Industry Affairs January 2014

Injection wells seen as possible cause of earthquakes

Posted Saturday, Jan. 11, 2014 – Ft. Worth Star Telegram JAMES OSBORNE The Dallas Morning News

By Jim Fuquay

The small earthquakes that shook the Azle area late last year have put a spotlight on another aspect of the oil and gas drilling boom in North Texas — injection wells that get rid of millions of gallons of water used and polluted in the process.

The state has about 35,000 active injection wells, according to the Texas Railroad Commission. Crude oil wells typically produce tons of salt water along with oil, and injection wells pump that water back down into the formation to help extract more oil. Injecting water into a depleting formation is rarely the cause of a seismic event, experts say.

But about 7,000 of the state’s injection wells are being used for disposal. The widespread use of hydraulic fracturing to extract natural gas and oil from shale formations has increased the need for disposal wells, which are used to send wastewater deep underground.

And there’s some evidence that they can cause the Earth to quiver.

“In a way, Texas has been a vast experiment in injection wells,” some of which are used to dispose of oil field waste, said seismologist Cliff Frohlich, associate director of the Institute for Geophysics at the University of Texas at Austin.

Millions of gallons of water are typically used to fracture, or frack, a well, and much of it eventually returns to the surface. Some is recycled, but most is pumped down disposal wells. And the extra fluid can migrate far from the well.

Disposal wells usually don’t produce seismic events, but sometimes they do, said Frohlich, who has studied the link between energy production and earthquakes. In a 2012 study, Frohlich found that “injection-triggered earthquakes are more common than is generally recognized.”

There are five active disposal wells in northern Parker County and southern Wise County, the site of more than 20 quakes that shook the Azle area in November and December. Those events prompted the Texas Railroad Commission to hold a public meeting in Azle on Jan. 2.

After hearing a litany of complaints about disruption and property damage from residents who packed the hearing at Azle High School, the three-member Railroad Commission, which regulates oil and gas production, voted to hire an in-house seismologist.

But some answers could be forthcoming even before that position is filled.

Researchers from Southern Methodist University and the U.S. Geological Survey have installed a network of seismic monitors around Azle and Reno, in northern Parker County, with the goal of collecting better data on the quakes.

Art McGarr, an earthquake researcher at the Geological Survey who is working on the Azle project, said Thursday that researchers expect to present their findings in late April. But they could come to a determination earlier than that and don’t necessarily need additional quakes to occur to do their job.

“We already have a lot of data in hand” from previous quakes, McGarr said. “We’re chewing through it.”

The wild card

Faults, or breaks in the Earth that typically formed millions of years ago in underground strata, are the big unknown that can influence whether an injection well might cause an earthquake. Faults aren’t always known before drilling takes place, and even if they were, McGarr said, it’s not certain that they will produce an earthquake if an injection well is drilled nearby.

Still, as Ken Morgan, director of the TCU Energy Institute, put it: “There are better places and worse places for disposal wells. That is common sense. If you have faults and a cluster of quakes, you’ve rounded up some suspects” by looking at nearby injection wells.

McGarr, Morgan and Frohlich said it can be hard to identify a single injection well as the cause of a particular quake. But a swarm of seismic events like the Azle quakes is certainly grounds for suspicion.

“Evidence would be if earthquakes started not too long after an injection well began operation,” McGarr said. “If they started within one or two months, that’s pretty good evidence. Even better evidence is if injection is stopped and the earthquakes stop.”

Scientists have actually controlled earthquakes by starting and stopping underground fluid injection. In what Morgan said is still the gold standard of such studies, researchers at the Rocky Mountain Arsenal near Denver in 1966 produced earthquakes by beginning or increasing injection. The quakes stopped when injections ceased.

In 1962, the well started disposing of wastewater from chemical weapons production. By 1966, more than 700 quakes had occurred within 5 miles of the well.

Disposal wells can also produce seismic events after years of operation. McGarr’s research shows that the total volume of fluid injected in a well can be the biggest factor in triggering quakes, not how fast it is injected.

Narrowing the field

The five disposal wells around Azle went into operation between 2005 and 2009, according to Railroad Commission data. Three are permitted to inject up to 25,000 barrels a day (or 1.05 million gallons, at 42 gallons per barrel). One well is limited to 15,000 barrels and another to 10,000 barrels. All are injecting considerably less than their allowed maximums at depths of 9,000 to 11,000 feet.

According to filings with the Railroad Commission, the largest well, operated by Foxborough Energy Co. of Oklahoma City, injected nearly 3.4 million barrels, or 142 million gallons, in the first nine months of 2013, the latest data available. The smallest, run by Strata Operating, injected 618,000 barrels, or nearly 26 million gallons, in the same nine months.

The additional seismic monitors that SMU is installing will allow researchers to locate new earthquakes much more accurately, researchers said. Earthquakes are tagged two ways: the focus, which is the depth underground where the quake originated, and the epicenter, which is its position on the surface.

Frohlich said all of Texas has about a dozen active seismic monitors at any time. That limits the accuracy of the epicenter to several miles. And Morgan said the estimated depth can be as broad as one of three ranges: shallow, moderate or deep.

McGarr said that with half a dozen monitors in just the Azle area, researchers can pinpoint the epicenter to within 200 to 300 meters and the depth to within about 500 meters.

Red light, green light

Fort Worth lawyer Jim Bradbury, who has followed the environmental issues of energy production, said state regulators should adopt a standard proposed by the U.S. Geological Survey called the traffic light system.

