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ECONOMI C IMPAC T O F TH E TOXICIT Y CHARACTERISTI C RUL E

O N TH E CRUD E OI L RECLAIMIN G INDUSTR Y

Submitte dto : U.S . Environmenta l Protectio n Agenc y Offic e o f Soli dWast e 280 0 Crystal Driv e Washington , D.C . 2046 0

Submitte dby : Scienc e Application s Internationa l Corporatio n

840 0 Westpar

k Driv e McLean , Virgini a2210 2 Novembe r

30 , 199 0 EP A Contrac t

No . 68-WO-002 5 SAI C Projec t

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

ECONOMI C IMPAC

T O F TH E TOXICIT

Y CHARACTERISTI

C RUL E O N TH E CRUD E OI L RECLAIMIN

G INDUSTR

Y Industr y Profil e Crud e oi l reclaimer s perfor maservic e fo

r th e petroleu mindustr

y b y collectin g tan k bottoms , produce dwater , an dproduce dwate r skimmings , al l o

f whic h contai n recoverabl e quantitie s o

f crud e oil . Th e input s fo

r th e reclaimin g industr

y ar e derive dfromth e primar y productio n an dexploratio n (P&E ) fiel doperation s an dfromClas s I I UI C well s which ar e use dt o dispos e o

f produce dwater . Reclaimer s primaril y us e hea t treatmen t

an d demulsifyin g agent s t o separat e th e recoverabl e crud e fromth e basi n sedimen t an d wate r (BS&W ) inheren t

i n th e variou s P& E wastestreams . Th e reclaime dcrud e oi l i s sol d t o pipeline s an dth e BS&

W i s dispose dof

. Unde r th e Toxicit

y Characteristi c rul e promulgate do n Marc h 29 , 1990 , crud e oi l reclaimers ' previousl y non-hazardou s waste s tha t exhibi t th e Toxicit

y Characteristi c (TC ) ar e to b e manage dunde r

Subtitl e C a s hazardou s wastes . Whil e EP A doe s no t hav e conclusiv e dat ashowin g tha t

crud e oi l reclaimers ' waste s d o o r d o no t exhibi t th e TC , preliminary informatio n indicate s tha t reclaimer s believ e a t

leas t som e o f th e waste s will fail th e T C du e t o benzene . Furthermore , du e t o th e variabl e condition s o f oilfiel dwastes , frequen t

testin g woul db e require dt o determin e whethe r th e waste s fail th e TC , unles s th e reclaime r assume s tha t

al l waste s will fail th e TC . Fo r th e purpose s o

f thi s analysis , i t

i s assume d that al l sedimen t

waste s will exhibi t

th e TC . I t

i s als o assume dtha t

produce dwate r

i s exemp t fromSubtitl e C . Th e T C rul e will impos e ne w complianc e cost s fo r th e crud e oi l reclaimers . Thes e ne w cost s will involv e th e cos t differential betwee n disposin g o f non-hazardou s waste s i n a Subtitl e D facilit

y an ddisposin g o

f th e no w hazardou s waste s i n aSubtitl e C facility . Th e following analysi s will examin e th e effect tha t thi s cos t increas e will hav e o n projecte d ne t revenue s o

f th e crud e oi l industry . I n thi s cos t analysi s a n assumptio n i s mad e tha t soli d o r sludg e waste s ar e dispose do f i n landfills ; also , n o reclaime r will conver

t hi s on-sit e Subtitl e D landfil l t o aSubtitl e C landfil l du e t o prohibitiv e expense . Methodolog y I n Octobe r

an dNovembe r

1990 , staf f fromEPA' s Wast e Managemen t Divisio n collecte d informatio n fro mreclaimer s an dstat e regulatory agencie s by telephon e conversation s an d a n Interstat e Oi l Compac t Commissio n (IOCC ) survey . Thes e dat awer e compile d fo r us e in th e presen t

cos t impac t analysis . Extrapolation s an dassumption s wer e mad e wit h respec t t o thi s dat ai n orde r

t o produc e a n estimat e o f th e effect

o f th e T C rul e o n crud e oil reclaimers . A detaile ddescriptio n an dexplanatio n o f eac h extrapolatio n o r

assumptio n i s provide di n th e Attachments . Sectio n A belo w provide s adiscussio n o f disposal cos t

impact s b y showin g befor e T C an dafter T C costs . Sectio n B show s how th e increase ddisposal cost s ar e reflecte di n tota l revenue s fo r th e industry .P. 4

