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Eagle Ford company brings down cost of recycling oil & gas waste

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Written by: Sergio Chapa

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The oil field is a shrinking pond thanks to record low commodity prices, but competition and technology have driven down costs for recycling waste from the drilling pad.

DeWitt Recyclable Products in Cuero held a grand opening in April but will begin receiving drilling muds and other waste products from its first clients this week.

Using new and customized technology, owners say the costs of recycling oil and gas waste have now fallen to the point where they are very competitive with landfills.

“When you think of recycling, you think of paying a premium but that’s not our business model,” company co-founder David Elks told the Business Journal. “We don’t charge more.”

Mud farms and other oil waste companies typically charge by the cubic yard to dispose of oil and gas waste, but DeWitt uses state-certified scales to charge their clients by the ton.

Once the waste is processed, three products can be made: crude oil, diesel fuel and clean dirt. Elks said the company makes money receiving the waste from companies and selling the recycled products to third parties. Additional revenue can be generated from washing tanker trucks as well as cleaning and storing frack tanks.

“We’re going to hire about 40 people once we’re fully up and running,” Elks said.

Located off Highway 183 just north of Cuero city limits, the land for the facility was carefully selected to be near one of the last remaining hotspots in the Eagle Ford. Railroad Commission of Texas figures show that DeWitt County is the second most prolific oilproducing county in the entire state. A review of drilling permits shows that big oil companies such as EOG Resources, BHP Billiton, Burlington Resources, Pioneer Natural Resources and Devon Energy all operate within the county.

“There are 15 rigs operating within 25 miles of us,” Elks noted.

With decades of experience building processing plants, Elks served as his own general contractor to build the multi-million dollar facility while the company’s other co-founder James McCabe put together the private financing.

Elks is based in Fredericksburg and McCabe is based in Florida but the two have worked together for years at Watson Energy Investments, a company founded by McCabe that has drilled for oil and gas near Wichita Falls. The two are currently building a second oil and gas waste recycling facility in the Permian Basin town of Pecos where they have a similar market advantage.

“We understand the operator side of this, we understand what they need to do,” Elks said.

Recycling centers are popping up like weeds in the Eagle Ford where Polk Operating LLC opened one in Karnes County three years and Fortress Environmental Services opened one in Gonzales County late last year. Fortress is hoping to open another facility in Carrizo Springs later this year.

In addition to competing with each other, recycling centers face stiff competition from landfills, which for decades have used open air pits to store waste, mix it with clean dirt and then use aeration to break down hydrocarbons over time. Elks said landfills were always cheaper but noted that they have one legal disadvantage — companies that take their waste to landfills remain responsible for it in the event of a spill or contamination.

“When they bring it here, their long-term responsibility goes away,” Elks said. “A landfill has a cradle to grave responsibility.”

TAGS: Oil, Gas, Energy, Crude

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