WASHINGTON, Feb. 16, 2016 - Last weekend, the third-strongest earthquake ever recorded in Oklahoma reinforced state and national concerns that the surge in oil industry horizontal drilling and hydraulic fracturing (fracking) is causing the earth to move.
The 5.1 quake and two aftershocks were reminders that Oklahoma now averages 2.5 earthquakes a day at magnitude 3.0 or greater. That’s 600 times the state’s pre-2008 average.
Responding to mounting protests and threatened legal action against state agencies and oil companies, Oklahoma Gov. Mary Fallin on Jan. 28 promised “meaningful action on earthquakes” and authorized $1.387 million in state emergency funds to deal with the state’s unprecedented surge in seismic activity. Two weeks earlier, Fallin’s spokesman Michael McNutt had assured protesters that “There is no need for the governor to intervene at this time.”
In announcing her new focus on quakes, Fallin explained that “Like many other Oklahoma residents, I have felt my walls shake from earthquakes that have struck our state with increasing frequency over the past few years. I take the concerns seriously and I share your worries about potential damage from the quakes, which numbered more than 900 with a magnitude 3.0 or greater last year.”
Meanwhile, Crawley Petroleum President Kim Hatfield, chairman of the Oklahoma Independent Petroleum Association’s regulatory committee, rejected calls to limit oil operations, warning critics that a moratorium on injecting wastewater and other drilling fluids underground could “completely shut down oil and gas production” in Oklahoma.
Fallin said “Researchers tell us the state’s rise in earthquakes is caused by the disposal of produced saltwater deep into the Arbuckle formation beneath north-central Oklahoma, not by hydraulic fracturing, but haven’t provided any clear answers on how to stop the shaking.”
The distinction Fallin makes is that in Oklahoma, a state deeply invested in oil and natural gas production, current research pins the blame for the surge in quakes not on fracking directly, but on the wastewater “brine” pumped out and then re-injected deep underground following fracking, horizontal drilling, or conventional drilling.
Oklahoma has responded by ordering some oil industry disposal wells shut down and disposal volumes limited in others. The state’s largest disposal wells operator, SandRidge Energy, initially refused a state request to voluntarily limit disposal. Threatened with legal action, SandRidge signed a settlement agreement with the state in January to end disposal at seven wells and reduce volumes at an additional 48 wells by 40 percent.
Energy In Depth, a public education project launched by the Independent Petroleum Association of America, warns that “states should avoid drastic measures that are fueled more by politics than sound science, including blanket bans on injection wells, or restrictions on hydraulic fracturing.”
“Any policies that ban or seriously restrict oil and natural gas development would ultimately put hundreds of thousands of people in (Texas and Oklahoma) out of work and deny millions of tax dollars to state and local governments,” it added.
A research report published Feb. 5 concludes that oil industry disposal wells almost certainly caused a 2005 series of California earthquakes. In December, California commissioned Lawrence Berkeley National Laboratory to study the potential for oilfield-induced quakes in the state.
Also in California, the U.S. Interior Department on Jan. 29 agreed to suspend issuing fracking permits for offshore sites pending an environmental assessment to be completed by May 28. Kristen Monsell, an attorney with the Center for Biological Diversity, which challenged California’s offshore fracking, predicted the government may end the practice at least off the state’s shores.
“Once federal officials take a hard look at the dangers, they’ll have to conclude that offshore fracking is far too big of a gamble with our oceans’ life-support systems,” she said. “They’ll have to stop authorizing it for good.”
The California settlement applies only to California. But the Center notes that fracking in the Gulf of Mexico “has also never had meaningful environmental review.” So it hopes the settlement will trigger “oversight of all federally permitted offshore fracking.”
Nationally, the Interior Department’s Bureau of Land Management (BLM) proposed new regulations Feb. 8 “to reduce waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore federal and Indian leases.” Along with environmental benefits from reduced methane emissions, the Interior estimates economic benefits from the new rules would include increasing federal and state royalty revenue “as much as $23 million annually” from the natural gas which would be sold rather than wasted.
The oil industry worries that any new regulations imposed for federal lands could be extended to private lands. Such concerns escalated after President Obama promised in his Jan. 12 State of the Union address “to accelerate the transition away from old, dirtier energy sources” and said he will “push to change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet.”
Even without new regulations, the oil industry is under pressure, thanks to oil prices at around $30 per barrel, far below June 2014’s peak of over $100. Just how much low prices have hurt is clear from the bankruptcy of Texas-based natural gas driller Quicksilver Resources. At auction Jan. 22, Quicksilver sold its U.S. assets – valued last year at $1.2 billion – for $245 million, a fraction of Quicksilver’s $2.35 billion in debts.
The Oil Patch Bankruptcy Monitor provided by law firm Haynes and Boone shows that 48 North American oil and gas producers filed for bankruptcy in 2015, with over $17.3 billion in debt. After another six bankruptcies this year, Haynes and Boone warns that “all indications suggest many more producer bankruptcy filings will occur during 2016.”
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