A. DISPOSAL COS T ANALYSI S Crud e Oi l Productio n an dRevenue s Crud e oi l reclaimer s produce almos t 3 millio n barrel s o

f oi l ever y year , a s shown i

n Attachmen t

1 . Wit h 26 0 reclaimer s activ e i n th e industry , o n averag e eac h produce s abou t 11,000 barrel s o

f crud e annually . Assumin g apric e rang e o f $1 6 t o $3 2 pe r

barre l fo

r reclaime dcrud e oil , reclaimer s receiv e betwee n $176,000 an d$352,00 0 eac h yea r fo r thei r crud e oil . Averag e annua l receipt s fromth e sal e o f th e reclaime dcrud e oi l ar e $264,000 in thi s costin g model . Disposal Cost s Fo r purpose s o

f thi s analysis , assum e tha t BS& W comprise s 8 0 percen t

o f mos t tank bottom s collected , an dcrud e oi l i s th e remainin g 2 0 percent. 1 At thi s level , reclaimer s neithe r pa y for no r ar e pai dt o collec t

tan k bottoms. 2 Of

th e BS&W , 7 5 percen t

i s assume d t o b e produce dwate r

an d2 5 percen t

i s sediment. 3 Fo r

facilitie s tha t

collec t produce d wate r skimmings , i t

i s assume dtha t

th e skimming s contai n 9 0 percen t crud e an d1 0 percen t wate r wit h negligibl e sedimen t

content . Assumin g tha t

produce dwate r

i s exclude dfromth e T C rule , thi s analysi s consider s only th e highe r complianc e cost s fo

r th e disposal o

f sediments . Cost s fo

r disposal o

f produce dwate r

are , however , include di n th e revenu e section . Th e ne w managemen t cost s estimate dher e will consis t o f transportatio n t o an d disposal i n aSubtitl e C landfill . Attachmen t 2 provide s a n explanatio n o f thes e charges . I n thi s analysis , th e followin g cost s ar e assumed . Attachmen t 3 provide s calculation s o f th e amoun t o f sedimen t dispose di n eac h scenario .

1 EP A als o attempte dt o mode l a50 % percen t crud e an d50 % BS&

W scenario . Informatio n i n Attachmen t 7 explain s wh

y thi s scenari o wa s no t

used . 2 Fro mtelephon e discussio n wit h Barr y Peters , A.A . Oilfiel dService , Inc. , Hobbs , NM. , Octobe r 29 , 1990 . 3 Provide dby Mr . Pau l Bohannon , aMidland , Texa s attorne y representin g severa l crud e oi l reclaimers , i n amem o t o EP A date dSeptembe r 9 , 1990 . 2P. 5

Disposal Cost

s Befor e an d Afte r th e T C Rule

On-site Off-sit e Befor

e T C rule/Subtitl e D $.5 0 pe r barre l $2.0 0 pe r barre l Afte r T C rule/Subtitl e C N/ A $11 0 pe r barre l an d$21 0 pe r barre l Disposal Scenario s I n orde r t o thoroughl y examin e th e possibl e effect s tha t th e T C rul e will have , thre e waste managemen t

scenario s ar e develope dtha t involv e different

input s (tan k

bottoms , produce dwater , an dproduce dwate r skimmings ) an ddifferent combination s o

f on-site an d off-sit e disposal . I n al l scenarios , i t i s assume dtha t

11,00 0 barrel s o

f crud e ar e produce d annuall y b

y eac h reclaimer . Becaus e i t i s assume d tha t

disposal charge s fo

r produce d wate r d o no t chang e unde r

th e T C rule , ther e ma

y b e incentive s fo

r crud e oi l reclaimer s t o remov e a s muc h wate r

an dcrud e a s possibl e fromth e tan k bottoms , an dthereb y reduc e waste s tha t

mus t b e dispose do

f in aSubtitl e C facility . Thi s ma y minimiz e th e increase d disposal cost s t o th e reclaimer . Othe r non-quantifie dcost s includ e othe r cost s o f complianc e unde r Subtitl e C suc h a s manifesting , recordkeepin g an dreportin g an dth e administrativ e cost s associate dwit

h each . Also , it

i s assume dtha t

al l waste s ar e store di n aRCRA-exemp t reclamatio n uni t

unti l the y ar e haule daway . Therefore , n o wast e accumulatio n occur s o n th e generator' s (reclaimer's ) site an dn o increase d cost s associate dwit h generato r

storag e complianc e ar e incurred .P. 6

Scenari o 1 : Tan k

bottom s onl

y Unde r thi s scenario , acrud e oi l reclaime r will receiv e tan k

bottom s tha t

contai n a fractio n o f crud e which i s reclaime dan dsold . Th e remainde r o f th e tan k botto mi s 7 5 percen t wate r an d2 5 percen t

sediment . A s show n i n Attachmen t 3 , 11,00 0 barrel s o

f sediment s ar e generate di n th e reclamatio n process . Thi s scenari o show s th e cos t differenc e betwee n disposin g o f tan k botto msedimen t

i n aSubtitl e D landfil l on-sit e o r off-sit e an daSubtitl e C off-sit

e landfill . Th e assume d cost s discusse dpreviousl y ar e utilize dher e an dth e result s ar e summarize dbelow . Attachmen t 4 provide s detail s abou t

how th e result s ar e derived .

