Howland Company Eyes D&L's Injection Wells
HOWLAND TOWNSHIP, Ohio -- American Water Management Services Inc. is interested in picking up the pieces left scattered by D&L Energy Inc.
American Water, a division of American Waste Management Inc., Howland, is drilling two wastewater injection wells in Trumbull County and would like to add D&L’s abandoned projects in North Lima and Coitsville Township to that list.
“D&L has two wells that we’ve been interested in for some time,” says Ron Klingle, chairman of Avalon Holdings, the parent company of American Water and American Waste. “We’ve been working with a lot of the investors to see if there’s an interest on their part to become part of what we’re putting together.”
D&L Energy, the embattled company whose injection well in Youngstown – Northstar #1 – was identified as the culprit behind a series of earthquakes that shook the Mahoning Valley in 2011 – filed Chapter 11 bankruptcy earlier this year. Its former president, Ben Lupo, and a former employee of an affiliated company, were charged with one count of violating the U.S. Clean Water Act. The government says that Lupo instructed the employee, Michael Guesman, to illegally discharge drilling wastewater into a storm drain that ended up contaminating a portion of the Mahoning River.
Guesman has since pleaded guilty.
Klingle says that his company and D&L started discussions after a 2011 New Year’s Eve earthquake in the Valley caused the state of Ohio to step in and shut down all injection well operations within a five-mile radius of the Northstar site.
“We began having conversations with D&L right after the earthquakes, when they were not able to follow through themselves,” Klingle notes. “We weren’t able to come an agreement.”
However, D&L’s bankruptcy has opened the door for further discussions, Klingle adds. The injection well in North Lima, on state Route 7, is nearly finished and would require only a “few more weeks” of work before operations could begin.
“It’s in a good location and is an excellent facility,” he says. American Water is interested in acquiring just these two wells, Klingle emphasizes, and no other D&L properties or sites.
And, he assures skeptics, American Water isn’t going to make the same mistakes that D&L did. The company’s two new wells, slated for Weathersfield Township, will comply with stringent regulations the state mandated in the wake of the Youngstown quakes.
D&L’s well in Youngstown, for example, was drilled too deep and fractured the basement rock, Klingle says. When water was injected into the well, it lubricated a fault line, causing it to slip.
“Six to eight years ago, all you had to do was fill out a form, and you got a permit,” he says. Now, companies must supply engineering and design studies, geological surveys, as well as other data related to development of an injection well before a permit can even be considered.
Another requirement, he notes, is that American Water place sensors all around the new wells before they are in operation so they can measure any seismic activity that naturally occurs. Once the wells are in operation, the data are examined to verify if there are any indications of increased seismic activity. “The state will also monitor that with us,” Klingle says. “I really think that’s a good thing.”
Moreover, Klingle says his core business is waste disposal and the company has never been cited for a single violation since it was started nearly 28 years ago. “We’ve been in the environmental disposal business since 1986,” he says. “Deep well injection can be done in a perfectly safe manner, and that’s the only way we’d get involved in that business.”
Klingle’s American Waste has owned and operated some of the largest hazardous and nonhazardous waste disposal entities in the country, trucking firms, engineering firms, environmental laboratories and remediation companies. “We’ve done billions of dollars worth of business and we’ve never received a fine or penalty.”
Drilling at the company’s first Weathersfield well along state Route 169 should begin soon. The site is perfect since it has access to rail lines on which wastewater can be shipped to the wells via water tankers.
“We prefer older industrial locations,” Klingle says. He reports it costs between $1 million and $2 million on average to develop an injection well.
In August Weathersfield Township trustees adopted a resolution that effectively bans the development of injection wells within its borders. Aside from the prospects of more earthquakes, residents are concerned that the wastewater is laced with dangerous chemicals used during hydraulic fracturing that could harm the environment and poison water supplies. “I think the general consensus is that there’s less favor for injection wells than fracking,” says Gil Blair, township trustee.
He concedes trustees have no authority to enforce their resolution because control relative to permitting and approving wells lies solely within the Ohio Department of Natural Resources, not local governments.
Blair emphasizes that representatives of American Water were on hand during a recent trustees meeting and explained the entire process, assuring those attending that storing contaminated water in deep-ground injection wells is the safest method of disposing this waste.
As a result, Blair says, the trustees and the township are “trying to establish a good, productive relationship” with American Water.
Klingle adds that it’s important that these wells are available in the region to facilitate growth in the oil and gas industry as energy companies step up exploration in the northern tier of the Utica shale.
“I’ve been involved extensively with welcoming the gas and oil industry in our community,” he says. “It was obvious that there were certain things that they need in order to be successful. They need a way to get rid of their brinewater, and that’s critical.”
It takes six million to eight million gallons of water on average to hydraulically fracture each new horizontal gas well that’s drilled, Klingle says. About 15% to 20% of that water comes back up once the well is opened, and that water must be disposed of. “If it’s more expensive for them to get rid of,” he comments, “it makes it harder for them to have an efficient operation here.”
The entire oil and gas industry stands to have a huge impact throughout the region, and Klingle says he doesn’t want to see such an opportunity slip by. “I think what we’re doing is vital,” Klingle says. “We know how to do it safely, and we will not be a part of anything that is done improperly.”
EDITOR'S NOTE: First published in the MidOctober edition of The Business Journal, published today.
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