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Coverage of energy that moves beyond polarized arguments and emotional debate to explore the points of tension, the tradeoffs and opportunities, and the very human consequences of energy policy, production, use and innovation.Inside Energy is a collaboration of seven public media outlets in the nation's energy epicenter: Colorado, Wyoming and North Dakota.

Western Nebraska Disposal Well Proposal Raises Questions For Colorado Firm

Courtesy NET Nebraska News
Temporary drilling equipment marks the site of the proposed wastewater injection well in Sioux County, NE.

As oil and gas activity has proliferated in Colorado and Wyoming so has the amount of wastewater that is produced. In 2013, both states combined produced a little more than 2.4 billion barrels of wastewater. That kind of volume suggests that there's money to be made in disposal of produced water.

That's exactly what one Colorado-based company wants to do, but their plan to charge out-of-state oil companies to use their disposal site in Sioux County, Nebraska has hit a snag.

"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."

The proposed well would be the largest of the existing 115 injection wells that already operate in the state. Eighty trucks a day would bring 10,000 barrels of wastewater to the site [.pdf]. Both the proposal and the company itself have come under scrutiny. 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 their 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?

Inside Energy is a public media collaboration, based in Colorado, Wyoming and North Dakota, focusing on the energy industry and its impacts.

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