Waste Disposal Firm Readying South Midland Facility

08/10/2017

Business opportunities are flowing throughout the Permian Basin almost as freely as the crude oil and natural gas from the expanding shale plays.

Among the businesses expanding to accommodate the proliferation of drilling rigs throughout the Permian are those specializing in oil and gas waste management. Houston-based Milestone Environmental Services is in the process of constructing its newest oil field waste disposal facility south of Midland on Highway 349 just across the Upton County line.

“We built our first facility in the Permian Basin in Pecos a little over a year ago to serve the Delaware,” Gabriel Rio, Milestone’s President and Chief Executive Officer, said in a phone interview from his Houston office. Given the strong response, “we decided we needed to double down in the Permian,” he said.

The new facility is expected to open in the fourth quarter of this year. It will initially employ 18 to 20 -- from facility managers and shift supervisors to pump operators and wash rack technicians. A job fair to staff the facility is set for 2 p.m. to 7 p.m. Aug. 29 and 7 a.m. to 3 p.m. Aug. 30 at the DoubleTree by Hilton Midland Plaza, 117 W. Wall St. Rio said sales team members also will be hired. He expects employment at the Midland facility to rise to 25 or 30 as it ramps up operations. “The Permian Basin is such a big area and covers such wide geography, (but) compared to other areas it doesn’t have significant waste disposal infrastructure,” Rio said.

The Eagle Ford in South Texas, for example, has many more facilities but “the Permian Basin has many multiples more activity and also covers a bigger area,” he said. In deciding on a new location, Rio said company officials took a map and drew a circle representing an hour’s drive from the Pecos facility, and found there were 40 rigs within that radius. A similar circle around Midland showed 50 rigs within that radius, he said. “We’re pretty excited about the potential for business,” he said.

Through its Pecos facility, the company already has been working with exploration and production companies active in both the southern and northern Delaware Basin -- from Occidental Petroleum to Centennial Resources, Rosetta Resources to Chevron, Apache to ExL Petroleum.

“Before we opened in the Delaware, companies had to drive from Pecos to Odessa or north into New Mexico,” he said.

Even in the southern Midland Basin, there are very few facilities south of Interstate 20, Rio said. “For oil field waste, location is extremely important. Companies can spend more on transportation than the actual disposal,” he said. “The shorter the travel distance, the more affordable it is to dispose of waste in a professional manner.”

Rio has seen this side of the industry change over recent years.

“I’ve been in this business since 2004, and at first I was working at facilities in Louisiana and South Texas, where 80 percent of the rigs were using reserve pits and onsite disposal. Over time, through regulatory change and landowner pushback and internal environmental standards from the companies, they’re using more closed-loop drilling systems, more off-site professional waste management,” he said.

“Companies are asking for more infrastructure to dispose of waste in the right way.” That need has only grown as drilling has evolved, he said.

“If you look at drilling right now compared to a few years ago, each pad may have more than one well. Companies are drilling faster, they’re drilling longer laterals, they’re using more expensive fluids to drill. There’s a lot more fluids coming out of the hole,” he said.

Milestone fills a disposal niche not met by saltwater disposal wells, which can process produced water or flowback fluids but have difficulty handling solids, and landfills, which are good at processing solids.

“We’re the stuff between — the really dirty fluids or really wet solids,” he said.

The company’s facilities take drilling, completion and production waste streams, including oil-based or water-based muds, drilling fluids, flowback fluids, tank bottoms, dirty water and produced water and use its proprietary slurry injection process to inject a mixture of the waste streams over a mile below the surface, where they’re sequestered beneath multiple layers of stone and away from ground water.

Rio said this process means a much smaller surface footprint than a landfill and is more sustainable, environmentally friendly and affordable. The facility also offers full-service washouts for trucks and frac tanks before they return to the field.

Because location is so important, Rio said the company’s goal is to have five or six facilities serving the Permian Basin, accessible to those active in the north or south Delaware and north or south Midland basins.