle 

D landfill to a Subtitle C landfill due to prohibitive expense. 

Methodology 

In October and November 1990, staff from EPA's Waste Management Division collected 

information from reclaimers and state regulatory agencies by telephone conversations and 

an Interstate Oil Compact Commission (IOCC) survey. These data were compiled for use 

in the present cost impact analysis. Extrapolations and assumptions were made with respect 

to this data in order to produce an estimate of the effect of the TC rule on crude oil 

reclaimers. A detailed description and explanation of each extrapolation or assumption is 

provided in the Attachments. Section A below provides a discussion of disposal cost impacts 

by showing before TC and after TC costs. Section B shows how the increased disposal costs 

are reflected in total revenues for the industry. 
P.4 

A. DISPOSAL COST ANALYSIS 

Crude Oil Production and Revenues 

Crude oil reclaimers produce almost 3 million barrels of oil every year, as shown in 

Attachment 1. With 260 reclaimers active in the industry, on average each produces about 

11,000 barrels of crude annually. Assuming a price range of $16 to $32 per barrel for 

reclaimed crude oil, reclaimers receive between $176,000 and $352,000 each year for their 

crude oil. Average annual receipts from the sale of the reclaimed crude oil are $264,000 

in this costing model. 

Disposal Costs 

For purposes of this analysis, assume that BS&W comprises 80 percent of most tank 

bottoms collected, and crude oil is the remaining 20 percent.1 At this level, reclaimers 

neither pay for nor are paid to collect tank bottoms.2 Of the BS&W, 75 percent is assumed 

to be produced water and 25 percent is sediment.3 For facilities that collect produced 

water skimmings, it is assumed that the skimmings contain 90 percent crude and 10 percent 

water with negligible sediment content. Assuming that produced water is excluded from the 

TC rule, this analysis considers only the higher compliance costs for the disposal of 

sediments. Costs for disposal of produced water are, however, included in the revenue 

section. The new management costs estimated here will consist of transportation to and 

disposal in a Subtitle C landfill. Attachment 2 provides an explanation of these charges. 

In this analysis, the following costs are assumed. Attachment 3 provides calculations of the 

amount of sediment disposed in each scenario. 

1

 EPA also attempted to model a 50% percent crude and 50% BS&W scenario. 

Information in Attachment 7 explains why this scenario was not used. 

2

 From telephone discussion with Barry Peters, A.A. Oilfield Service, Inc., Hobbs, NM., 

October 29, 1990. 

3

 Provided by Mr. Paul Bohannon, a Midland, Texas attorney representing several crude 

oil reclaimers, in a memo to EPA dated September 9, 1990. 

2 
P.5 

Disposal Costs Before and After the TC Rule 

On-site 

Off-site 

Before TC rule/Subtitle D 

$.50 per barrel 

$2.00 per barrel 

After TC rule/Subtitle C 

N/A 

$110 per barrel and $210 per 

barrel 

Disposal Scenarios 

In order to thoroughly examine the possible effects that the TC rule will have, three 

waste management scenarios are developed that involve different inputs (tank bottoms, 

produced water, and produced water skimmings) and different combinations of on-site and 

off-site disposal. In all scenarios, it is assumed that 11,000 barrels of crude are produced 

annually by each reclaimer. Because it is assumed that disposal charges for produced water 

do not change under the TC rule, there may be incentives for crude oil reclaimers to 

remove as much water and crude as possible from the tank bottoms, and thereby reduce 

wastes that must be disposed of in a Subtitle C facility. This may minimize the increased 

disposal costs to the reclaimer. Other non-quantified costs include other costs of compliance 

under Subtitle C such as manifesting, recordkeeping and reporting and the administrative 

costs associated with each. Also, it is assumed that all wastes are stored in a RCRA-exempt 

reclamation unit until they are hauled away. Therefore, no waste accumulation occurs on 

the generator's (reclaimer's) site and no increased costs associated with generator storage 

compliance are incurred. 
P.6 

Scenario 1: Tank bottoms only 

Under this scenario, a crude oil reclaimer will receive tank bottoms that contain a 

fraction of crude which is reclaimed and sold. The remainder of the tank bottom is 75 

percent water and 25 percent sediment. As shown in Attachment 3, 11,000 barrels of 

sediments are generated in the reclamation process. 

