I'm a trial attorney, and I recently defended a lawsuit involving a young man who was very badly burned, after stepping on a discarded cigarette that happened to be in contact with 5 to 8 pounds of Bullseye powder that my client (a former competition shooter) had poured out onto the ground in his backyard at least six months before the fire. Witnesses described the victim as being engulfed in an "8- to 10-foot fireball of yellow flames." After being transported to the hospital, the guy was given a 50/50 chance of survival. Fortunately, he lived and is now back to work.
During this litigation, I deposed several chemical experts from different parts of the country, as well as a key product expert witness who is now retired after 40-some years with Hercules Incorporated, the former manufacturer of good ol' Bullseye powder.
Needless to say, I learned a lot about smokeless gunpowder during this case.
The bottom line: The only safe way to dispose of smokeless gunpowder is to burn it under controlled conditions. Water will not permanently neutralize it. Oil will not permanently neutralize it. Smokeless powder is extraordinarily stable and non-hygroscopic by design, and until it is completely consumed by burning, it must be considered flammable, and at least potentially dangerous.
Interesting side-note: The powder involved in this incident was determined to have been manufactured sometime in the early '60s. I kept a left-over square metal powder can as a souvenir of the case. The powder is definitely still flammable (as controlled testing proved) and I suspect still perfectly usable. It looks and smells exactly like the Bullseye powder I bought at the gun shop a month ago!