Scenari o 1 : Disposal Cost s of Tan k Bottoms Sedimen

t

On-sit e Off-sit e Befor

e T C rule/Subtitl e D 11,000 bb l * $.50/bb l = $550 0 pe r yea r pe r reclaime r 11,000 bb l • $2.00/bbl = $22,00 0 pe r yea r pe r reclaime r Afte r T C rule/Subtitl e C N/ A At $110/barrel : 11,000 * $110/bb l = $1,210,00 0 pe r

yea r pe r reclaime r A t $210/barrel : 11,00 0 * $210/bb l = $2,310,00 0 pe r

yea r pe r reclaime rP. 7

Scenari o 2 : Tan k

Bottom s an dProduce dWate r Skimming s Crud e oi l reclaimer s unde r thi s scenari o receiv e both tan k bottom s an dproduce d wate r skimming s fro moi l producer s an dClas s I I well operators . Crud e oi l i s recovere dfrombot h type s o f input s an dthen sold , an dth e reclaime r dispose s o

f th e produce dwate r

an d solid s a s unde r th e previou s scenario . Reclaimer s pa

y $16.2 0 pe r

barre l fo r produce dwate r

skimming s i

f th e skimming s contai n 1 0 percen t o r les s water. 4 I t

i s assume din thi s scenari o tha t th e skimming s d o contai n les s than 1 0 percen t

water . Therefore , th e reclaime r pay s $100,00 0 fo

r th e skimming s a s explaine di n Attachmen t

5 . Also , unde r

thi s scenari o i t

i s assume dtha t

5 0 percen t

o f th e crud e oi l recovere db

y reclaimer s i s fromtan k

bottom s an d5 0 percen t

i s fromskimmings . (I t shoul db e note dtha t

marke t condition s will determin e th e mos t advantageou s mi

x o f tan k bottom s an dskimming s inputs. ) Thi s combinatio n produce s 550 0 barrel s o f solids , a s show n i n Attachmen t

3 . Assumin g th e sam e cost s o f disposal a s in Scenari o 1 , th e result s ar e summarize dbelow .

Scenari o 2 : Disposal Cost s of Tan k Bottoms Sedimen

t

On-sit e Off-sit e Befor

e T C rule/Subtitl e D 550 0 bb l * .5 0 = $275 0 pe r yea r pe r reclaime r 550 0 bb l * 2.0 0 = $11,000 pe r yea r pe r reclaime r Afte r T C rule/Subtitl e C N/ A At $ 110/barrel : 550 0 bb l * 11 0 = $605,00 0 pe r yea r pe r reclaime r At $210/barrel : 550 0 bb l * 21 0 = $1,155,00 0 pe r yea r pe r reclaime r

4 Informatio n provide dMr . Pau l Bishop , owner o f Atascos areclamatio n facilit y i n Jourdanton , Texas , durin g telephon e conversatio n Novembe r 5 , 1990 .P. 8

Scenari o 3 : Tan k

Bottom s an dProduce dWate r Reclaimer s unde r

thi s scenari o reclai mcrud e oi l fromtan k bottom s an dproduce d water , bu t th e quantity o

f crud e oi l recovere dfromproduce dwate r i s negligible . Assume i

n thi s scenari o tha t

th e reclaime r

derive s revenue s fromdisposal o f th e produce dwate r

in an on sit e Clas s I I UI C well . H e charge s hi s client s $.2 0 pe r barre l fo

r thi s service. 5 Th e reclaime r will dispos e o

f 11,00 0 barrel s o

f sedimen t i n thi s scenari o an dwill dispos e o f 33,00 0 barrel s o

f wate r fromth e tan k

bottoms . Fo r

purpose s o

f illustration , assum e that

h e wil l als o pic k

u p an ddispos e o

f 50,00 0 barrel s o

f produce dwater .

Scenari o 3 : Disposa l Cost s of Tan k Bottoms Sedimen

t

On-sit e Off-sit e Befor

e T C rule/Subtitl e D 11,00 0 bb l * .50/bb l = $5500 pe r yea r pe r reclaime r 11,000 bb l • 2.00/bb l = $22,000 pe r yea r pe r reclaime r Afte r TC rule/Subtitl e C N/ A At $ 110/barrel : 11,000 * 110/bb l = $1,210,00 0 pe r yea r pe r reclaime r A t $210/barrel : 11,000 * 210/bb l = $2,310,00 0 pe r yea r pe r reclaime r

5 Informatio n provide di n telephon e conversatio n wit h Barr y Peters , A.A . Oilfiel d Service , Hobbs , N

M o n Octobe r

29 , 1990 .P. 9

B . NET REVENU

E IMPAC T ANALYSI S Th e effect o n revenue s tha t

thes e increase dcost s wil

l hav e i s examine di n thi s analysis . Tw o cos t assumption s fo

r Subtitl e C disposal ar e utilized , on e a t $11 0 pe r barre l an d on e at $21 0 pe r barrel , a s explaine din Attachmen t 2 . Thre e revenu e scenario s ar e examined , on e a t lo w revenu e wher e reclaime dcrud e i s $1 6 pe r barrel , on e wher e crud e i s an averag e pric e o f $2 4 pe r barrel , an dahigh revenu e scenari o wit h reclaime dcrud e at