This scenario shows the cost difference between disposing of tank bottom sediment in 

a Subtitle D landfill on-site or off-site and a Subtitle C off-site landfill. The assumed costs 

discussed previously are utilized here and the results are summarized below. Attachment 

4 provides details about how the results are derived. 

Scenario 1: Disposal Costs of Tank Bottoms Sediment 

On-site 

Off-site 

Before TC rule/Subtitle D 

11,000 bbl * $.50/bbl = 

$5500 per year per reclaimer 

11,000 bbl • $2.00/bbl= $22,000 

per year per reclaimer 

After TC rule/Subtitle C 

N/A 

At $110/barrel: 

11,000 * $110/bbl = 

$1,210,000 per year per reclaimer 

At $210/barrel: 

11,000 * $210/bbl = 

$2,310,000 per year per reclaimer 
P.7 

Scenario 2: Tank Bottoms and Produced Water Skimmings 

Crude oil reclaimers under this scenario receive both tank bottoms and produced water 

skimmings from oil producers and Class II well operators. Crude oil is recovered from both 

types of inputs and then sold, and the reclaimer disposes of the produced water and solids 

as under the previous scenario. 

Reclaimers pay $16.20 per barrel for produced water skimmings if the skimmings contain 

10 percent or less water.4 It is assumed in this scenario that the skimmings do contain less 

than 10 percent water. Therefore, the reclaimer pays $100,000 for the skimmings as 

explained in Attachment 5. Also, under this scenario it is assumed that 50 percent of the 

crude oil recovered by reclaimers is from tank bottoms and 50 percent is from skimmings. 

(It should be noted that market conditions will determine the most advantageous mix of 

tank bottoms and skimmings inputs.) This combination produces 5500 barrels of solids, as 

shown in Attachment 3. Assuming the same costs of disposal as in Scenario 1, the results 

are summarized below. 

Scenario 2: Disposal Costs of Tank Bottoms Sediment 

On-site 

Off-site 

Before TC rule/Subtitle D 

5500 bbl * .50 = $2750 per year 

per reclaimer 

5500 bbl * 2.00 = $11,000 per year 

per reclaimer 

After TC rule/Subtitle C 

N/A 

At $ 110/barrel: 

5500 bbl * 110 = $605,000 per 

year per reclaimer 

At $210/barrel: 

5500 bbl * 210 = $1,155,000 per 

year per reclaimer 

4

 Information provided Mr. Paul Bishop, owner of Atascosa reclamation facility in 

Jourdanton, Texas, during telephone conversation November 5, 1990. 
P.8 

Scenario 3: Tank Bottoms and Produced Water 

Reclaimers under this scenario reclaim crude oil from tank bottoms and produced water, 

but the quantity of crude oil recovered from produced water is negligible. Assume in this 

scenario that the reclaimer derives revenues from disposal of the produced water in an onsite Class II UIC well. He charges his clients $.20 per barrel for this service.5

 The 

reclaimer will dispose of 11,000 barrels of sediment in this scenario and will dispose of 

33,000 barrels of water from the tank bottoms. For purposes of illustration, assume that he 

will also pick up and dispose of 50,000 barrels of produced water. 

Scenario 3: Disposal Costs of Tank Bottoms Sediment 

On-site 

Off-site 

Before TC rule/Subtitle D 

11,000 bbl * .50/bbl = $5500 per 

year per reclaimer 

11,000 bbl • 2.00/bbl = $22,000 

per year per reclaimer 

After TC rule/Subtitle C 

N/A 

At $ 110/barrel: 

11,000 * 110/bbl = $1,210,000 

per year per reclaimer 

At $210/barrel: 

11,000 * 210/bbl = $2,310,000 

per year per reclaimer 

5

 Information provided in telephone conversation with Barry Peters, A.A. Oilfield 

Service, Hobbs, NM on October 29, 1990. 
P.9 

B. NET REVENUE IMPACT ANALYSIS 

The effect on revenues that these increased costs will have is examined in this analysis. 

