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Oklahoma Governor Signs Bill Clarifying State's Authority to Act on Quakes

In an effort to reinforce the response to seismic activity in the state, Oklahoma Gov. Mary Fallin signed a bill clarifying that state regulators -- specifically, the Oklahoma Corporation Commission (OCC) -- has the authority to declare an emergency in matters pertaining to the oil and natural gas industry, and to take appropriate action when an emergency occurs.

On Monday, Fallin signed HB 3158, which was introduced last February by House Speaker Jeff Hickman (R-Fairview). The bill amends Section 52 of Title 17 of the Oklahoma Statutes, which covers the regulatory powers granted to the OCC.

Under HB 3158, "for [the] purposes of immediately responding to emergency situations having potentially critical environmental or public safety impact and resulting from activities within its jurisdiction, the OCC may take whatever action is necessary, without notice and hearing, including without limitation the issuance or execution of administrative agreements by the [OCC's] Oil and Gas Conservation Division [OGCD]...to promptly respond to the emergency."

HB 3158 unanimously passed both chambers of the state legislature. It cleared the House of Representatives on March 7 and the Senate on April 11, by votes of 92-0 and 42-0, respectively.

The bill was signed three months after the state avoided a court battle, within its own court system, with SandRidge Energy Inc. (see Shale DailyJan. 21). Last December, the OGCD had ordered the Oklahoma City-based company to shut down four wastewater disposal wells and curtail operations at 40 others (see Shale Daily, Dec. 21, 2015). SandRidge refused, ostensibly on the grounds that it would be uneconomic for it to comply with the orders (see Shale DailyDec. 4, 2015).

SandRidge announced in March that it was considering going private or voluntarily filing for bankruptcy protection to reorganize (see Shale DailyMarch 30).

Last month, the OGCD ordered more than 400 wastewater injection wells targeting the Arbuckle Formation to reduce their disposal volumes by 40% below 2014 levels over the next two months (see Shale Daily, March 7). The OGCD also expanded its "area of interest" in the state, effectively placing restrictions on more than 100 additional disposal wells in areas that have not yet recorded major earthquake activity. A pair of earthquakes, including one that registered 4.2 magnitude on the Richter scale, hit central Oklahoma in late March (see Shale DailyMarch 29).

The OGCD began ordering operators to either shut down or curtail intake volumes at injection wells in March 2015, shortly before scientists with the Oklahoma Geological Survey (OGS) attributed the increase in seismic activity to injection wells targeting the Arbuckle Formation, which closely overlies the crystalline basement (see Shale Daily, April 22, 2015; April 2, 2015). The OGS said the disposal of extremely salty water -- a byproduct of oil and gas production, not the mostly freshwater used for hydraulic fracturing (fracking) -- is responsible for the quakes (see Shale Daily, Jan. 5).

During a conference call on Thursday to discuss first quarter results (see relatedstory), Basic Energy Inc. CEO Roe Patterson was asked whether he is concerned about future work in Oklahoma because of the increase in seismic activity and the possible link to injection wells. Basic provides well services across the U.S. onshore, including fluid services.

"We don't have any [injection wells] in the area that's gotten all the scrutiny, and that's fortunate," Patterson said. "But we do frack in that market for a couple of customers. Right now, the fracking is completely shut off. It's completely postponed. We've got several wells to do in there, if it ever comes back."

Patterson said the issues can be overcome by producers.

"I think probably the solution is going to be injection of water in different zones, rather than the zone that's under scrutiny," Patterson said. "I think they'll spread out the water into different zones and move it around, rather than concentrating in one particular zone, which is what they were doing before. That ought to alleviate a lot of the issues and the scrutiny on it.

"There's varying opinions out there, whether you believe the science that the injection wells are actually causing or inducing tremors. But you can debate that all day. I think the solution will be some sort of compromise for water injection into different zones. That ought to happen in the next six months or so."

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