$3 2 pe r barrel . Als o include di s $80,10 0 o f additiona l operatin g cost s incurre db y reclaimer s both before an d after th e T C rule . A n explanatio n o f th e derivatio n o

f th e operatin g cost s i s provide d in Attachmen t

7 . A s depicte din Attachmen t 7 , unde r n o circumstance s wit

h th e assumptio n mad e i

n thi s analysi s d o reclaimer s ear n positiv e ne t incom e after

th e firs t yea r unde r th e new T C rule. 6

6 Thes e revenu e scenario s ar e no t capitalize dover

tim e du e t o th e larg e negativ e revenue s tha t

resul t after th e firs t yea r o f complianc e wit

h th e TC .P.1 0

ATTACHMEN

T 1 CRUD E OI L PRODUCTIO

N AN D REVENUE

S B Y RECLAIMER

S Th e followin g informatio n wa s collecte dfromstat e regulatory agencie s b y EPA' s Wast e Managemen t

Divisio n staf

f i n October , 1990 . Crud e oi l sol d b

y 26 0 active reclaimers : State s reportin g Crud e sol dpe r yea r activ e reclaimer s b

y reclaimer s (bbH Numbe r o f reclaimer s Oklahom a Texa s Kansa s Ne w Mexic o Louisian a Mississipp i Nevad a North Dakot a Nebrask a 1,680,00 0 456,54 0 n o dat a 132,000 106,48 8 51,74 4 n o dat a 13,000 4.00 0 13 7 (53% )

4 5 (17% ) 4 0 (15% ) 1 7 ( 7% ) 1 1 ( 4% ) 5 ( 2% ) 3 ( 1% ) 1 (0.5% ) 1 rt).5%} Total s 2,443,77 2 26 0 Nevad aan d Kansa s wer e unabl e t o supply informatio n o n th e amoun t o f crud e sol d b

y th e reclaimer s i n thei r

states . Thes e reclaimer s accoun t fo r 1 6 percen t

o f th e tota l numbe r

o f reclaimers , s o ther e i s asignificant amoun t o f crud e oi l reclaime dtha t

i s no t include d in th e productio n number s above . Th e tota l reporte damoun t o f production , 2,443,77 2 barrel s account s fo

r 8 4 percen t

o f th e reclaimer s an dthi s amoun t extrapolate danothe r

1 6 percen t result s i n atota l o

f 3 millio n barrel s o

f crud e oi l reclaime db

y al l 26 0 reclaimers : Tota l crud e oi l sol d b

y 26 0 reclaimers : 2.443.77 2 barrel s o

f crud e sol d 84 % o f tota l productio n

= 2,909,25 2 barrel s o

f crud e sol d (approximatel y 3 million )P.1 1

Averag e crude oi l produced b

y eac h reclaimer per year : 3 millio n barrel s 26 0 reclaimer s = abou t 11,000 barrel s pe r reclaime r

pe r yea r

Revenue s earne db

y eac h reclaime r

pe r year : a ) At lo w reclaime dcrud e oi l pric e ($16/barrel ) = $176,000 b ) At averag e reclaime dcrud e oi l pric e ($24/barrel ) = $264,000 c ) At high reclaime dcrud e oi l pric e ($32/barrel ) = $352,000 Telephon e contac t

wit h crud e oi l reclaimer s confirme dtha t reclaime dcrud e oi l price s ar e typically $ 3 t o $

4 les s than th e poste dcrud e price .P.1 2

ATTACHMEN

T 2 SOURCES O

F DISPOSA

L COS T ESTIMATE

S Several crud e oi l reclaimer s wer e interviewe dby phon e abou t thei r activitie s an d th e cost s associate dwit

h th e disposal o

f thei r BS& W wastes . Thi s informatio n provide d th e basi s fo r th e cos t assumption s mad e i n th e analysis . a. ) Mr . Barr

y Peter s at

A.A . Oilfiel dService s i n Hobbs , New Mexic o reporte dSubtitl e D landfil l cost s o

f $.60/barre l t o $2.00/barrel . b. ) Mr . Bo b Kimme l at Midwester

n Reclamatio n i n Snyder , Texa s pay s $1.50/barre l fo r off-sit e Subtitl e D landfil l disposal . c. ) Subtitl e C disposal cost s ar e significantly higher . Barr y Peter s a t

A.A . Oilfiel d Service s estimate s tha t

tan k botto mdisposal in ahazardou s wast e facilit y cost s $550/barrel . EPA , however , provide dcos t estimate s o

f $100/barrel . I n addition , telephon e call s t o thre e hazardou s waste managemen t facilitie s i n Region s I V an d V I indicate dtha t

$110/barre l i s mor e realisti c tha n $550/barrel . Price s wer e quote d fo r dr y sludges , thos e tha t

pas s th e Pain t

Filte r Liquid s test , a s wel l a s fo r wet sludges , which mus t

b e stabilize dprio r

t o disposal . Price s pe r

metri c to n dr

y sludg e range dfrom$13 0 t o $295 ; pric e pe r metri c to n we t

sludg e range dfro m$24 5 t o $345 . Thes e translat e roughly t o $3 2 t o $7 4 pe r barre l fo r dr y sludge s an d$6 1 t o $8 6 pe r barre l fo r we t sludges . Cost s pe r

barre l woul dactuall y b e highe r becaus e o

f th e increase d handlin g charge s incurred . On e facilit y quote dth e pric e a t