If earthquakes above a certain level occur near a disposal well, it could get a yellow light, requiring a reduction in the amount it’s injecting. “If seismicity continued or escalated, operations could be suspended” — the red light, the agency says.

The Railroad Commission has inspected all of the wells in the Azle area over the last two months, including three last week, according to reports emailed to the Star-Telegram.

“When earthquakes are reported, our staff will determine if saltwater disposal wells are nearby and then inspect the facilities to ensure that they are in compliance with their Railroad Commission permit conditions,” said spokeswoman Ramona Nye.

Eagle Ford led energy deals in 2013, despite national decline

Posted on January 9, 2014 at 2:43 pm by Simone Sebastian in DealsEagle Ford, featured

HOUSTON — The Eagle Ford Shale drew $8.8 billion in upstream oil and gas deals in 2013, the largest value in the country, according to a new PLS report.

The shale play in South Texas also was the site of the year’s largest energy deal, with Devon Energy’s $6 billion Eagle Ford land grab announced in November, the Houston-based research firm noted.

In West Texas, unconventional regions of the Permian Basin were targets of the second-largest disclosed value of deals, a total of 7.5 billion. Other high-value regions included, in order of disclosed deal totals:

  • Rockies conventional plays, $5.5 billion
  • Gulf of Mexico shelf, $4.2 billion
  • Bakken Shale, $2.9 billion

Deal value declines

These multibillion-dollar numbers notwithstanding, 2013 brought the lowest total deal value in global upstream oil and gas since 2008.

Upstream companies, which produce and explore for oil and gas, spent $138 billion to expand their assets and buy other firms in 2013, according to PLS. That’s a 49 percent drop from 2012, when the industry recorded $271 billion in value-disclosed deals.

The decline largely occurred in North America, where the land grab that characterized the early U.S. shale boom has waned.

The disclosed value of upstream oil and gas deals in North America totaled $62.9 billion in 2013, down from$143 billion the year before.

International record

Meanwhile, oustide of the United States, asset sales (not including corporate deals) set a record value of $66.3 billion in 2013, according to the report.

In Africa, total disclosed deal value jumped 50 percent to $20.3 billion in 2013. In Asia, deal value grew 35 percent to $5.3 billion. In South America, it grew 88 percent to $9.2 billion.

“Looking at the international markets outside of the United States, asset transactions remained strong in 2013,” said Derrick Petroleum Services Director Mangesh Hirve in a written statement. Derrick Petroleum Services partnered with PLS on the report.

Global interestChina’s largest coal company to learn shale in US deal

Deal value declined in Australia by 82 percent to $2.5 billion; in Europe by 47 percent to $5.7 billion; in the Middle East by 98 percent to $3.1 billion; and in the former Soviet Union by 59 percent to $31.2 billion.

The total number of 2013 deals also declined, to 1,028 from 1,235 in 2012.

Healthy market

PLS Managaing Director Brian Lidsky noted in the report that the results could be skewed since the value of some deals is not made public. (643 deals had disclosed values in 2013.)

Also, 2012 included three megadeals that significantly increased that year’s total, including Rosneft’s $61 billion acquisition of TNK-BP.

“2013 actually is a year in which upstream oil and gas M&A activity by and large reverted back to the mean of the last several years of activity, after adjusting for the megadeals,” Lidsky said in a written statement. “Overall, the market remains healthy with ample deal flow and a host of motivated buyers.”

Three of the year’s five biggest upstream oil and gas deals occured in the United States:

Despite restrictions, anti-fracking protest attracts large crowd

Jon Campbell, ROC 12:37 p.m. EST January 9, 2014

No, they didn't line the Empire State Plaza concourse this year, chanting and wielding signs as lawmakers and state officials walked to Gov. Andrew Cuomo's State of the State address.

But a large throng of anti-fracking protesters stood near the entrance to Cuomo's speech on Wednesday, calling on him to unequivocally ban shale-gas drilling as State of the State attendees walked into the state convention center.

"On a day when all eyes in the state are on Albany, we want to remind Governor Cuomo that New Yorkers won't back off until he protects us by banning fracking," said Alex Beauchamp, northeast region director of Food & Water Watch.

The protesters stayed in a large, gated area within the concourse, which made it difficult to estimate the total attendance. There where at least several hundred; organizers say there were more than 2,000 at its peak. There were also a few dozen dozen gun-rights activists who were protesting the SAFE Act, the gun-control laws passed a year ago.

Last year, the protesters formed a long line between the Capitol and the convention center, lining the walkway that nearly everyone walked to get to Cuomo's address. But a series of tourism-themed displays prevented that from happening this year.

Wes Gillingham, program director of Catskill Mountainkeeper, said the large showing represents the strength of fracking opponents.

"Why are all these people here? Because we love New York," Gillingham said. "We love our communities. We love our farms and our forests, and we do not want that to be destroyed by fracking and a greedy industry."

To the surprise of few, Cuomo did not make any mention of hydrofracking and shale-gas drilling in his 70-minute speech. Cuomo's administration continues to weigh whether to lift a de facto moratorium on high-volume fracking in the Southern Tier.

A joint statement from the heads of three Binghamton-area organizations -- the Joint Landowners Coalition, the Greater Binghamton Chamber of Commerce and the Broome County Farm Bureau -- expressed disappointment with Cuomo's lack of a fracking mention.

"We are disappointed that the State of the State address once again failed to mention natural gas development as an integral part of a comprehensive plan for Upstate’s economic growth," the statement read. "Developing natural gas resources is essential to create long-term jobs and economic opportunity in the Southern Tier."