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James Stafford

James Stafford

James Stafford is the Editor of Oilprice.com

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Earthquake Case Could Doom Fracking In Oklahoma

The rise in earthquakes as a result of fracking poses a massive problem for the oil and gas industry.

It is not hydraulic fracturing per se that is causing the earthquakes. Rather, the injection of wastewater back into the ground that contributes to fault lines “slipping,” which results in heightened seismic activity.

Oklahoma has become the earthquake capital of the United States, surpassing even tremor-prone California. Oklahoma has averaged less than two earthquakes of a magnitude 3.0 or greater over the last 30 years. Shockingly, however, that rate has skyrocketed in recent years. In 2013, the state experienced 585 earthquakes with at least a 3.0 magnitude. And if the current rate of earthquakes continues, Oklahoma could have 875 by the end of 2015. Related: Oil Prices To Fall Or Fly Depending On Iranian Nuclear Talks

The oil and gas industry in Oklahoma has downplayed the induced seismicity from disposal wells, but the frequency of earthquakes – rising to several earthquakes each day – has become too hard to ignore. That is leading to the prospect of a flurry of lawsuits against fracking companies. Continental Resources, one of the most active companies in Oklahoma, even included legal action and state regulation related to seismic activity on its list of risks in its financial statements. Related: Low Oil Prices Not Enough To Kill Off Oil Sands, Yet

Legal action in neighboring states offer an indication that costs will rise for Oklahoma drillers as the backlash ensues. Chesapeake Energy and BHP Billiton paid an undisclosed sum to settle a 2013 case in Arkansas over earthquake activity.

Energy companies can deal with paying off plaintiffs one by one, although it will raise the cost of doing business. But the big threat to drillers is a court case going against them, saddling the industry with the costs of earthquake-related damage and raising the liability for all future drilling. In essence, the subsequent cost of insurance needed by drilling companies could make oil and gas production unviable. Related: Rare Earths Problem Could Have A Nuclear Solution

One case in particular could determine how bad costs could get for the industry. A woman named Sandra Ladra has brought a case against two oil companies – New Dominion and Spess Oil Co. – after her chimney collapsed amid a 5.7 magnitude earthquake, and the falling bricks severely injured her. The 2011 earthquake was the strongest in Oklahoma history and destroyed 13 homes. A 2013 peer-reviewed study pointed to injection wells nearby that were used to dispose of fracking wastewater as the cause of the earthquake.

The Ladra case has now moved to the state supreme court. A court ruling in her favor will amount to a huge blow to the industry statewide, raising costs of operating and possibly contributing to a significant reduction in drilling over the long-term.

By James Stafford of Oilprice.com

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Leave a comment
  • Fred Bothers on April 03 2015 said:
    There's no need to pour so much money into fracking and oil sands. Very soon, clean renewable energy sources like wind and solar will supply a large part of the energy needs for the entire world at a price that fossil fuels will never be able to compete with. The smart money has already shifted to wind, solar, and geothermal. Many of the original backers of the super-port for exporting natural gas have understood that this touted market will not be there. They have backed away and withdrawn their support.
  • Glen Etzkorn on April 05 2015 said:
    erroneous comment that 'per se' fracking well operation sites do not cause earthquakes, when indeed there are indications of such incidents in 5 cases. so far, of having very dang likely induced fracker quakes.
  • MW on April 06 2015 said:
    The earthquake in question is the same strength as a quake that hit 50 miles away , in 1950's. Long before any injection wells were active.

    The injection wells are putting in produced water and frack water. They are not fracking.

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