The recent initiation of a show cause order by the Railroad Commission of Texas (RRC) against operators of drilling waste injection wells thought to be linked with earthquakes in the Barnett Shale region was a dramatic and unusual step, an environmental lawyer with RRC experience told NGI's Shale Daily.
"...[T]he chatter certainly around the [operator] community is that a show cause proceeding is a very serious proceeding, and it requires a tremendous amount of resources and time by these operators to come into that hearing in a very defensive posture, and they've got a fairly tall order ahead of them," said Bracewell & Giuliani's Scott Sherman, an energy and environmental strategies attorney.
"It's a significant, significant action by the commission, placing a real burden on these two operators. I think that they will come into that hearing with a number of things that they're going to want to talk about and put into the record."
A rule change on injection wells made last year at the RRC added seismicity as an area of concern and one where action could be taken by the regulator (see Shale Daily, Oct. 28, 2014).
Commissioners, in calling for the show cause hearing, said they were responding to a study by seismologists at Southern Methodist University that linked earthquakes with injection wells (see Shale Daily, April 24; April 21).
"There's been some history, obviously, for some time," Sherman said of concern over injection wells and seismicity. "The report, obviously, provides a technical basis for additional concerns.
"But I think the real concern in the operator community is how do you take all that and go right in to an operator-specific inquiry and do it in a show-cause hearing, which includes a potential recommendation to terminate a permit. This is not just a hearing where someone can come in and provide some additional information...This is a proceeding where you could lose your permit."
The companies affected are ExxonMobil Corp. unit XTO Energy Inc. and EnerVest Operating LLC. The hearings are scheduled for June.
"We have serious questions about the assumptions made in the study and look forward to speaking with the Railroad Commission in June," said EnerVest's Ron Whitmire, chief administrative officer. XTO Energy parent ExxonMobil Corp. did not respond to an inquiry by press time.
A spokeswoman for the Texas Independent Producers & Royalty Owners Association (TIPRO) said it wasn't yet known whether TIPRO would be involved in the hearings. The Texas Oil & Gas Association did not respond to an inquiry by press time. Sherman said involvement in the hearings might not appeal to the statewide trade associations as the hearings are related to a localized event.