$8 0 pe r 55

- gallo n dru m($6 1 pe r

barrel ) o f dr y sludg e an d$12 0 dru m($9 2 pe r barrel ) o f wet sludge . EP A determine dtha t bracketin g disposal cost s betwee n $11 0 an d$21 0 pe r barre l woul db e appropriate . Fo r th e purpose s o

f thi s discussion , assum e $.50/barre l fo r on-sit e disposal o

f solid s i n a Subtitl e D facilit

y an d$2.0 0 barre l fo

r off-sit e disposal i n aSubtitl e D facility . Bot h Subtitl e C cos t estimate s o

f $110/barre l an d$210/barre l ar e considere dfo r illustrativ e purposes . Thes e includ e $10/barre l transportatio n cost s t o th e hazardou s wast e disposal facility . Mr . Kimme l a t

Midwestern Reclamatio n quote dthi s $10/barre l cost . Eac h o f thes e scenario s assume s tha t al l produce dwate r

i s exemp t

fromth e T C rul e an d ma y continu e t o b e dispose do f i n aClas s I I wel l at

acos t o f $.30/barrel . Mr . Bohanno n i n Midland , however , consider s tha t produce dwate r

will no t b e exemp t

fro mth e T C rul e an dtha t charge s fo

r disposal in aClas s I wel l will increas e t o $2.00/gallo n ($8 4 pe r barrel) .

1 0P.1 3

ATTACHMEN

T 3 PRODUCTIO

N O F BS& W B Y RECLAIMER

S BS& W component

s Accordin g t o Mr . Pau l Bohannon , a n attorne y i n Midland , Texa s representin g agrou p o f reclaimers , 7 5 percen t

o f BS& W i s produce dwate r

an dth e remainin g 2 5 percen t i s sedimen t fromtan k

bottoms . Produce dwate r an dsedimen t

ar e eac h subjec t

t o different disposal cost s s o it

i s importan t

t o kno w th e volum e o

f eac h componen t

tha t areclaime r

i s responsibl e fo

r disposin g of

. Volum e o f BS& W produce db

y reclaimer s Scenari o 1 : I n thi s scenari o reclaimer s deriv e al l o f thei r crud e oi l fromtan k

bottoms . Assumin g tha t

the y produc e 11,00

0 barrel s o

f crud e annually , the y mus t dispos e o

f 11,00 0 barrel s o f sedimen t an d33,00 0 barrel s o

f produce dwater . 11.000 barrel s o

f reclaime dcrud e 20 % crud e portio n o

f tan k bottom s = 55,00 0 barrel s o f tan k bottom s 55,00 0 - 11,000 = 44,00 0 barrel s o f BS& W 44,00 0 barrel s * 25 % sedimen t conten t = 11,00 0 barrel s o

f sedimen t 44,00 0 barrel s * 75 % wate r conten t = 33,00 0 barrel s o

f wate r Scenari o 2 : I n thi s scenari o reclaimer s deriv e 5 0 percen t o f thei r crud e fromtan k

bottom s an d5 0 percen t

fromproduce dwate r

skimmings . The y will , therefore , produc e 550 0 barrel s o f crud e fro mtan k

bottom s an d550 0 barrel s fromskimmings . Skimming s contai n a negligibl e amoun t

o f solids . The y will generat e 550 0 barrel s o f sedimen t an d17,11 1 barrel s o f produce dwate r

whic h mus t

b e dispose dof

. . 550 0 barrel s o

f reclaime d crud e fromtan k bottom s 20 % crud e portio n o

f tan k bottom s = 27,50 0 barrel s o f tan k bottom s 27,50 0 - 550 0 = 22,00 0 barrel s o f BS& W 22,00 0 barrel s * 25 % sedimen t conten t = 550 0 barrel s o

f sedimen t 22,00 0 barrel s * 75 % wate r conten t = 16,50 0 barrel s o

f wate r 1 1P.1 4

550 0 barrel s o

f reclaime dcrud e fromskimming s 90 % crud e portio n o

f skimming s =611 1 barrel s o f skimming s 611 1 - 550 0 = 61 1 barrel s o f wate r Scenari o 3 : Th e volume s o f sedimen t an dproduce dwate r

generate dunde r

thi s scenari o ar e th e sam e a s thos e i n Scenari o 1 above . 11.000 barrel s o

f reclaime dcrud e 20 % crud e portio n o

f tan k bottom s = 55,00 0 barrel s o f tan k bottom s 55,00 0 - 11,000 = 44,00 0 barrel s o f BS& W 44,00 0 barrel s * 25 % sedimen t conten t = 11,00 0 barrel s o

f sedimen t 44,00 0 barrel s * 75 % wate r conten t = 33,00 0 barrel s o

f wate r Assum e a n additiona l 50,00 0 barrel s o f wate r ar e dispose do

f on-site .

