links and reasons i like nr's increased revenue chances with these new epa rules
newpark, nr, has several drilling related businesses, and this new general discharge permit for the gulf of mexico can impact two of them with increased revenue in the short and longer term. the new rules start february, 19, 2002, and will phase in over the next 180 days after that. what is happening is previously unregulated synthetic drilling fluid/cutting discharges in the gulf are now being prohibited. only work-around will be some much tougher new processing specification (really arcane if you ask me) you will find in the links i have provided below. so there can be no doubt that newpark will definitely get a lot more business for its drilling waste disposal business from those operators who continue to use synthetic based drilling fluids.
the other new area where newpark should increase revenue a lot is nr's deepdrill Water-based drilling fluid. these new govt. regulations do not change anything relative to water-based drilling fluids (other than make them much more attractive to use for drilling, especially in the deepwater areas). i know from nr ceo conf calls that apc and some other operators have used and use deepdrill in the gulf. nr may get a win one day with one of the majors producers for deepdrill, and then this little stock could really take off. if you go check the growth of nr's revenues in the past few years, you will see the drilling fluids revenues have really grown quickly as a percentage of nr's overall business. a deepdrill win at a major is what i am looking for, and i think these new epa-discharge-of-drilling-fluids rules could hasten the day for such a win. we shall see.
here are the links with some quotes to make reading easier, and some editorial comments of my own.
Final NPDES General Permit for New and Existing Sources and New Dischargers in the Offshore Subcategory of the Oil and Gas Category for the Western Portion of the Outer Continental Shelf of the Gulf of Mexico
newpark.com
from page 8 section 1.B.1.a of this large government epa document
"a) Prohibitions"
"Non-Aqueous Based Drilling Fluids. The discharge of non-aqueous based drilling fluid
is prohibited, except that which adheres to cuttings and small volume discharges
described below in Part 1.B.2.c.2."
"Exception: non-aqueous base fluids may be used as a carrier fluid (transporter fluid),
lubricity additive or pill in water based drilling fluids and discharged with those drilling
fluids provided the discharge continues to meet the no free oil and 96-hour LC50
toxicity limits, and a pill is removed prior to discharge."
"Oil-Based Drilling Fluids. The discharge of oil based drilling fluids and oil based
inverse emulsion drilling fluids are prohibited."
"Oil Contaminated Drilling Fluids. The discharge of drilling fluids which contain waste
engine oil, cooling oil, gear oil or any lubricants which have been previously used for
purposes other than borehole lubrication, is prohibited."
"Diesel Oil. Drilling fluids to which any diesel oil has been added as a lubricant may not
be discharged."
for those of you who wish to read comments from the oil/gas operators/drillers and the response from the government, this is the final epa response to the public comments on the npdes general permit for discharges....
newpark.com
the Key takeaway here for me (relative to newpark) is this text, because it means water based drilling fluids can still be discharged into the gulf waters, but previously unregulated synthetic drilling fluids starting on february 19, 2002, cannot be discharged into gulf of mexico waters except under extremely tight conditions specified in Part 1.B.2.c.2 of the final npdes specification (given above in the link supplied) :
"The permit issued today authorizes new discharges of drill cuttings generated using synthetic
and other non-aqueous based drilling fluids and hydrostatic test water from pressure testing of existing
pipelines. The existing general permit, which covers existing dischargers, new dischargers, and New
Sources was published in the Federal Register on April 19, 1999. Water-based drilling fluids, and the
cuttings produced using them, are presently authorized to be discharged under the OCS general permit."
"The limitations and monitoring requirements pertaining to discharges of water based drilling fluids and
the associated cuttings are not changed with this modification. Likewise, the existing permit’s discharge
prohibitions for oil-based and mineral oil-based drilling fluids and the cuttings generated using them are
not changed. The permit’s existing authorization of the discharge of water used to hydrostatically test
new piping and new pipelines and the associated limitations and monitoring requirements also are not
proposed to be modified."
fyi in the middle of the first page (page 65209 in this us government info document) begins the info/notification of the final NPDES General Permit, etc.
newpark.com
response to comments npdes by epa from the past (for those who want to investigate deeper)
epa.gov |
