Texas Oil Company, Two Executives Admit Environmental Crimes

In U.S. District Court in Houston, the two corporate officers Thursday admitted conspiracy and violation of the Safe Drinking Water Act for disposing of oil-contaminated wastewater from its refinery process at an underground class II injection well in Rosharon, Texas permitted to accept wastes only from oil and gas production.

The company pleaded guilty to conspiracy and violating the Resource Conservation and Recovery Act, RCRA, for disposing of hazardous waste at an unpermitted facility.

A class II injection well is permitted to accept only wastes generated from the exploration of oil and gas. Usually the wastes consist of brine mixed with some crude oil or gas distillate.

BLSR Operating injection well silouetted against the sunset at Rosharon, Texas (Photo courtesy BLSR)

In this case, the waste water was mixed with refined products and chemicals such as higher concentrations of toluene and xylene not usually found in oil and gas production wastes.

The government's investigation began in January 2003, when the BLSR Operating, Ltd. injection well at Rosharon exploded, killing three workers and seriously injuring four others. Although the explosion was not caused by the defendants, a closer review of the waste dumped into the injection well led to their prosecution.

The charges against Texas Oil and Gathering and its two officers involved the fraudulent representation to BLSR Operating that the wastewater the company was disposing at the well came from an oil well Kessel had leased and was developing.

In reality, the wastewater came from Texas Oil and Gathering's reclamation process involving the distillation of various liquids from refineries and chemical plants.

Between January 2000 and January 2003, Kessel and Pettijohn directed subordinates to truck its oil and water waste from distillation to the class II injection well and fill out disposal forms indicating it came from an oil well leased by Kessel.

The investigation was conducted by the EPA-Criminal Investigation Division, the Texas Commission on Environmental Quality and the Texas Environmental Enforcement Task Force.

"The defendants tried to make an illegal end run around our environmental laws in order to increase their bottom line," said Warren Amburn, special agent-in-charge of EPA's criminal enforcement office in Dallas. "These guilty pleas serve as a reminder that senior company executives who decide to commit environmental crimes will be prosecuted, not just the company."

Tim Johnson, acting U.S. Attorney for the Southern District of Texas said, "We remain committed to protecting the precious natural resources of Texas and hope that today's conviction sends a clear message to everyone in the industrial community that the government will investigate and prosecute anyone who attempts to circumvent our nation's anti-pollution laws."

Texas Oil and Gathering Inc. faces a maximum fine of $500,000 or twice monetary gain or loss for the conspiracy count and $50,000 per day, twice the gain or loss, or $500,000, whichever is higher, for the RCRA count.

Kessel and Pettijohn face up to eight years in prison and a fine of up to $500,000.

U.S. District Court Judge Keith Ellison scheduled the sentencing hearing for September 15, 2009.

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