Two cost assumptions for Subtitle C disposal are utilized, one at $110 per barrel and one 

at $210 per barrel, as explained in Attachment 2. Three revenue scenarios are examined, 

one at low revenue where reclaimed crude is $16 per barrel, one where crude is an average 

price of $24 per barrel, and a high revenue scenario with reclaimed crude at $32 per barrel. 

Also included is $80,100 of additional operating costs incurred by reclaimers both before 

and after the TC rule. An explanation of the derivation of the operating costs is provided 

in Attachment 7. 

As depicted in Attachment 7, under no circumstances with the assumption made in this 

analysis do reclaimers earn positive net income after the first year under the new TC rule.6 

6

 These revenue scenarios are not capitalized over time due to the large negative 

revenues that result after the first year of compliance with the TC. 
P.10 

ATTACHMENT 1 

CRUDE OIL PRODUCTION AND REVENUES BY RECLAIMERS 

The following information was collected from state regulatory agencies by EPA's Waste 

Management Division staff in October, 1990. 

Crude oil sold by 260 active reclaimers: 

States reporting Crude sold per year 

active reclaimers by reclaimers (bbH Number of reclaimers 

Oklahoma 

Texas 

Kansas 

New Mexico 

Louisiana 

Mississippi 

Nevada 

North Dakota 

Nebraska 

1,680,000 

456,540 

no data 

132,000 

106,488 

51,744 

no data 

13,000 

4.000 

137 (53%) 

45 (17%) 

40 (15%) 

17 ( 7%) 

11 ( 4%) 

5 ( 2%) 

3 ( 1%) 

1 (0.5%) 

1 rt).5%} 

Totals 2,443,772 260 

Nevada and Kansas were unable to supply information on the amount of crude sold by the 

reclaimers in their states. These reclaimers account for 16 percent of the total number of 

reclaimers, so there is a significant amount of crude oil reclaimed that is not included in the 

production numbers above. The total reported amount of production, 2,443,772 barrels 

accounts for 84 percent of the reclaimers and this amount extrapolated another 16 percent 

results in a total of 3 million barrels of crude oil reclaimed by all 260 reclaimers: 

Total crude oil sold by 260 reclaimers: 

2.443.772 barrels of crude sold 

84% of total production 

= 2,909,252 barrels of crude sold 

(approximately 3 million) 
P.11 

Average crude oil produced by each reclaimer per year: 

3 million barrels 

260 reclaimers = about 11,000 barrels 

per reclaimer per year 

Revenues earned by each reclaimer per year: 

a) At low reclaimed crude oil price ($16/barrel) = $176,000 

b) At average reclaimed crude oil price ($24/barrel) = $264,000 

c) At high reclaimed crude oil price ($32/barrel) = $352,000 

Telephone contact with crude oil reclaimers confirmed that reclaimed crude oil prices are 

typically $3 to $4 less than the posted crude price. 
P.12 

ATTACHMENT 2 

SOURCES OF DISPOSAL COST ESTIMATES 

Several crude oil reclaimers were interviewed by phone about their activities and the 

costs associated with the disposal of their BS&W wastes. This information provided the 

basis for the cost assumptions made in the analysis. 

a.) Mr. Barry Peters at A.A. Oilfield Services in Hobbs, New Mexico reported Subtitle 

D landfill costs of $.60/barrel to $2.00/barrel. 

b.) Mr. Bob Kimmel at Midwestern Reclamation in Snyder, Texas pays $1.50/barrel for 

off-site Subtitle D landfill disposal. 

c.) Subtitle C disposal costs are significantly higher. Barry Peters at A.A. Oilfield 

Services estimates that tank bottom disposal in a hazardous waste facility costs 

$550/barrel. EPA, however, provided cost estimates of $100/barrel. In addition, 

telephone calls to three hazardous waste management facilities in Regions IV and 

VI indicated that $110/barrel is more realistic than $550/barrel. Prices were quoted 

for dry sludges, those that pass the Paint Filter Liquids test, as well as for wet 

sludges, which must be stabilized prior to disposal. Prices per metric ton dry sludge 

ranged from $130 to $295; price per metric ton wet sludge ranged from $245 to $345. 

