OKLAHOMA CITY — Continental Resources Inc. founder, chairman and CEO Harold Hamm says he wasn’t trying to bully Oklahoma’s state seismologist when he sought a meeting in 2013, but simply trying to learn what proof the scientist had for saying hydraulic fracturing was causing earthquakes.
"We care about the industry," Hamm said. "When people disparage parts of it, I want to know why. I want to know what basis they have for doing that."
In his first in-depth interview about his dealings with state officials on the issue of man-made earthquakes, the billionaire oilman said he knows that wastewater disposal can set the ground rumbling but said the practice of fracturing shouldn’t be associated with quakes.
That’s why Austin Holland, seismologist at the Oklahoma Geological Survey (OGS), was summoned to a November 2013 "coffee" with Hamm in the office of University of Oklahoma President David Boren (EnergyWire, March 3).
Holland, a university employee, had done research linking "frack jobs" — Hamm calls them "fracture stimulations" — to the dozens of earthquakes then shaking the state. He’d said as many as 10 percent of the quakes could be linked to fracturing.
As to the other 90 percent of the shaking, Holland and OGS had also been edging closer to placing the blame on another oil and gas activity — injection of wastewater (EnergyWire, Oct. 25, 2013). But Hamm said that is not why he wanted to talk to Holland.
"We were in there because we are involved in fracture stimulation," Hamm said. "We’re the most active horizontal driller in Oklahoma."
Hamm sat down with EnergyWire for an interview at the company’s Oklahoma City headquarters in late April because he felt previous coverage of his interactions "kind of smacked of undue pressure and inappropriate behavior, and that’s not what we’re all about here at Continental."
Hamm believes that discussion of earthquakes and fracking plays into the hands of an active campaign to demonize the United States’ oil and gas "renaissance."
That renaissance has been made possible by hydraulic fracturing and horizontal drilling. He sees the hand of petroleum-dependent Russia in the efforts to disparage it. He even sees the Russian bear behind the anti-drilling film "Gasland" and its creator, Josh Fox.
"They spent about $500 million in research and hiring the big firms," Hamm said. "Then comes out with one little guy, Josh Fox, takes off.
"It all ties back," he said.
Asked for a response, Fox said Hamm’s remark was "the most misguided, insane notion I’ve ever heard. It’s almost as insane as fracking."
In such an atmosphere, Hamm said he was disturbed that an ill-advised report about fracking and earthquakes could be misinterpreted.
"If you make a statement like that, it’s going to cause a lot of concern," Hamm said. "Perhaps you should at least think about it and make sure it’s peer-reviewed before you go out with something that’s pretty novel. Because people take notice."
Holland’s findings linking a frack job to a series of barely felt quakes in south-central Oklahoma had been published in a peer-reviewed journal in June 2013, before the meeting.
A significant difference
Oklahoma’s earthquake rate started rising in 2009. Until then, the Sooner State had averaged one to three quakes each year greater than magnitude 3. In 2009, there were 20. In 2013, that grew to more than 100. Last year, there were 585. This year, the state is on track for more than 800.
Hamm said that it was in the fall of 2013 that he first heard of research by Holland linking the specific process of hydraulic fracturing to the earthquakes in the state.
The term "hydraulic fracturing" or "fracking" often inspires confusion. To those in industry, fracking is a specific part of well development, which occurs after the wellbore is drilled and before production begins. Chemical-laced water and sand are injected downhole at high pressure, breaking apart rock and releasing oil and gas.
Many outside the industry, particularly its critics, lump nearly every aspect of oil and production under the "fracking" moniker. That includes disposal of wastewater. Wastewater includes used fracturing fluid that gets returned to the surface and water already in the formation that comes up with the oil and gas.
The distinction might sound semantic, but it is significant. Fracking has not been linked to the swarms of quakes plaguing the state, or the risk of a much larger, damaging quake. Disposal has.
Seismologists say that wastewater can sometimes lubricate existing faults and trigger quakes. In Oklahoma, drilling methods that generate exceptional amounts of water have combined, apparently, with uniquely aligned faults to create the surge in earthquakes.
Disposal has also been linked to quakes in Arkansas, Colorado, New Mexico, Ohio and Texas.
But Oklahoma has far more than any of the other states.
Earthquakes in Oklahoma now are concentrated in two areas, central and north-central Oklahoma. Continental does not operate in those areas.
Many seismologists consider fracking-induced quakes to be a distraction from the more pressing issue of disposal-induced quakes. But Holland has focused more than most researchers on earthquakes linked to fracking.
In January 2011, Holland investigated small quakes reported by someone who lived close to a drilling site near Elmore City, Okla. To his surprise, he found a correlation between frack jobs done at the site and the earthquakes.
But even in discussing those results, he made clear that such a connection was uncommon. When a reporter asked about his findings, he stressed that companies had fracked 100,000 wells in Oklahoma, with only three minor seismic events reported (EnergyWire, Nov. 2, 2011).
