Major Oil Producer Refuses to Follow Oklahoma's Earthquake Regulations

by | January 12, 2016

By Oliver Morrison

SandRidge Energy Inc., the largest oil producer in Kansas and largest disposer of waste water in Oklahoma, is refusing to abide by regulations designed to prevent earthquakes, according to the Oklahoma Corporation Commission.

Oklahoma has seen a massive increase in the number of earthquakes since 2009, as the amount of waste water injected into the earth has increased. The earthquakes have increasingly originated close to the Kansas state line, and in Harper and Sumner counties.

The two most intense recent earthquakes felt in Wichita, including the earthquake last week in Fairview, originated in Oklahoma near where SandRidge operates waste wells.

SandRidge would be the first of more than 100 fracking companies in Oklahoma to refuse to implement the commission’s recommendations. One other smaller company resisted its recommendations in August but quickly complied after meeting with lawyers, according to commission spokesman Matt Skinner.

“A lot of the plans that we issue are technically voluntary,” Skinner said. “But it’s always been done with the understanding that if you don’t we’ll go to court.”

The Oklahoma commission has issued 12 major plans for waste water reduction since March 2015. Those plans recommend shutting down or decreasing the injection of waste water in wells within a radius of between 3 and 15 miles of the epicenter of earthquakes 4.0 or greater in magnitude, Skinner said.

SandRidge has declined to comply with the OCC’s most two recent orders in December, which cover Medford and Cherokee.

The commission’s lawyers are expected to file an application to change SandRidge’s permits so that all future OCC orders would be legally binding on SandRidge. Using voluntary permits was seen as a quicker way to achieve compliance, according to Skinner, but now SandRidge may be challenging that approach.

SandRidge injected 30 percent of the waste water in Oklahoma in 2014 – almost three times as much as the next largest company – totaling more than 200 million barrels, according to commission data cited in a Sierra Club intent to sue letter. This was down from nearly 400 million barrels in 2013.

The commission’s plans issued in December would further reduce SandRidge’s ability to inject wastewater – to 51 million barrels from around 113 million barrels – at 49 of its wells. The less waste water that can be disposed of, the less oil that can SandRidge can produce.

The price of oil has also been dropping precipitously the past two years and was trading under $35 per barrel last week when SandRidge’s stock was delisted on the New York Stock Exchange. The price dropped to as low as 3 cents per share and was trading at 7 cents on Monday.

Emails and phone calls to SandRidge seeking comment were not returned.

In Kansas, instead of reducing some well production to zero and decreasing waste water in wells surrounding quakes, the Kansas Corporation Commission has ordered a limit of 8,000 barrels a day in Sumner and Harper counties and 25,000 barrels a day in the rest of the state.

8,000 barrels was set as the limit because it’s the amount that was being injected before the Kansas earthquakes started in 2010 or 2011, according to a KCC spokesperson. The number of earthquakes in Kansas above a 3.0 fell from 47 to 20 in the 180 days after KCC’s new rules were implemented, but the number of smaller earthquakes may have increased, according to data from the USGS.

There is a direct relationship between the number of small earthquakes and the number of larger earthquakes, according to Jeremy Boak, director of the Oklahoma Geological Survey. But that number is higher for these man-made quakes than in a place like California that sees more 4.0 and 5.0 quakes.

“If you keep having earthquakes eventually you get the bigger ones,” Boak said.

Oklahoma has done more to limit earthquakes than Kansas has done, according to Skinner, but that’s because Oklahoma has so many more waste water wells.

“People can say we’re not doing enough …” Skinner said.

“We have done a lot, and we’re going to be doing a lot more.”

Contributing: Dan Voorhis of The Eagle