These translate roughly to $32 to $74 per barrel for dry sludges and $61 to $86 per 

barrel for wet sludges. Costs per barrel would actually be higher because of the 

increased handling charges incurred. One facility quoted the price at $80 per 55-

gallon drum ($61 per barrel) of dry sludge and $120 drum ($92 per barrel) of wet 

sludge. EPA determined that bracketing disposal costs between $110 and $210 per 

barrel would be appropriate. 

For the purposes of this discussion, assume $.50/barrel for on-site disposal of solids in a 

Subtitle D facility and $2.00 barrel for off-site disposal in a Subtitle D facility. Both Subtitle 

C cost estimates of $110/barrel and $210/barrel are considered for illustrative purposes. 

These include $10/barrel transportation costs to the hazardous waste disposal facility. Mr. 

Kimmel at Midwestern Reclamation quoted this $10/barrel cost. 

Each of these scenarios assumes that all produced water is exempt from the TC rule and 

may continue to be disposed of in a Class II well at a cost of $.30/barrel. Mr. Bohannon 

in Midland, however, considers that produced water will not be exempt from the TC rule 

and that charges for disposal in a Class I well will increase to $2.00/gallon ($84 per barrel). 

10 
P.13 

ATTACHMENT 3 

PRODUCTION OF BS&W BY RECLAIMERS 

BS&W components 

According to Mr. Paul Bohannon, an attorney in Midland, Texas representing a group 

of reclaimers, 75 percent of BS&W is produced water and the remaining 25 percent is 

sediment from tank bottoms. Produced water and sediment are each subject to different 

disposal costs so it is important to know the volume of each component that a reclaimer is 

responsible for disposing of. 

Volume of BS&W produced by reclaimers 

Scenario 1: In this scenario reclaimers derive all of their crude oil from tank bottoms. 

Assuming that they produce 11,000 barrels of crude annually, they must dispose of 11,000 

barrels of sediment and 33,000 barrels of produced water. 

11.000 barrels of reclaimed crude 

20% crude portion of tank bottoms = 55,000 barrels of tank bottoms 

55,000 - 11,000 = 44,000 barrels of BS&W 

44,000 barrels * 25% sediment content = 11,000 barrels of sediment 

44,000 barrels * 75% water content = 33,000 barrels of water 

Scenario 2: In this scenario reclaimers derive 50 percent of their crude from tank bottoms 

and 50 percent from produced water skimmings. They will, therefore, produce 5500 barrels 

of crude from tank bottoms and 5500 barrels from skimmings. Skimmings contain a 

negligible amount of solids. They will generate 5500 barrels of sediment and 17,111 barrels 

of produced water which must be disposed of. . 

5500 barrels of reclaimed crude from tank bottoms 

20% crude portion of tank bottoms = 27,500 barrels 

of tank bottoms 

27,500 - 5500 = 22,000 barrels of BS&W 

22,000 barrels * 25% sediment content = 5500 barrels of sediment 

22,000 barrels * 75% water content = 16,500 barrels of water 

11 
P.14 

5500 barrels of reclaimed crude from skimmings 

90% crude portion of skimmings =6111 barrels of 

skimmings 

6111 - 5500 = 611 barrels of water 

Scenario 3: The volumes of sediment and produced water generated under this scenario 

are the same as those in Scenario 1 above. 

