The idea that recent sequential earthquake activity, particularly in Ohio and Oklahoma, is related to hydraulic fracking and water disposal operations is gaining traction in some key drilling states.

While there is no hard data to conclusively support the theory, action on the part of regulatory agencies will potentially present oil and gas companies with a fresh set of challenges – and opportunities.

In April, the Ohio Department of Natural Resources put new seismic-related requirements in place for fracking, and Oklahoma recently put restrictions and reporting requirements in place for disposal wells. The Texas oil and gas regulatory agency hired a full time seismologist.

The Oklahoma Independent Petroleum Association established a working group on seismic activity with the Oklahoma Geological Survey and the Oklahoma Corporation Commission. The Interstate Oil and Gas Compact Commission and Ground Water Protection Council also joined with regulators and geological surveys.

“Suspicions about a link of disposal wells to earthquakes go back at least to 2010,” said Jim Gooding, Management Consulting Geoscientist and Energy Market Analyst for Black & Veatch. “Until recently in Ohio, these incidents could be rationalized as using too high an injection pressure on a disposal well. If it was corrected, the earthquakes would go away.”

Then, in Ohio, state regulators for the first time apparently were convinced that fracking, not water disposal, was the cause of a quake. “This is leapfrogging into a whole new territory in terms of how you manage, explain and somehow reconcile it going forward. So it is pretty significant,” Gooding said.

Bruce Mark, a spokesman for the Ohio Department of Natural Resources (ODNR), said that in March, seismic events as high as magnitude 3.0 – the level that can be felt by humans – occurred near Youngstown.

“We looked at a range of data about the event and information about the fracturing operation. We drew the probable correlation – we can’t draw a direct correlation – between the hydraulic fracturing and the seismic events,” Mark said. “It appears that the operation came in contact with a previously unknown microfault. There’s been no history of seismic activity in the immediate area,” he noted.

The ODNR imposed a temporary moratorium on fracturing activity for a radius of three miles of the well in question. The operator can put the well into production if it installs seismic monitoring, although there is a well on a nearby pad that continues to produce, he said.

In April, ODNR announced new permitting requirements for horizontal drilling: seismic monitors need to be installed for a well within three miles of a known fault or in areas of seismic activity greater than a 2.0 magnitude. If a seismic event greater than 1.0 magnitude is detected, activities need to pause while the cause is investigated. If it reveals a probable connection, well completion operations will be suspended, the agency said.

ODNR pointed out that more than 800 wells have been drilled in Ohio’s Utica and Marcellus shale formations, with as many as 16,000 hydraulic fracturing stages from those wells.

Seismic Activity in Oklahoma

Oklahoma has seen an “incredible uptick in activity,” said Austin Holland, research seismologist for the Oklahoma Geological Survey. The state averaged only one-and-a-half earthquakes with a magnitude of 3.0 or greater each year from 1978 to 2008. In 2010, there were 40. This year, Oklahoma has already seen more than 170, he said.

Is this related to fracking/disposal operations, or is it part of a natural cycle?

“It is probably a combination,” Holland said. “We can clearly say a small portion is likely related to fracking and disposal. But this increase is occurring over an area of about 9,700 square miles (25,000 square kilometers), so it’s a very large area. This would be completely unprecedented for a natural ‘swarm’ as well as any induced earthquake activity. We have a lot of data to dig through.”

A swarm is a series of earthquakes occurring in the same general locality and of similar strength over a period of hours or even weeks. They are distinct from the aftershocks of a large earthquake.

Holland added, “I’ve seen swarms and they generally last a year or two. There was a swarm in Arkansas in the 1980s. It lasted three or four years and then stopped. We could be looking at a much larger, more significant swarm and then it might stop. The change we are seeing is pretty remarkable.”

The Oklahoma Independent Petroleum Association points out that crude oil and natural gas are produced in 70 of Oklahoma’s 77 counties, so any seismic activity within the state is likely to occur near oil and gas activity.

“The conclusion that fracking causes earthquakes is jumping way ahead of the results of any in-depth scientific investigation,” Gooding said.

Public Pressure in Texas

The Texas Railroad Commission, which oversees the oil and gas industry in the state, has been getting complaints about earthquakes for the last two or three years. It became such a big issue that the commission early this year hired a full-time seismologist.

“I’m not aware of any other state regulator who has gone to such lengths,” Gooding said. “Since Texas, which has been friendly to oil and gas, has felt this uprising of public sentiment, we’re likely to see more of this.”

The issue is also causing a re-thinking of requirements for disposal wells. The Safe Drinking Water Act classifies petroleum wastewater disposal wells as Class II, not requiring a detailed seismic assessment. But seismic analysis is part of Class I permits, which deal with hazardous wastes. Since the earthquake issue emerged, some observers suggest that frac water disposal wells should be reclassified as Class I or that seismic assessments should be required for Class II.

“Either way, that could be a major regulatory shift,” Gooding said.

Making Contingency Plans

What happens if severe restrictions are placed on disposal wells?

“It would be a real game changer because, using Texas as example, more than 50,000 wastewater disposal wells have been drilled in the oil and gas history of the state. That has been the default disposal route,” Gooding said.

Ohio has been serving in such a role for Pennsylvania, making the Marcellus development dependent to a great degree on being able to truck the wastewater from Pennsylvania to Ohio. In the worst case, if disposal wells become unavailable, the industry will need to rapidly find an alternative or throttle back on oil and gas development. Either one would be problematical. If disposal wells go away, then treatment and recycling become even more important than has been talked about, he said.

The hydrocarbon fuel-producing community – those involved with drilling, well completion, gathering, transportation – should be concerned with this issue because headwinds are growing on the time-tested default disposal method, Gooding said. The smart operator needs to plan, he said. How does a drilling company adapt to a world where disposal wells are limited? Companies need to work with regulators on water reuse and recycling. They should examine their business plans and determine future cost implications. Disposal wells are always the least expensive way of getting rid of waste. If that route is closed, costs will go up.

For the wastewater handling industry, this could result in new business opportunities, Gooding said. “Wastewater companies need to ask, are we ready? Do we understand the business of hydrocarbon fuels, the type of waste they generate, and are we capable of dealing with it?”

As regulations tighten, the oil industry and its service providers will need to put new business plans in place to comply with the rules, and new investments will be necessary to implement those plans. That would seem to be the wave of the future.

Published originally on Black & Veatch Solutions.