This State Of Emergency Could Be A Major Setback For U.S. Shale by Dave Forest

Small but potentially critical item for the U.S. shale patch this week. With one state at the core of unconventional oil and gas production moving to shut down a swath of wells after some unexpected side effects.

The place is Oklahoma. And the problem is — the ground is moving.

On September 3, Oklahoma was struck by its largest earthquakes in memory. With the tremor initially being classified as a 5.6 — which was upgraded Wednesday to a 5.8 by the U.S. Geological Survey. Making it the biggest quake ever recorded in the state.

U.S. Shale
Image source: Pixabay

And regulators in Oklahoma have an idea what’s causing the unusual seismic activity.

Shale oil and gas production.

In the wake of the earthquake, the Oklahoma Corporation Commission immediately moved to shut down oil and gas activity it believes may be responsible for the shaking. With the regulatory body ordering E&Ps to suspend pumping at 37 wastewater disposal wells in the state.

That stoppage represents the first time that Oklahoma has issued a mandatory halt to oil and gas activity due to earthquake concerns. But the numbers show that the problem is growing — with the state having seen 375 earthquakes for the year to June 22, after experiencing a total of 890 quakes in 2015.

Here’s the shocking thing. During 2008, prior to shale activity really getting going in Oklahoma, the state experience just two earthquakes for the entire year. A statistic that’s led regulators to conclude that oil and gas activities such as wastewater disposal are very likely the culprit behind all the recent shaking.

That could be a major issue shaping up for drillers in hot plays here like the Scoop and Stack. Watch for more data on quakes throughout Oklahoma and the surrounding area, and for any further stoppages ordered by the government — which could impact production and profits for local E&Ps.

Here’s to not rocking the boat,

Dave Forest