11.000 barrels of reclaimed crude 

20% crude portion of tank bottoms = 55,000 barrels of tank bottoms 

55,000 - 11,000 = 44,000 barrels of BS&W 

44,000 barrels * 25% sediment content = 11,000 barrels of sediment 

44,000 barrels * 75% water content = 33,000 barrels of water 

Assume an additional 50,000 barrels of water are disposed of on-site. 

12 
P.15 

ATTACHMENT 4 

DISPOSAL COSTS OF TANK BOTTOMS ONLY 

Scenario 1: Tank Bottoms Only* 

la: Before TC, On-site D disposal 

11,000 bbl * $.50/barrel = $5500/year/reclaimer 

After TC, Off-site C disposal at $110/barrel 

11,000 bbl * $110/barrel = $l,210,000/year/reclaimer 

After TC, Off-site C disposal at $210/barrel 

11,000 bbl * $210/barrel = $2,310,000/year/reclaimer 

lb: Before TC, Off-site D disposal 

11,000 bbl * $2.00/bbl = $22,000/year/reclaimer 

After TC, Off-site C disposal at $110/barrel 

11,000 bbl * $ 110/barrel = $l,210,00/year/reclaimer 

After TC, Off-site C disposal at $210/barrel 

11,000 bbl * $210/barrel = $2,310,000/year/reclaimer 

* This cost analysis assumes that produced water is exempt from the TC rule and will not 

incur higher disposal costs. Costs for water disposal remain constant so they will not show 

a new impact on disposal costs. 

13 
P.16 

ATTACHMENT 5 

DISPOSAL COSTS OF TANK BOTTOMS AND PRODUCED WATER 

Price of produced water skimmings 

Mr. Paul Bishop, owner of Atascosa in Jourdanton, Texas states that 90 percent of 

produced water skimmings is crude oil and 10 percent is water. Mr. Bishop, as well as Mr. 

Peters from A.A. Oilfield Service, Inc., report that if skimmings contain 10 percent or less 

water, the reclaimer must pay the producer for the skimmings. For purposes of illustration 

in this scenario it is assumed that the reclaimer does purchase the skimmings at $16.20 per 

barrel. This price is based on Mr. Bishop's costs for skimmings. Mr. Bishop pays $18 per 

barrel of oil produced from skimmings. Subtracting out the 10 percent that is water, a net 

cost of $16.20 results. 

$18.00 per barrel of oil - $1.80 per barrel of water = $16.20 

If each reclaimer is purchasing 6111 barrels of skimmings each year as shown in Attachment 

3, they incur the following annual cost of 

6111 bbl •* $16.20 = about $100,000 

This purchase price of crude oil skimmings is not included in the disposal cost analysis 

below, but is included in the net revenue analysis in Section B and Attachment 7. 

Sources of crude oil and BS&W under Scenario 2: 

As discussed in Attachment 3, reclaimers in Scenario 2 will dispose of 11,000 barrels of 

sediment and 83,000 barrels of produced water annually. 

The costs associated with this scenario can be derived as follows. 

Scenario 2: Tank Bottoms and Produced Water Skimmings 

2a: Before TC, On-site D disposal 

5500 bbl * $.50 = $2750/year/reclaimer 

After TC, Off-site C disposal at $110/barrel 

5500 bbl * $110 = $605,500/year/reclaimer 

After TC, Off-site C disposal at $210/barrel 

5500 bbl * $210 = $l,155,000/year/reclaimer 

14 

* 
P.17 

2b: Before TC, Off-site D disposal 

5500 bbl * $2.00/bbl = $ll,000/year/reclaimer 

After TC, Off-site C disposal at $110/barrel 

5500 bbl * $110/bbl = $605,500/year/reclaimer 

After TC, Off-site C disposal at $210/barrel 

5500 bbl * $210 = $l,155,000/year/reclaimer 

* This cost analysis assumes that produced water is exempt from the TC rule and will not 

incur higher disposal costs. 

