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Oil Markets Ignore Growing Geopolitical Risk

Oil Markets Ignore Growing Geopolitical Risk

While geopolitical risks in the…

Oklahoma Earthquake Gives More Impetus To Fracking Fears

Oklahoma was struck by a magnitude 5.1 earthquake on Saturday, the third-strongest quake ever recorded in the state, which has experienced a surge in seismic activity in recent years, feeding ongoing fears about the connection to hydraulic fracturing.

A total of nine minor earthquakes were reported, according to the U.S. Geological Survey. The quakes were felt across Kansas, Missouri, New Mexico, Nebraska, Texas, Arkansas and Iowa.

The epicenter was near the East Campbell Gas Field and about 75 miles west of Cushing—the “Pipeline Crossroads--and one of the largest oil storage hubs in the world.

Oklahoma is one of the top five oil production states and accounts for some 3 percent to 4 percent of total U.S. output. The U.S. Energy Information Administration last week raised its estimate for total state production by 100,000 barrels per day, up 25 percent to 30 percent percent.

While Oklahoma’s oil fields have experienced a boom over the past decade thanks to fracking and horizontal drilling, the state also reported 907 earthquakes of magnitude last year. This represents a 54 percent increase in earthquakes from 2014 alone.

Related: Is Venezuela Trying To Hide Oil Assets With This Bizarre Move?

In January, earthquakes in Oklahoma led to calls for the governor to make changes to oil and gas drilling regulations. Regulators responded by ordering companies within 10 miles of the earthquake's epicenter to reduce their well disposal activity.

Activists and local residents criticize efforts as falling short of what is necessary.

In late January, two lawsuits in Oklahoma were brought accusing more than a dozen oil and gas companies of triggering recent earthquakes by disposing of their drilling waste in deep wells.

Related: UAE Offers India Free Oil To Ease Storage Woes

The lawsuits target Devon Energy Production, Grayhorse Operating, Marjo Operating Mid-Continent, New Dominion, Northport Production, Pedestal Oil, Rainbow Service, R.C. Taylor Operating, Special Energy, Sundance Energy, TNT Operating and White Operating. The suits allege that these companies’ wastewater disposal wells are to blame, and more specifically that the injection of fracking wastewater into these wells is causing or contributing to the earthquakes.

By James Burgess of Oilprice.com

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