1 2P.1 5

ATTACHMEN

T 4 DISPOSAL COSTS O

F TAN KBOTTOM

S ONL Y Scenari o 1 : Tan k

Bottom s Only * la : Before TC , On-sit e D disposal 11,000 bb l * $.50/barre l = $5500/year/reclaime r After TC , Off-sit

e C disposal a t

$110/barre l 11,000 bb l * $110/barre l = $l,210,000/year/reclaime r After TC , Off-sit

e C disposal at

$210/barre l 11,000 bb l * $210/barre l = $2,310,000/year/reclaime r lb : Before TC , Off-sit

e D disposal 11,000 bb l * $2.00/bb l = $22,000/year/reclaime r After TC , Off-sit

e C disposal a t

$110/barre l 11,000 bb l * $ 110/barre l = $l,210,00/year/reclaime r After TC , Off-sit

e C disposal a t

$210/barre l 11,000 bb l * $210/barre l = $2,310,000/year/reclaime r

* Thi s cos t

analysi s assume s tha t

produce dwate r

i s exemp t

fro mth e T C rul e an dwill no t incur highe r disposal costs . Cost s fo

r wate r disposal remai n constan t s o the y will no t

sho w anew impac t

o n disposal costs .

1 3P.1 6

ATTACHMEN

T 5 DISPOSAL COSTS O

F TAN KBOTTOM

S AN D PRODUCE

D WATE R Price of produced wate r

skimming s Mr . Pau l Bishop , owner

o f Atascos ai n Jourdanton , Texa s state s tha t 9 0 percen t

o f produce dwate r

skimming s i s crud e oi l an d1 0 percen t i s water . Mr . Bishop , a s wel l a s Mr . Peter s fro mA.A . Oilfiel dService , Inc. , repor t tha t i f skimming s contai n 1 0 percen t o r les s water , th e reclaime r

mus t pa y th e produce r

fo r th e skimmings . Fo r

purpose s o

f illustratio n in thi s scenari o i t

i s assume dtha t

th e reclaime r

doe s purchas e th e skimming s at $16.2 0 pe r barrel . Thi s pric e i s base do n Mr . Bishop' s cost s fo r skimmings . Mr . Bisho p pay s $1 8 pe r barre l o f oi l produce dfromskimmings . Subtractin g ou t th e 1 0 percen t

tha t i s water , ane t cos t o f $16.2 0 results . $18.0 0 pe r

barre l o f oi l - $1.8 0 pe r

barre l o f wate r = $16.2 0 I f eac h reclaime r

i s purchasin g 611 1 barrel s o f skimming s eac h yea

r a s show n i n Attachmen t 3 , the y incu r

th e following annua l cos t o f 611 1 bb l • * $16.20 = abou t

$100,00 0 Thi s purchas e pric e o

f crud e oi l skimming s i s no t include di n th e disposal cos t analysi s below , bu t

i s include di n th e ne t

revenu e analysi s i n Sectio n B an dAttachmen t 7 . Source s of

crude oi l and BS&

W under Scenari o 2 : A s discusse di n Attachmen t 3 , reclaimer s i n Scenari o 2 will dispos e o f 11,000 barrel s o

f sedimen t an d 83,00 0 barrel s o

f produce dwate r

annually . Th e cost s associate dwit

h thi s scenari o can b e derive da s follows . Scenari o 2 : Tan

k Bottoms an

d Produce

d Water Skimmings 2a : Before TC , On-sit e D disposal 550 0 bb l * $.5 0 = $2750/year/reclaime r After TC , Off-sit

e C disposal a t

$110/barre l 550 0 bb l * $11 0 = $605,500/year/reclaime r After TC , Off-sit

e C disposal at

$210/barre l 550 0 bb l * $21 0 = $l,155,000/year/reclaime r 1 4 *P.1 7

2b : Before TC , Off-sit e D disposal 550 0 bb l * $2.00/bb l = $ll,000/year/reclaime r After TC , Off-sit

e C disposal a t

$110/barre l 550 0 bb l * $110/bb l = $605,500/year/reclaime r After TC , Off-sit

e C disposal at

$210/barre l 550 0 bb l * $21 0 = $l,155,000/year/reclaime r * Thi s cos t

analysi s assume s tha t

produce dwate r

i s exemp t

fromth e T C rul e an dwill no t incur highe r disposal costs .

