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Ohio Company Appeals State Shutdown of Injection Well

An Ohio company is appealing an order issued by state regulators in September that forced it to shut down operations at an underground injection well that was thought to have triggered a series of earthquakes. The company said the shutdown is costing it money and affecting its business.

Avalon Holdings subsidiary American Water Management Services LLC (AWMS), based in Warren, OH, filed its appeal with the Ohio Oil and Gas Commission in October, shortly after the chief of the Ohio Department of Natural Resources (ODNR) Division of Oil and Gas Resources Management ordered two wells at an AWMS site in Trumbull County to shut down pending an investigation (see Shale Daily, Sept. 2, 2014).

Just weeks after the order was issued, ODNR allowed one of those wells, the AWMS #1, which is shallower at a depth of about 4,400 feet, to resume operations (see Shale Daily, Sept. 22, 2014). But the AWMS #2, which is twice as deep, has been offline since September while ODNR continues to evaluate the cause of seismic events near the site.

At a hearing before the commission on March 11, company officials said they've been losing money as a result and could be forced to make layoffs.

The commission consists of five members appointed by the governor. It's a separate entity that hears appeals against decisions made by ODNR.

State regulators claim that within about three months of the AWMS #2 beginning operations, a 1.7 magnitude earthquake and a 2.1 magnitude earthquake were recorded in "close proximity" to the injection well, which accepts oilfield waste. According to ODNR's order, the chief found that the well "poses a risk of increasing or creating seismic activity," and requested that the company submit a plan to the agency evaluating those concerns.

In its appeal, AWMS said that in no way did it violate the permit issued by ODNR. It also disputes that the well poses a risk and said the chief "acted unlawfully and unreasonably in ordering the immediate suspension of all operations at the well."

The case is the latest involving seismic activity in Northeast Ohio near Youngstown. On New Year's Eve 2011, an unrelated injection well was linked to a 4.0 magnitude earthquake in the city (see Shale Daily, Jan. 4, 2012). ODNR has also issued statewide permitting requirements for horizontal oil and gas wells located within three miles of a known fault (see Shale Daily, April 11, 2014). Those rules were issued after the agency linked stimulation operations at a Hilcorp Energy Co. pad just outside Youngstown to a series of small earthquakes (see Shale Daily, March 12, 2014; March 11, 2014).

ODNR also claims it needs to further evaluate the AWMS injection well because it is revamping injection well regulations. AWMS is asking the commission to overturn ODNR's order so it can resume injection operations, albeit at lower volumes.

Ohio Oil and Gas Commission Executive Director Linda Osterman told NGI's Shale Daily that with the hearing over, commission members are awaiting closing arguments from both parties, which are due by March 25. She said the commission will then decide on the appeal.

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