Fracking-Linked Quakes Spurring Regulations

With scientific evidence emerging that wastewater from oil and gas drilling is the possible cause of earthquakes, states are adding new requirements for disposal wells.

Researchers think an increase in wastewater injected into the ground by drilling operators may be the cause of a sixfold increase in the number of earthquakes that have shaken the central part of the U.S. from 2000 to 2011, according to a U.S. Geological Survey study. The demand for underground disposal wells has increased with the proliferation of shale-gas drilling, a technique that produces millions of gallons of wastewater a well.

Links between disposal wells and earthquakes in Arkansas, Ohio and other states has raised public concern, according to Scott Anderson, senior policy adviser for the Environmental Defense Fund in Austin, Texas. The U.S. Environmental Protection Agency, which sets standards for wells under the Safe Drinking Water Act, said it is working with states to develop guidelines to manage seismic risk.

“Basically, people need to be told not to locate their disposal wells in active seismic areas,” Anderson said in an interview. “But the total percentage of wells that would be impacted by those restrictions almost certainly would be small.”

U.S. Geological Survey researchers found that, for three decades prior to 2000, seismic events in the nation’s midsection averaged 21 a year. They jumped to 50 in 2009, 87 in 2010 and 134 in 2011, according to the study, which was presented April 18 at the annual meeting of the Seismological Society of America.

Hydraulic Fracturing

The findings add to pressure on the industry over hydraulic fracturing, or fracking, a drilling technique in which millions of gallons of chemically treated water are forced underground to break up rock and free trapped gas. Most of the drilling fluid returns to the surface where it is either recycled or disposed of in underground wells.

This week, the EPA released the first regulations to combat air pollution from gas wells.

“In terms of public pressure, it’s part of a mosaic that is really challenging for the industry,” Benjamin Salisbury, a senior energy policy analyst at FBR Capital Markets Corp. in Arlington, Virginia, said in an interview. “None of these issues outweigh the massive societal benefits of hydraulic fracturing.”

Fracking, which has opened vast new shale-gas deposits and helped push gas prices to the lowest level in a decade, is raising demand for disposal wells, according to Mark Boling, president of Southwestern Energy Co. (SWN) (SWN)’s V+ Development Division.

Arkansas Wells Shut

“The necessity for having more water disposal capacity goes up in connection with hydraulic fracturing operations,” Boling said in an interview. “You’re seeing some situations that, just by chance, some wells are going into areas that were not previously known to be geologically active.”

Last year, Arkansas regulators permanently shut four disposal wells in the Fayetteville Shale after an outbreak of earthquakes near the town of Guy, including one that measured 4.7 on the Richter scale. This year, the state Oil and Gas Commission adopted rules requiring drillers to provide information on the structural geology of well sites and to position wells away from known faults, according to Lawrence Bengal, commission director.

“The circumstances under which these events occurred show there’s a very good relationship between these four disposal wells and the seismic activity,” Bengal said in an interview.

Little Damage

None of what government researchers consider to be man-made earthquakes has caused significant damage, William Ellsworth, Earthquake Science Center staff director for the U.S. Geological Survey, said on April 18 as he discussed a report on induced seismicity at a conference in San Diego. There is no evidence that the fracking itself -- as opposed to wastewater disposal -- causes earthquakes, he said.

In a 1990 report with the USGS, the EPA found that injection of fluid into deep wells triggered earthquakes in Colorado, Texas, New York, New Mexico, Nebraska, and Ohio and possibly in Oklahoma, Louisiana, and Mississippi. The EPA is expected to issue guidance to help state regulators assess earthquake risks, Anderson said.

State Jurisdiction

“The implementation of rules is ceded to the states, but they ultimately have jurisdiction over protecting underground sources of drinking water,” Anderson said.

Last year, the Colorado Oil and Gas Conservation Commission began asking state geologist Vince Matthews to review permit applications for new or expanded injection wells. The move came after a 5.3 magnitude earthquake on Aug. 23, 2011, near Trinidad in the gas-producing Raton Basin.

El Paso Corp. (EP) (EP), Exxon Mobil Corp. (XOM) (XOM) and Pioneer Natural Resources Co. (PXD) (PXD)are the primary drillers in the basin, which includes a coal-bed methane field that straddles the New Mexico- Colorado border. The companies dispose of drilling wastewater in underground wells in the basin.

http://www.businessweek.com/news/2012-04-20/fracking-linked-earthquakes-spurring-state-regulations