State regulators propose, then roll back, stricter environmental requirements for oil wells

State regulators proposed stricter environmental requirements for three oil wells in South Dakota but are poised to roll back some of the requirements after the affected company objected.

The company is Citation Oil & Gas Corp. of Houston, Texas. It’s attempting to renew an expiring surface-water discharge permit for three wells – including one that’s not currently producing – in South Dakota’s Harding County. The sparsely populated county contains most of the state’s oil industry, with 152 of the state’s 166 active oil wells.

Citation needs a discharge permit because its wells bring up water from deep underground with oil. The company uses chemicals, heat and gravity to separate the oil from the water. The separated water flows from treatment tanks into a manmade detention pond, and some water drains into nearby tributaries that lead to creeks. The creeks provide water for fish, wildlife, livestock, irrigation and recreation.

Over the life of the three wells since the 1970s, they’ve produced about 144 million gallons of water, according to data maintained by the state. Water discharged from oil wells may contain substances such as dissolved solids, petroleum hydrocarbons, radium, benzene, toluene, ethylbenzene and xylene. 

Surface-water discharge permits impose monitoring requirements and limits on some substances to ensure water is safe for its approved uses. The state Department of Agriculture and Natural Resources published a draft renewal of Citation’s discharge permit for the three wells in December 2021. The proposed new permit included some changes, including more frequent water sampling and stricter limits on some substances.

Bob Redweik, a Citation vice president, responded with a letter to the department.

“Citation contends that unreasonable limitations are being established in the draft permit such that undue harm may occur to both Citation and the landowner without any environmental justification,” the letter said, in part.

The letter went on to cite six concerns about changes in the permit. After considering those concerns, the state rejected some requested changes but agreed to others.

The state agreed to remove:

• Daily company self-inspections during water discharges, settling instead for weekly inspections.
• A requirement to measure the depth of water in the detention ponds.
• A requirement to report the duration of water discharges.
• Monthly discharge monitoring report forms, settling instead for quarterly reports.
• Limits on benzene, toluene, ethylbenzene and xylene, after sample results showed amounts well below a maximum standard (the state’s response said it reserves the right to impose these limits later “if it is determined there is reasonable potential the discharge could violate water quality standards”).
• Monitoring for total dissolved solids, conductivity, alkalinity, radium-226 and water temperature, on the basis that “the daily maximum flow rate of 4,500 gallons per day will ensure any discharge from Citation will not reach Jones Creek or Bull Creek.” 

Redweik told South Dakota Searchlight that the state determined the discharged water “doesn’t make it down there” to the creeks. When asked where it does go, he said it goes into tributaries where it’s “used up watering the wildlife and the livestock.”

The state Department of Agriculture and Natural Resources responded to South Dakota Searchlight questions by email.

“There is no evidence the discharge waters reach either creek,” said Brian Walsh, a spokesperson with the department. 

The state opened a 30-day comment period on the draft permit March 24. Within 30 days after the close of that comment period, the secretary of the state Department of Agriculture and Natural Resources will issue a final determination.

Jay Gilbertson, manager of the East Dakota Water Development District, has submitted written comments on the draft permit. He is urging state regulators to reinstate limits on several substances.

“With the changes proposed in the draft permit, most parameters used to assess the fish and wildlife propagation, recreation and stocking suitability will be discontinued, and none of the parameters used to assess irrigation water suitability will be collected,” Gilbertson wrote. “I am at a loss as to how the purpose of the permit can be accomplished under these circumstances.”

Redweik told South Dakota Searchlight that the revised draft permit will allow the wells to keep producing oil. 

“If we had to do something different with this water, it would make the field more uneconomic,” Redweik said. “The state is appropriately regulating us based on the volume of discharge and our record of compliance.”

Oil production from the three wells since the 1970s has totaled a combined 830,580 barrels, according to records maintained by the state. 

The state’s Office of School and Public Lands owns the mineral rights for at least one of the wells, named State Cave Hills #1. The office (and therefore public education, which is the ultimate recipient of the money) has received $550,982 from the lease of those mineral rights since 1998, the earliest date of records available from the state. The payments are based on the value of the oil produced.