1 5P.1 8

ATTACHMEN

T 6 DISPOSAL COST S O

F TAN K BOTTO

M SEDIMENT AN D PRODUCE

D WATE R Unde r thi s scenari o areclaime r dispose s o

f both tan k

botto msedimen t

an dproduce d water . Eac h componen t

ha s adifferent

disposal cos t

associate dwit

h it . Sedimen t

continue s t o cos t eithe r $11 0 pe r barre l t o $51 0 pe r

barre l t o dispos e o

f in aSubtitl e C off-sit

e landfill . Produce dwate r

i s exemp t

fromthi s TC , however , s o it i s muc h les s costly t o dispos e of . Unde r thi s scenario , disposal cost s ar e no t incurre dfo

r produce dwate r

becaus e th e reclaime r ha s a n on-sit e Clas s I I well . I t i s assume dtha t

operatin g cost s o

f thi s well ar e negligible . Scenari o 3 : Tan

k Bottoms an

d Produce

d Water * 3a : Before TC , On-sit e D disposal 11,000 bb l * $.50/barre l = $5500/year/reclaime r After TC , Off-sit

e C disposal at

$110/barre l 11,000 bb l * $110/barre l = $l,210,000/year/reclaime r After TC , Off-sit

e C disposal a t

$210/barre l 11,000 bb l * $210/barre l = $2,310,000/year/reclaime r 3b : Before TC , Off-sit

e D disposal 11,000 bb l * $2.00/bb l = $22,000/year/reclaime r After TC , Off-sit

e C disposal a t

$110/barre l 11,000 bb l * $110/barre l = $l,210,00/year/reclaime r After TC , Off-sit

e C disposal at

$210/barre l 11,000 bb l * $210/barre l = $2,310,000/year/reclaime r

* Thi s cos t

analysi s assume s tha t

produce dwate r

i s exemp t

fromth e T C rul e an dwil l no t incur highe r disposal costs . Cost s fo

r wate r disposal remai n constan t s o the y will no t

show ane w impac t

o n disposal costs .

1 6P.1 9

ATTACHMEN

T 7 NE T REVENU

E SCENARIOS I t i s assume di n thes e scenario s that crud e oi l price s will b e betwee n $20 an d$3 5 pe r barrel . Th e reclaime dcrud e oi l marke t pric e i s $ 3 t o $4/bb l belo w thi s marke t price , however . Thes e price s wer e derive db y EP A base do n recen t

marke t prices . Therefore , fo

r thes e ne t revenu e scenario s th e reclaime dcrud e oi l pric e rang e i s $1 6 t o $3 2 pe r barrel . Th e averag e pric e i s $2

4 pe r barrel . Th e following scenario s includ e alo w revenu e scenari o wher e reclaime dcrud e i s $1 6 pe r barrel , a n averag e revenu e scenari o wher e th e crud e i s $2 4 pe r barrel , an dahigh revenu e scenari o i n which reclaime dcrud e sell s fo r $3 2 pe r barrel . Also , unde r

eac h revenu e scenari o tw o cos t assumption s ar e utilized . Ne t revenu e i s presente dwit

h Subtitl e C off-sit

e disposal cost s o

f $110/barre l an d$510/barrel . Anothe r consideratio n i n thes e scenarios , i s th e additiona l cost s associate dwit h crud e oi l reclaiming . Thes e cost s includ e ra w materia l collection , heat/chemica l treatment , an d genera l an dadministrativ e expenses . Pau l Bisho p o f Atascos ai n Jourdanton , Texa s provide dinformatio n o n monthl y expense s associate dwit h thes e activities . Hi s firm , however , produce s 36,00 0 barrel s o f crud e oi l ever

y yea r an dthi s i s abou t

thre e time s large r tha n th e typical reclaime r considere dhere . Therefore , Mr . Bishop' s monthl y expense s were reduce dby 6 7 percen t

an dthe n reformulate dint o annua l expenses . I t i s possibl e that economie s o

f scal e inheren t

i n th e large r

facility' s operation s ma

y lesse n th e differenc e betwee n th e cost s associate dwit h different

size s o f facilities . It

i s als o importan t

t o not e that thi s analysi s doe s no t

includ e cost s fo

r additiona l equipment , such a s dewaterin g equipment , tha t

ma y b e purchase dt o minimiz e th e volume s o f regulate dwast e t o b e dispose do

f i n aSubtitl e C facility . No r doe s thi s analysi s explor e othe r possibilitie s tha t

th e industr y ma y pursue , suc h a s alterin g th e reclamatio n process , such tha t volume s o

f waste s exhibitin g th e T C ar e minimized . Th e typical monthl y expense s o f Atascos ainclude : Ra w Materia l Collectio n $9,00 0 Heat/Chemica l Treatmen t $7,000 G & A an dMiscellaneou s $5,25 0 Th e typical expense s unde r thi s scenari o fo

r othe r reclaimer s will be : Raw Materia l Collection : $3,00 0 ($9,00 0 * 1/3 ) o r $36,000/yea

r Heat/Chemica l Treatment : $2,33 3 ($7,00 0 * 1/3 ) o r $25,200/yea

r G & A an dMiscellaneous : $1,75 0 ($5,25 0 * 1/3 ) o r $18.900/yea

r Tota l annua l expenses : $80,100/yea r

1 7P.2 0

Cost s fo r th e disposal o

f produce dwate r

ar e include din th e ne t

revenu e equations . Fo r Scenari o 1 , 33,00 0 barrel s o f wate r * $.3 0 pe r

barre l = $9900 Fo r Scenari o 2 , 17,11 1 barrel s o f wate r * $.3 0 pe r

barre l = $513 3 Fo r Scenari o 3 , n o disposal cost s fo r produce dwate r

ar e incurred . Incom e o

f $10,00 0 fo

r disposal service s on-sit e i n Clas s I I well s i s include di n th e revenu e equations . Mr . Pau l Bohanno n provide dacos t analysi s tha t

