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Parties fined $25K for unpermitted work on saltwater disposal well site

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Parties fined $25K for unpermitted work on saltwater disposal well site
Dickinson North Dakota 1815 1st Street West 58602

BISMARCK — The North Dakota Industrial Commission voted Tuesday to impose a $25,000 civil penalty on four parties with ties to construction work done on a saltwater disposal well site in McKenzie County without a state permit.

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The complaint filed by Department of Mineral Resources Director Lynn Helms alleged that the work was performed on two days in May 2013 at a site about 10 miles northwest of Watford City.

The work consisted of moving earth to flatten the site and installing electrical service, according to Bruce Hicks, assistant director of the department’s oil and gas division. The well wasn’t drilled, he said.

Saltwater, also known as produced water, is a byproduct of oil and gas production. It is commonly injected into underground wells for disposal.

“It’s very rare for us to see any party start constructing a well pad or start a well without a permit,” Helms said.

Sam Houston SWD LLC, which originally leased the site in May 2012, is one of the four parties facing the $25,000 fine and $1,155 in costs related to the state’s investigation.

The other three parties are Charles Reddell, who signed the lease on behalf of Sam Houston as a manager/member of the firm; RES Reddell Energy Services, which was billed for the earthwork; and Ralph Reddell, who remitted payment for the work, according to the order approved 3-0 by the Industrial Commission on Tuesday.

Helms noted that the original complaint was filed against Dakota Disposals LLC, which claims to now have the site lease. But Dakota Disposals wasn’t penalized because the company, which was organized in Minnesota, didn’t legally exist until April 15, 2013, after the work was already done, he said.

“We don’t believe they are really totally innocent in all of this, either, but the administrative law judge thought that the majority of weight of all the evidence indicated that the four other parties are really the ones responsible,” he said.

After the state began investigating the site, Dakota Disposals filed an application with the Industrial Commission on April 26, 2013, for a permit to drill and operate the saltwater well. Helms said the company isn’t registered in North Dakota and will find it difficult to obtain a bond to construct the site because it couldn’t produce the lease for the administrative law judge.

Another operator could still obtain the proper paperwork and complete the saltwater disposal well, or the state could collect the $25,000 penalty – $12,500 for each infraction, the maximum allowed by law – and confiscate the $50,000 bond posted by Dakota Disposals and use the money to restore the site to its original condition, Helms said.

Nowatzki is a reporter for Forum News Service. Contact him at 701-255-5607 or by email at mnowatzki@forumcomm.com.

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Mike Nowatzki
Mike Nowatzki reports for Forum News Service. He can be reached at (701) 255-5607.
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