2016-02-17 ne-wastewaterg1

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Three days after Oklahoma notched its third-strongest earthquake, state regulators unveiled plans Tuesday to cut wastewater disposal rates by 40 percent in a 5,200-square-mile area.

It’s a move with unprecedented actions, but one that an oil industry spokesman says he doesn’t expect to engender blowback from operators.

The Oklahoma Corporation Commission’s latest directive carves out a hunk of northwestern Oklahoma; it introduces the proactive move of including areas farther west that have yet to see the intense quakes of current seismic hotbeds. The wide swath covers 245 disposal wells injecting wastewater into the state’s deepest geological formation — the Arbuckle — that experts deem as the most pressing concern regarding man-made quakes.

Spokesman Matt Skinner noted the reductions will be phased in across two months in four stages, ultimately dropping volumes by 378,058 barrels per day. The action covers all or parts of Woods, Alfalfa, Grant, Woodward, Major and Garfield counties.

A similar directive from Jan. 20 is installing volume cuts of 40 percent (191,327 barrels a day) at 38 Arbuckle disposal wells owned by SandRidge Energy Inc.

Combining the two measures will equate to an overall volume reduction of nearly 570,000 barrels a day at 283 disposal wells.

“(The directive) looks pretty reasonable,” said Jeremy Boak, director of the Oklahoma Geological Survey. “It could be challenging for the companies, I think.”

The Tulsa World in mid-January reported on a recent OGS study, which showed an 81 percent jump from 2009 to 2014 in wastewater volumes pumped back underground from oil and gas activities. The rise coincides with the state’s leap in seismicity. Even more strikingly, wastewater injected into the Arbuckle ballooned 141 percent in the same period.

The study noted wastewater volumes expanded to 1.538 billion barrels in 2014 from 849 million in 2009. Arbuckle volumes leaped to 1.047 billion barrels in 2014 from 434 million barrels in 2009. For additional perspective, one barrel is 42 gallons.

Mitigation at work?

Boak noted “interesting developments” Tuesday afternoon in a brief telephone interview with the World while on the road. Data reflect a dropoff in central Oklahoma’s seismicity — not only in numbers but likely in energy released too, Boak said. It’s “plausible” to connect that to summer and fall actions by the Corporation Commission, he said.

A progressive increase in the number and strength of quakes in the northern portion of the state is an area in which recent mitigation measures haven’t had much — or any — time to take effect.

“So I think the previous directives are beginning to show,” Boak said.

The phased-in component of the volume reduction plans run through April 30 and is at the recommendation of researchers, who caution against sudden pressure changes, according to the Corporation Commission.

The SandRidge action was part of an agreement struck by the company and the Corporation Commission to avoid litigation over non-compliance with earlier directives.

Skinner noted the SandRidge dispute is one of two challenges to Corporation Commission directives. State regulators have been developing Tuesday’s plan since late October, Skinner said, adding that it is time consuming to ensure data are in hand.

Bottom line, he said, the agency must be able to prove the necessity of its directives in court.

“It would not be unreasonable to expect other challenges,” Skinner said.

Kim Hatfield, spokesman for the Oklahoma Independent Petroleum Association, said the SandRidge matter was a misunderstanding and that he expects all operators will comply with the latest regulations.

Hatfield noted the directive would present more of a problem if the cost of oil were higher because market conditions unfavorable to companies have curtailed drilling to a degree.

“Certainly it will be a challenge, but the fact they are giving us a little more flexibility in how it’s done is a big help to us,” Hatfield said. “And the fact that the decrease in the rate of drilling has led to a certain amount of volume reduction already.”

Proactive efforts

A 5.1-magnitude quake hit at 11:07 a.m. Saturday northwest of Fairview, pushing its way to a third-place spot in state history.

About 30 earthquakes in a 24-hour period rumbled that area in the first full week of January, including quakes of magnitudes 4.8 and 4.4. The 4.8 now is tied for fifth-strongest in Oklahoma after the 5.1 recorded Saturday.

Tim Baker, director of the OCC’s Oil and Gas Conservation Division, in a prepared statement said the latest plan’s boundaries extend west to where there hasn’t been “major earthquake activity.”

“This plan is aimed not only at taking further action in response to past activity, but also to get out ahead of it and hopefully prevent new areas from being involved,” Baker stated.

Baker acknowledged the recent local actions taken in the Medford, Fairview and Cherokee areas weren’t enough based on opinions of researchers and data.

“There is agreement among researchers, including our partners at the Oklahoma Geological Survey, that the data clearly underscored the need for a larger, regional response,” Baker stated. “That is why, even as we took actions in various parts of the region in response to specific earthquake events, we were already working on a larger plan.”

Skinner pointed out the initiative contains state regulators’ “first proactive element” and acknowledged he is unsure how operators of wells will react. He said operators have five days to respond from receipt of the letters detailing the directive.

On Tuesday, the governor’s office announced the Oklahoma Energy Resources Board has awarded a grant to the Corporation Commission. Skinner said the grant and a recent emergency infusion of cash from the governor have allowed for the hiring of two geologists, a consulting geophysicist and sorely needed software and hardware upgrades.

“We hope the process can speed up now,” Skinner said of acquiring data and implementing mitigation measures.

A different strategy

Tuesday’s widespread volume reduction plan is distinctly different from nearly a year ago when state regulators began broad well-depth reduction measures to Arbuckle well operators. The Arbuckle is in contact with the state’s crystalline “basement” rock, which contains critically stressed faults.

Skinner said each of the 245 wells identified Tuesday were covered in either the March or July 2015 well-depth directives and are in compliance with those stipulations.

Those two directives created broad “areas of interest” encompassing 558 wells disposing of wastewater into the Arbuckle formation. The directives required well operators to prove they weren’t injecting below the Arbuckle. If so, they were to plug back the depths of their wells and were to otherwise reduce wastewater volumes by 50 percent.

Updated Corporation Commission information states 224 of the wells reduced their depths and 14 cut their volumes in half.

The March 2015 directive noted there were approximately 900 wastewater wells injecting into the Arbuckle. Skinner said that figure remains about the same.

After the two broad well-depth directives, state regulators began targeting localized quake swarms with about a dozen directives. The latest ones came in the first month of 2016, with two taking aim at larger swaths of volume reductions, but still smaller areas than Tuesday’s announcement.

Corey Jones 918-581-8359

corey.jones@tulsaworld.com