showe dunde r

al l scenario s negativ e revenu e resultin g fromth e highe r disposal cost s unde r

th e T C rule . Th e analysi s provide d b y Mr . Bohanno n estimate drevenue s takin g int o accoun t th e increase dcos t

o f Subtitl e C disposal . Fiv e scenario s wer e include dan dthe y varie dwit h respec t t o th e amoun t

o f BS& W in th e inpu t

streams . A compariso n betwee n thes e tw o cos t analyse s i s difficul

t du e t o different assumption s mad e an ddifferent cos t impact s included . Fo r example , Mr . Bohannon' s analysi s include s a$2.00/gallo n disposal charg e fo r produce dwate r

bu t th e presen t analysi s assume s tha t

produce dwate r

i s exemp t

fromT C and , therefore , that disposal charge s remai n th e sam e a t $.30/barrel. 7 Also , th e analysi s describe dher e include s othe r expense s t o reclaimer s ($80,100/year) . I t i s unclear

whethe r Mr . Bohannon' s analysi s include s thes e expenses . I t i s significant , however , tha t both analyse s sho w tha t negativ e revenue s occur

du e t o th e increase ddisposal cost s associate dwit h th e T C rule . Mr . Bohannon' s revenue s ar e no t a s lo w a s th e presen t

analysis ' revenues , which ma y indicat e tha t thi s analysi s i s mor e conservativ e than Mr . Bohannon's . Consideratio n o f

Alternative Crud

e Oil an d BS& W Blend s Fo r thi s analysi s i t

wa s assume dtha t

tan k bottom s contai n 2 0 percen t crud e an d8 0 percen t BS&W . EP A attempte dt o mode l th e scenario s usin g a5 0 percen t crud e oil/5 0 percen t BS& W mixture , becaus e informatio n fromreclaimer s indicate dtha t othe r blend s beside s 20/8 0 ar e reclaimed . Th e calculation s below , which incorporat e th e assumption s mad e throughou t

thi s analysis , indicat e tha t eve n a t averag e crud e oi l pric e ($24 pe r barrel ) reclaimer s d o no t

sho w positiv e revenue s befor e applicatio n o f th e TC . Therefore , EP A believe s tha t

th e us e o

f th e 50/5 0 blen di s no t

appropriat e give n th e assumption s mad e i n thi s analysis . I t

i s possible , however , tha t

reclaimer s can var

y thei r purchasin g pattern s (an d crud e oi l productio n rates ) such tha t positiv e revenue s can b e realize db y purchasin g othe r blend s o f crud e oi l an dBS&W . Fo r purpose s o

f illustration , therefore , EP A decide d that usin g th e 20/8 0 blen dassumptio n wa s appropriat e fo r thi s analysis .

7 Cos t estimate s provide dby Mr . Raou l Garz awit h Dodson , Inc . o

f Sa n Antonio , Texa s an dMr . Pau l Bisho p wit h Atascos ai n Jourdanton , Texas , i n telephon e conversation s o n Octobe r 31 , 199 0 an dNovembe r

5 , 1990 , respectively .

1 8P.2 1

11.000 barrel s o

f reclaime dcrud e 50 % crud e portio n o

f tan k bottom s = 22,00 0 barrel s o f tan k bottom s 22,00 0 bb l o

f tan k bottom s - 11,000 bb l o

f crud e = 11,000 bb l o

f BS& W 11,00 0 bb l o f BS& W * 25 % sedimen t

= 275 0 bb l o

f sedimen t 11,00 0 bb l o f BS& W * 75 % sedimen t

= 825 0 bb l o

f wate r A t 50 % crud e conten t

reclaimer s pa

y $9.5 0 pe r

barre l fo r th e tan k bottoms. 8 22,00 0 bb l o

f tan k bottom s * $9.5 0 pe r

bb l = $209,00 0 Usin g thi s purchas e price , th e following revenu e impact s ar e foun dat averag e crud e oi l price s ($24) : Crud e oi l - Sedimen t

- Operatin g - Wate r

- Purchas e Pric e = Ne t Revenu e Revenue s Disposal Cos t Disposal o

f Tan k Bottom s Cost s Cost s la : Before T C $264,00 0 - $137 5 - $80,10 0 - $247 5 - $209,00 0 = ($116,950 ) Give n th e constan t

revenue s o

f $264,00 0 fo

r 11,000 barrel s o

f crude , th e saving s from decrease ddisposal cost s fo r both sediment s an dwate r d o no t offse t th e increase dcost s pai d fo r th e 50/5 0 tan k

bottoms . la : Afte r T C $264,00 0 - $302,50 0 - $80,10 0 - $247 5 - $209,00 0 = ($418,075 )

8 Purchas e pric e estimat e provide db y Mr . Bo b Kimme l wit

h Midwestern Reclamation , Inc . i n Snyder , Texas , in atelephon e conversatio n o n Octobe r 30 , 1990 . 1 9