Does Unconventional Hydrocarbon Development Cause Induced Seismicity?

It is not news that the deep injection of fluids into subsurface rock formations has the potential to lubricate faults and cause so-called "induced seismic events". However, the US debate is heating up around whether a number of smaller earthquakes from unconventional oil and gas activity in certain regions are related to hydraulic fracturing of production wells or to waste water injection in disposal wells.

Fracturing Vs. Waste Water Injection A number of studies in 2011 and 2012 investigated seismic events in Colorado, Oklahoma and Ohio and the potential role that hydraulic fracturing of production wells might have played in their occurrence. In early 2012, the US Geological Survey (USGS) released a study that called what they perceive as a "remarkable increase" in seismic activity for the middle of the United States "almost certainly man-made".

A June 2012 report, Induced Seismicity Potential in Energy Technologies, by the US National Research Council (NRC), however, found that waste water injection carries a higher risk of inducing seismic activity than the fracturing of production wells. One aspect contributing to this phenomenon, according to the NRC, is that changes in subsurface fluid balances are much more significant in scope when injection flows are sustained over a longer period of time, as is the case in disposal wells. In comparison, fractures created in a production well generally extend 800-1,500 feet from the well - a subsurface seismic event in itself that is not felt on surface - before the producer moves on to a different segment of the rock formation, or the next "stage" of the multi-stage fracturing treatment.

The risk of injection well-induced seismic activity noticeable on the surface is highest where pre-stressed faults exist and their stress regimes are not sufficiently well understood to assess the potential for inducing seismicity. Overall, however, the NRC concedes that comprehensive data for complex natural rock systems is lacking to firmly establish a cause-effect relationship between industrial activities and recent seismic events.

In Ohio, state oil and gas regulators said in March 2012 that waste water injection into a fault has likely caused around a dozen earthquakes near Youngstown. Ohio has followed the precautionary principle and introduced new regulations. Disposal well operators are now required to:

• Submit more comprehensive geological data when applying for site permits • Employ state-of-the-art pressure and volume monitoring equipment at the well site, including a shut-off system • Install electronic tracking systems that identify the composition of wastewater fluids

Finally, waste water injection in the fault-prone Precambrian basement rock has now been banned and existing wells there plugged.

The UK Experience In the United Kingdom, government investigations appear to have found evidence for a link between the fracturing of production wells near Blackpool in Northwest England and two small earthquakes in the area in 2011. In this case, investigators also found a presumably pre-stressed fault system present, even though the official government report concedes that not enough data is available about smaller faults underlying the drilling site to make predictive observations about future seismic events in the area. Nevertheless, in December 2012, the UK government lifted a ban on fracturing operations that had been imposed in response to the seismic events, but introduced new controls on the industry. New requirements to mitigate seismic risks include:

• An obligatory geological pre-operations review • A fracturing plan detailing risk mitigation efforts • Seismic monitoring before, during, and after fracturing

The Department of Energy and Climate Change (DECC) also has developed a new "traffic light" system to categorise levels of seismic activity and appropriate responses, including a trigger mechanism to suspend fracturing altogether at a certain site under certain conditions. The United Kingdom has been in the unique position to evaluate seismic risk at an early stage in the country's unconventional hydrocarbon development, as shale gas exploration is still limited there. At the same time, increased seismic risk assessment requirements and monitoring equipment will add costs for operators there and likely slow down the pace of development.

The US Difference In the United States, hydrocarbon extraction activities are regulated on the state level, allowing for better regulatory adaptation to local circumstances and more targeted risk mitigation measures. However, the US Environmental Protection Agency (EPA) has jurisdiction over waste water injection under the Safe Drinking Water Act and will therefore likely contribute to the regulation of the issue.

But going forward, states that have more fault-prone geological formations are likely to have an interest in putting more controls in place. In the NRC's view, "with the potential for increased numbers of induced seismic events due to expanding energy development, government agencies and research institutions may not have sufficient resources to address unexpected events. Forward-looking interagency cooperation to address potential induced seismicity is warranted." Thus, the NRC proposes further expansion and standardization of industry best practices, which might be the most effective way forward in the US induced seismicity debate.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.