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Ohio Sets Immediate Permit Conditions for Fracking Near Faults

The Ohio Department of Natural Resources (ODNR) on Friday took an unprecedented step to establish what is believed to be the country's first set of permitting conditions for hydraulic fracturing (fracking) in horizontal wells near fault lines or areas of previous seismic activity.

The move comes after a month of investigation into what caused a 3.0-magnitude earthquake on March 10 near a well-pad operated by Hilcorp Energy Co. in Mahoning County's Poland Township, about eight miles southeast of Youngstown (see Shale Daily, March 11).

In a press release announcing the new regulations, ODNR said its geologists believe that sand and water injected into one of the six wells on the pad during stimulation operations in the days leading up to the earthquake (see Shale Daily, March 12) increased pressure on an unknown micro-fault in the area, triggering the seismic activity.

ODNR shut down operations at that well pad the day of the earthquake and allowed natural gas to continue flowing at a nearby producing well. Another 10 earthquakes, smaller than the first, were recorded in the area by the U.S. Geological Survey and researchers at Columbia University in the following days (see Shale Daily, March 19).

Despite a number of private studies (see Shale Daily, April 11, 2013; Jan. 18, 2013; June 18, 2012 ;Oct. 11, 2011), ODNR's announcement marks one of the first times that a state agency has gone beyond suggestions and provided an explanation about the link between stimulation operations and fracking.

As other states, such as Oklahoma and Kansas (see Shale Daily, March 20; April 8), mull similar regulations for exploration and production companies and injection well operators, ODNR's move is also one of the first significant steps in establishing conditions aimed at limiting the possibility of seismic events related to unconventional oil and gas development.

"The way these things usually develop is a state starts with something and others consider it to see if it's right for their geology to adopt it or strengthen it to make it their own," said Gerry Baker, associate executive director of the Interstate Oil and Gas Compact Commission (IOGCC), a multi-state government agency that works with regulators across the country. "There's some precedent for looking at these sorts of regulations, but this is new."

Although ODNR published a preliminary report in 2012 that suggested a strong link between an injection well in Youngstown and a 4.0-magnitude earthquake that rattled the city on New Year’s Eve 2011 (see Shale Daily, Jan. 4, 2012), an agency spokeswoman, Bethany McCorkle, said the new permitting conditions were a direct result of ODNR's investigation into the recent earthquakes near Hilcorp's operations.

She added that she also believed the regulations were among the first of their kind in the nation.

Effective immediately, all horizontal drilling permits issued by ODNR for unconventional drilling within three miles of a known fault or area of seismic activity greater than magnitude-2.0 will come with a condition that the applicant must install sensitive seismic monitoring devices. If those monitors detect a seismic event in excess of magnitude-1.0, activities would be temporarily halted for further investigation.

Should ODNR discover a probable connection between any drilling-related activity and seismic events, all completion operations would be indefinitely suspended.

"While we can never be 100% sure that drilling activities are connected to a seismic event, caution dictates that we take these new steps to protect human health, safety and the environment," said ODNR Director James Zehringer in a statement. "Not only will this reasonable course of action help to ensure public health and safety, but it will also help us to expand our underground maps and provide more information about all types of seismicity in Ohio."

While it remains unclear how ODNR's announcement might affect development in Ohio's Utica Shale, McCorkle said the agency had no reason to believe it would significantly slow permitting. ODNR maps show that most of the state's known fault lines are located in central and western Ohio, in area where no unconventional drilling is taking place. There are roughly four known fault lines in northeast Ohio, across an area where producers have limited operations and have expressed little enthusiasm about developing that part of the state.

To the southeast, ODNR maps show another four known fault lines in an area of heavy development, where a sweet spot is shaping up in the Utica Shale play (see Shale Daily, Nov. 19, 2013). ODNR said more than 800 wells have been drilled in Ohio's Utica and Marcellus Shale formations. The agency added that it would review previously issued permits in close proximity to fault lines that have not yet been drilled.

As for Hilcorp's Poland Township operations, the company will be allowed to continue with production on five of the wells at the suspect pad. The sixth well, which Hilcorp had not finished stimulating before ODNR stopped operations, will have to stay that way. ODNR will not allow any more fracking operations, and it has also imposed a drilling moratorium in the immediate area, but McCorkle said Hilcorp could produce from the sixth well if possible.

While ODNR's regulatory move was hailed by the Groundwater Protection Council, the Youngstown-Warren Regional Chamber of Commerce and others as prudent, the Ohio Oil and Gas Association (OOGA) said in a statement that it believed the March earthquakes were a "rare and isolated event that should not cast doubt about the safety of hydraulic fracturing."

OOGA said it would be reviewing the conditions put forth by ODNR.

Meanwhile, Baker, of the IOGCC, said his group will be watching to see how the new permitting conditions work in Ohio and keeping other states informed about that progress. He said it's too early to tell if ODNR's move would rub off on other state regulators looking into the link between oil and gas development and seismic events.

Hilcorp said it is reviewing ODNR’s new permit conditions and trying to understand how they will affect its operations in Ohio.

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