15 
P.18 

ATTACHMENT 6 

DISPOSAL COSTS OF TANK BOTTOM SEDIMENT 

AND PRODUCED WATER 

Under this scenario a reclaimer disposes of both tank bottom sediment and produced 

water. Each component has a different disposal cost associated with it. Sediment continues 

to cost either $110 per barrel to $510 per barrel to dispose of in a Subtitle C off-site landfill. 

Produced water is exempt from this TC, however, so it is much less costly to dispose of. 

Under this scenario, disposal costs are not incurred for produced water because the 

reclaimer has an on-site Class II well. It is assumed that operating costs of this well are 

negligible. 

Scenario 3: Tank Bottoms and Produced Water* 

3a: Before TC, On-site D disposal 

11,000 bbl * $.50/barrel = $5500/year/reclaimer 

After TC, Off-site C disposal at $110/barrel 

11,000 bbl * $110/barrel = $l,210,000/year/reclaimer 

After TC, Off-site C disposal at $210/barrel 

11,000 bbl * $210/barrel = $2,310,000/year/reclaimer 

3b: Before TC, Off-site D disposal 

11,000 bbl * $2.00/bbl = $22,000/year/reclaimer 

After TC, Off-site C disposal at $110/barrel 

11,000 bbl * $110/barrel = $l,210,00/year/reclaimer 

After TC, Off-site C disposal at $210/barrel 

11,000 bbl * $210/barrel = $2,310,000/year/reclaimer 

* This cost analysis assumes that produced water is exempt from the TC rule and will not 

incur higher disposal costs. Costs for water disposal remain constant so they will not show 

a new impact on disposal costs. 

16 
P.19 

ATTACHMENT 7 

NET REVENUE SCENARIOS 

It is assumed in these scenarios that crude oil prices will be between $20 and $35 per 

barrel. The reclaimed crude oil market price is $3 to $4/bbl below this market price, 

however. These prices were derived by EPA based on recent market prices. Therefore, for 

these net revenue scenarios the reclaimed crude oil price range is $16 to $32 per barrel. 

The average price is $24 per barrel. The following scenarios include a low revenue scenario 

where reclaimed crude is $16 per barrel, an average revenue scenario where the crude is 

$24 per barrel, and a high revenue scenario in which reclaimed crude sells for $32 per 

barrel. Also, under each revenue scenario two cost assumptions are utilized. Net revenue 

is presented with Subtitle C off-site disposal costs of $110/barrel and $510/barrel. 

Another consideration in these scenarios, is the additional costs associated with crude 

oil reclaiming. These costs include raw material collection, heat/chemical treatment, and 

general and administrative expenses. Paul Bishop of Atascosa in Jourdanton, Texas 

provided information on monthly expenses associated with these activities. His firm, 

however, produces 36,000 barrels of crude oil every year and this is about three times larger 

than the typical reclaimer considered here. Therefore, Mr. Bishop's monthly expenses were 

reduced by 67 percent and then reformulated into annual expenses. It is possible that 

economies of scale inherent in the larger facility's operations may lessen the difference 

between the costs associated with different sizes of facilities. It is also important to note 

that this analysis does not include costs for additional equipment, such as dewatering 

equipment, that may be purchased to minimize the volumes of regulated waste to be 

disposed of in a Subtitle C facility. Nor does this analysis explore other possibilities that the 

industry may pursue, such as altering the reclamation process, such that volumes of wastes 

exhibiting the TC are minimized. 

The typical monthly expenses of Atascosa include: 

Raw Material Collection $9,000 

Heat/Chemical Treatment $7,000 

G & A and Miscellaneous $5,250 

The typical expenses under this scenario for other reclaimers will be: 

Raw Material Collection: $3,000 ($9,000 * 1/3) or $36,000/year 

Heat/Chemical Treatment: $2,333 ($7,000 * 1/3) or $25,200/year 

G & A and Miscellaneous: $1,750 ($5,250 * 1/3) or $18.900/year 

Total annual expenses: $80,100/year 

17 
P.20 

Costs for the disposal of produced water are included in the net revenue equations. 