Focus on fracking
After that, Holland began research into data from a dense array of temporary seismic recorders installed in Oklahoma starting in 2009. In 2012, he reported that he found that "earthquakes triggered by hydraulic fracturing are at most 2 percent of completed wells, but possibly much more infrequent." He reported elsewhere that 10 percent of the earthquakes in the state could be related to fracking.
Holland’s report said disposal wells pose the greatest risk of quakes. But Hamm and his top lieutenant, Jack Stark, say it was the findings about hydraulic fracturing that drove their concerns.
"That’s what really piqued our interest," said Stark, president and chief operating officer of Continental, who joined in the interview last month. "What could this be? What are your scientific facts?"
Hamm and Stark are not the only ones who have questioned Holland’s focus on fracturing and earthquakes.
A few days after his Nov. 20, 2013, meeting with Hamm, Stanford University geophysicist Mark Zoback emailed Holland. Zoback, who has worked with state officials on the earthquake issue, said he’d been asked about an interview in which Holland said there were "hundreds of cases of earthquakes triggered by hydraulic fracturing."
"Could you please clarify this for me," Zoback said in his email to Holland, obtained by EnergyWire through an open records request. "I’m aware of a small number of documented (and rumored cases — less than a dozen) [and except] for Horn River, no earthquakes have ever been larger than M 3."
Holland met with Stark, who was then senior vice president of exploration at Continental, about a month before his coffee with Hamm. The meeting was at the headquarters of the Oklahoma Corporation Commission, which is in charge of regulating oil and gas in the state, in the office of Commissioner Patrice Douglas, who has since left office.
"She just wanted an industry representative there to give her an opinion and the state seismologist to give an opinion," Stark said.
Holland, though, heard something different. He told his bosses that Stark complained about a statement OGS had joined with the U.S. Geological Survey. The statement warned about a sharp increase in Oklahoma’s earthquake risk and said "wastewater disposal" might be "a contributing factor" in the surge (EnergyWire, Oct. 25, 2013).
"Continental does not feel induced seismicity is an issue and they are nervous about any dialog about the subject," Holland wrote to his bosses after meeting with Stark. "They are in the denial phase that this is a possibility."
Hamm said he had questions similar to Stark. So he approached Boren, who he has known since the early 1970s when Boren first ran for governor of Oklahoma.
"So, I’m obviously not Mr. Holland’s peer. I went to my peer," Hamm said. "My peer is David Boren. I went to him and asked to meet with somebody from that department to explain or share information as to how that was established."
But he said he went into the meeting knowing that Boren would ensure that it was handled appropriately.
"One thing about him, he’s always been very, very concerned about other people’s well-being," Hamm said. "He doesn’t want to see anybody trampled on and he’s not going to do that."
Boren has served on Continental’s board of directors since 2009, for which he has received more than $1.6 million in cash and stock. At least one state legislator, Rep. Jason Murphey (R-Guthrie), has called that a conflict of interest and called for ending university oversight of OGS.
Boren has offered a different account of the meeting. In a March statement, Boren said that Hamm asked for the meeting because "he wanted to know if Mr. Holland had found any information which might be helpful to producers in adopting best practices that would help prevent any possible connection between drilling and seismic events" (EnergyWire, March 5).
But Hamm and Holland say the meeting focused on hydraulic fracturing and earthquakes. Hamm said Holland told him about his 2011 research showing a correlation between a frack job and earthquakes near Elmore City.
"He made me familiar with it there," Hamm said. "Basically, it brought you to the wrong conclusion with one well. I certainly suggested that he broaden the scope. And he did, I think."
In a brief interview last week, Holland confirmed that the meeting focused on fracking and not disposal. "That’s about right," Holland said.
Hamm’s concerns, however, have not changed Holland’s conclusions about frack jobs and earthquakes. In recent presentations, he has continued to say that as many as 10 percent of the state’s earthquakes could be caused by fracture treatments (EnergyWire, Oct. 31, 2014).
Hamm is the richest oilman in Oklahoma and one of the biggest donors to Boren’s university. But he bristles at the idea that he was throwing his weight around, as he said initial stories implied.
"I’m very approachable, and don’t think I’m intimidating," Hamm said. "That’s not who I am. I try to do the right thing. I don’t try to push anybody around."
Stark and Hamm say their position that hydraulic fracturing isn’t a concern for earthquakes was borne out last month when OGS issued a new statement on man-made quakes. Holland and Richard Andrews, interim director of OGS, wrote that "the primary suspected source of triggered seismicity is not from hydraulic fracturing." Instead, the main concern is disposal of wastewater from oil and gas production.
"There’s a long history of that," Hamm said. "And certainly, knowing those things, we need to take care with placement of wells."
Corporation Commission officials are subjecting wells in earthquake-prone areas to increased scrutiny. Hamm says he’s confident that state officials figure out what to do.
"They’re smart people and certainly will deal with the issues," Hamm said. "They’re going through a lot of wells to make sure. If there are any problems, they’ll shut ’em down."