The Department of Natural Resources says a quarry off the Trans Canada Highway where drill mud from the offshore was recently found is an approved soil treatment facility.
The department launched a review along with the Department of Environment and Service NL after oil and other substances at the site were brought to their attention by a member of the public.
The department says the quarry lease, operated by Modern Holdings Limited, is an approved facility for what it calls non-hazardous drilling mud stored for additional treatment.
It says appropriate infrastructure is in place and includes primary and secondary oil treatment pads and liners to prevent the release of contaminants into the environment.
Once treated, government says, sample results are submitted to Service NL for review before they can be disposed of in approved waster disposal facilities.