For Scenario 1, 33,000 barrels of water * $.30 per barrel = $9900 

For Scenario 2, 17,111 barrels of water * $.30 per barrel = $5133 

For Scenario 3, no disposal costs for produced water are incurred. Income of $10,000 for 

disposal services on-site in Class II wells is included in the revenue equations. 

Mr. Paul Bohannon provided a cost analysis that showed under all scenarios negative 

revenue resulting from the higher disposal costs under the TC rule. The analysis provided 

by Mr. Bohannon estimated revenues taking into account the increased cost of Subtitle C 

disposal. Five scenarios were included and they varied with respect to the amount of BS&W 

in the input streams. A comparison between these two cost analyses is difficult due to 

different assumptions made and different cost impacts included. For example, Mr. 

Bohannon's analysis includes a $2.00/gallon disposal charge for produced water but the 

present analysis assumes that produced water is exempt from TC and, therefore, that 

disposal charges remain the same at $.30/barrel.7 Also, the analysis described here includes 

other expenses to reclaimers ($80,100/year). It is unclear whether Mr. Bohannon's analysis 

includes these expenses. It is significant, however, that both analyses show that negative 

revenues occur due to the increased disposal costs associated with the TC rule. Mr. 

Bohannon's revenues are not as low as the present analysis' revenues, which may indicate 

that this analysis is more conservative than Mr. Bohannon's. 

Consideration of Alternative Crude Oil and BS&W Blends 

For this analysis it was assumed that tank bottoms contain 20 percent crude and 80 percent 

BS&W. EPA attempted to model the scenarios using a 50 percent crude oil/50 percent 

BS&W mixture, because information from reclaimers indicated that other blends besides 

20/80 are reclaimed. The calculations below, which incorporate the assumptions made 

throughout this analysis, indicate that even at average crude oil price ($24 per barrel) 

reclaimers do not show positive revenues before application of the TC. Therefore, EPA 

believes that the use of the 50/50 blend is not appropriate given the assumptions made in 

this analysis. It is possible, however, that reclaimers can vary their purchasing patterns (and 

crude oil production rates) such that positive revenues can be realized by purchasing other 

blends of crude oil and BS&W. For purposes of illustration, therefore, EPA decided that 

using the 20/80 blend assumption was appropriate for this analysis. 

7

 Cost estimates provided by Mr. Raoul Garza with Dodson, Inc. of San Antonio, Texas 

and Mr. Paul Bishop with Atascosa in Jourdanton, Texas, in telephone conversations on 

October 31, 1990 and November 5, 1990, respectively. 

18 
P.21 

11.000 barrels of reclaimed crude 

50% crude portion of tank bottoms = 22,000 barrels of tank bottoms 

22,000 bbl of tank bottoms - 11,000 bbl of crude = 11,000 bbl of BS&W 

11,000 bbl of BS&W * 25% sediment = 2750 bbl of sediment 

11,000 bbl of BS&W * 75% sediment = 8250 bbl of water 

At 50% crude content reclaimers pay $9.50 per barrel for the tank bottoms.8 

22,000 bbl of tank bottoms * $9.50 per bbl = $209,000 

Using this purchase price, the following revenue impacts are found at average crude oil 

prices ($24): 

Crude oil - Sediment - Operating - Water - Purchase Price = Net Revenue 

Revenues Disposal Cost Disposal of Tank Bottoms 

Costs Costs 

la: 

Before TC $264,000 - $1375 - $80,100 - $2475 - $209,000 = ($116,950) 

Given the constant revenues of $264,000 for 11,000 barrels of crude, the savings from 

decreased disposal costs for both sediments and water do not offset the increased costs 

paid for the 50/50 tank bottoms. 

la: 

After TC $264,000 - $302,500 - $80,100 - $2475 - $209,000 = ($418,075) 

8

 Purchase price estimate provided by Mr. Bob Kimmel with Midwestern Reclamation, 

Inc. in Snyder, Texas, in a telephone conversation on October 30, 1990. 

19