Oklahoma oil and gas officials yesterday reached a settlement with SandRidge Energy Inc. to shut down several disposal wells in an earthquake-prone area of the state.
The agreement avoids a courtroom standoff between SandRidge and the Oklahoma Corporation Commission (OCC) about whether the agency has the authority to shut down wells in an effort to prevent earthquakes. SandRidge, which is struggling financially, had rejected a voluntary "directive" from the agency in December (EnergyWire, Dec. 21, 2015).
Under the deal, SandRidge will be allowed to inject 7 percent more wastewater than if it had complied with the December directive, but it is closing one more well than the agency requested earlier. And some of the wells won't just be closed but will be turned over to the Oklahoma Geological Survey for earthquake research.
Industry officials touted the deal as an example of the state regulatory system working and as proof that industry is addressing the earthquake issue.
"It clearly demonstrates that the oil and gas industry takes our responsibilities seriously as corporate citizens and community partners to develop and use the most current science available," said Chad Warmington, president of the Oklahoma Oil & Gas Association.
But state Rep. Cory Williams (D) of Stillwater, who has criticized the response of state and industry officials to the quake swarms, said the deal rewarded SandRidge's defiance by allowing it to dispose more and operate the wells even longer.
"It's a 7 percent bonus to SandRidge," Williams said. "This gives them quite a bit of time."
OCC spokesman Matt Skinner noted that SandRidge has agreed to abide by the agency's request to cut back volumes in the Fairview area, which has been shaken by a series of quakes larger than magnitude 4.
"And they will comply with future plans," Skinner said, noting that OCC officials are working on a larger, more comprehensive plan for the north-central and northwestern part of the state.
SandRidge agreed to end disposal operations at seven wells. Four of those will be used as monitoring wells in an Oklahoma Geological Survey (OGS) research project. SandRidge will also give another unused disposal well to researchers.
Along with volume reductions at other wells, the deal calls for SandRidge to cut the amount it injects underground by 40 percent by April 30.
"I think the result is superior to the plans originally issued," said Tim Baker, director of OCC's Oil & Gas Division. "There is still a very significant cutback in volume, and the company has agreed to provide resources for this critically needed OGS research program."
In a statement released by SandRidge spokesman David Kimmel, the company emphasized its cooperation with state officials on a scientific solution.
"The directive achieves both significantly reduced disposal volumes in the area of interest and a further commitment to scientific research through significant new data collection in collaboration with the OGS," the statement said.
Oklahoma had 905 earthquakes of magnitude 3 or greater in 2015, almost seven times more than California. This year has gotten off to an even shakier start. There have been 84 such quakes since New Year's Eve, and eight of those have been magnitude 4 or greater.
Scientists and state officials have tied the massive increase in the number of earthquakes in the state to wastewater disposal wells from oil and gas production. Researchers say favorably aligned faults have combined with production methods that result in unusually large volumes of wastewater to create the earthquake swarms.
The directives that OCC has been issuing to disposal well operators are voluntary but backed up by the threat that the agency will take official action if companies don't agree. Such formal action is time-consuming and was avoided by the settlement.
"We had prepared and were about to file a case to force compliance to the two plans we had issued for the areas in December," Baker said. "Sandridge was willing to try and work out an agreement."
The OGS research project will be led by agency hydrogeologist Kyle Murray, who has studied the Arbuckle formation, into which most Oklahoma wastewater is injected. Murray said he expects access to the wells will allow him to study underground pressure fluctuations in areas with and without active injection.
State Rep. Richard Morrissette (D) of Oklahoma City said yesterday that he plans to request emergency legislation to set up an industry-funded reparation fund to cover earthquake damage. He said previously that such a fund was one of the suggestions he had heard most often from constituents (EnergyWire, Jan. 19).