Taking a Studied Approach to Drilling Waste
What is risk? As Leigh Buchanan and Andrew O’Connell put it in the January 2006 issue of the Harvard Business Review, “Risk is an inescapable part of every decision.” Decisions regarding waste management policy in the oil and gas industry are no exception.
Drilling waste is one of the largest waste streams generated from oil and gas exploration and production in the US, with about 200 million bbl of solid drilling waste produced in 2014 alone. Drilling waste consists of the drilled cuttings and unrecovered drilling fluids, including water- and oil-based fluids. The risk management of drilling waste should be an important aspect of every drilling mud program. There are multiple publications that include important guidelines as well as several companies that are able to help assess and manage this risk.
Risk Is a Balance of Probability and Liability
In a mathematical sense, risk is a function of the probability of a poor or undesirable outcome and the associated costs or liability of that outcome. This is directly related to both probability and liability. One must first understand the probability and liability associated with a decision to determine risk. In accounting, this liability is generally referred to as a loss contingency and may or may not be reported on the balance sheet, depending on the probability of a loss event occurring. For an environmental risk assessment, human health and ecological risk assessments should first be calculated. The degree of risk can then be a factor in estimating financial liability.