Oklahoma officials considering tighter rules on drilling: Rash of earthquakes is a 'game changer'

A spike in earthquakes across Oklahoma is forcing the state's energy regulator to urgently consider tougher restrictions on drilling activity, a spokesman said on Wednesday, calling it a "game changer."

From June 17 to 24, there have been 35 earthquakes of magnitude 3.0 or greater in the state, according to the Oklahoma Geological Survey. Particularly worrying for regulators, some of the recent quakes occurred in the Oklahoma City metropolitan area, where there are no high-volume wastewater injection wells.

The spike in quakes comes roughly two months after new rules governing the disposal of briny wastewater from drilling took full effect. Drillers were ordered by the Oklahoma Corporation Commission (OCC), which regulates the oil and gas industry, to stop disposing wastewater below the state's deepest rock formation, believed to be one of the main causes of the quakes, and to reduce the depth of wells that already go that deep.

"We have to approach it anew," said Matt Skinner, a spokesman for the OCC. "There's been a huge increase. That's a game-changer," he said, referring to the recent jump in tremors.

Oklahoma has been grappling with a rise in seismic activity since 2009, amid an expansion of drilling activity that has doubled the state's oil output in the last seven years.

The energy boom has created jobs and contributed to state coffers, but many residents are deeply uneasy about the tremors. Oklahoma has become ground zero in the oil industry's struggle to break the connection between production and earthquakes.

It was not immediately clear why there was a spike in quakes in the last eight days. Prior to this period, quakes of magnitude 3.0 or greater typically hit Oklahoma once or twice a day, according to data from the U.S. Geological Survey (USGS). Prior to 2009, there were only one or two such quakes in the state in a year.

Scientists attribute the general rise in tremors to soaring amounts of salty wastewater being injected underground. Injected liquid volumes have doubled from about 80 million barrels per month in 1997 to about 160 million barrels per month in 2013, according to a study by Stanford researchers published this month.

The drilling boom is due in part to the expanded use of hydraulic fracturing, or "fracking," to access oil and gas in tight shale formations, although the salty wastewater being injected into Oklahoma's disposal wells is found naturally in formations along with the oil and gas, and are not fracking fluids.

HOW ABOUT A MORATORIUM?

Other oil and gas states have also experienced increased seismic activity related to expanded water injection. Arkansas responded with a moratorium on disposal wells in the most sensitive areas, a plan favored by some Oklahoma activists and at least one state legislator.

But most of Oklahoma's elected officials have been reluctant to shackle an industry that directly generated more than 7 percent of state revenues last year in the form of production taxes from companies like Devon Energy Corp, SandRidge Energy Inc, and Chesapeake Energy Corp.

The industry contributes far more than that in income taxes and employment in related industries.

The USGS says an increase in small tremors heightens the possibility of a catastrophic quake in the future.

"If there is damage and loss of life, you will see the political climate absolutely change overnight," said Jason Murphey, a Republican member of the state legislature. "When and if that happens, you will have a cloud that hangs over the energy sector for the rest of our lives."

Oklahoma regulators, and Republican Governor Mary Fallin, say they lack the authority to issue a moratorium.

One option may be to limit the volume of water disposal for wells in earthquake prone areas - a move Kansas took in March.

"If it's your house that's shaking, we are moving way too slow and we recognize that," Michael Teague, Oklahoma's secretary of energy and environment, told Reuters earlier this month.

WATER-LOGGED OIL FIELDS

To be sure, Oklahoma faces a different set of challenges from other states. It is crisscrossed with fault lines, many of which were unmapped before the quakes began to get notice.

Some of Oklahoma's most active oil fields are also its most water-logged, such as the Mississippi Lime formation, where drillers recover, on average, more than seven barrels of water for every barrel of oil, according to a study by Kyle Murray, a hydrogeologist at the Oklahoma Geological Survey.

Complicating the job of regulators further, there are about 3,200 saltwater disposal wells in Oklahoma - making it difficult to know which wells might be to blame for a particular quake. Arkansas was able to put a stop to quakes rattling homes in 2010 and 2011 - but had to shut down just four wells to do so.

Few in Oklahoma had expected the OCC directive would end the shaking immediately.

"The best case is we would probably be decreasing in seismicity slowly for awhile," said Todd Halihan, a geologist at Oklahoma State University. "It wouldn't shut off the next day."

The OCC had hoped for more time to assess the impact of the new directive, but the failure to slow the pace of quakes has now forced officials to consider more urgent steps.

"We had hopes that ... we would have more time and that the directive would also generate data that researchers could use to better formulate whatever the next steps may be," said Skinner. "Obviously we don't have the time for that now."

That urgency was echoed by Lisa Griggs, an environmental and safety engineer who lives in a quake hot zone in Guthrie, Oklahoma.

On a placid June morning, she walked visitors around her three-bedroom house, pointing to the long cracks in every wall, a deep dip in her kitchen floor, and a weakened cinder block foundation that she says was caused by a series of earthquakes. Her insurer estimated the cost of repairs at over $74,000.

"I like living here and [oil and gas] pays for all kinds of stuff," said Griggs, 56. But, she added, "I think it's at too high a cost."

(Reporting by Yeganeh Torbati; Editing by Bruce Wallace and Tiffany Wu)