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Sep 02, 2010

Chesapeake Waste Wells May Have Caused Earthquakes

Aug 14, 2009

By Thomas Korosec and Jim Polson

(Corrects volume of water pumped in 10th paragraph.)

Aug. 14 (Bloomberg) -- Chesapeake Energy Corp. wells drilled through the Barnett Shale, the biggest Texas natural-gas field, may have caused earthquakes in the Dallas-Fort Worth area, the company and university scientists said.

Oklahoma City-based Chesapeake shut both wells, used to dispose of saltwater that is a byproduct of gas production, as a precaution after university seismologists told executives June 29 that the center of some quakes lay near the base of one of the wells, Steven Turk, vice president of the company’s southern operations, said in an interview.

The wells were drilled as part of Chesapeake’s exploration in the Barnett Shale, a band of rock under Texas that accounts for about 5 percent of U.S. natural-gas output. Both were drilled near known geological faults, or breaks in the underground rock, the company said.

“There is a relationship,” Cliff Frohlich, senior research scientist and associate director of the University of Texas Institute for Geophysics, said in an interview. “We have not proven it with scientific certainty, but we’re looking at these as induced earthquakes.”

The well scientists linked to the minor quakes was drilled on the south end of Dallas-Fort Worth International Airport, the world’s third-busiest. Studies of the second well and a possible link are continuing. The airport tremors and the base of the disposal wells are twice as deep as wells that produce gas from the shale layer itself.

Disposal Wells

At least 12,050 gas wells have been drilled by gas- production companies in a 15-county area of North Texas since 2002 as part of the development of the shale, the Texas Railroad Commission said. Wells have sprung up near housing developments and businesses since new technology made producing the gas financially viable.

The commission also has permitted 101 salt water disposal wells in the area. The airport well was drilled to 13,780 feet, twice the depth of some gas wells, and completed in August, Frohlich said. It also was drilled about 2,400 feet from a major fault running through the airport, said Julie Wilson, a spokeswoman for Oklahoma City-based Chesapeake.

“Preliminary results have indicated there is no correlation between natural-gas drilling and fracturing activities and the minor earthquakes that have occurred over the last several months in North Texas,” Wilson said.

Wells Idled

Chesapeake stopped using the airport saltwater disposal well and another at Cleburne, Texas, where tremors have been reported, as a precaution, she said. The action didn’t affect gas production.

Chesapeake pumped 2.8 million barrels of water into the airport well from Sept. 12, 2008, until it was shut after the company met with geologists June 29, Turk said.

“We really had no reason to believe we would ever have a problem such as it appears we’ve ended up with, where injecting into the Ellenberger near one of these big faults would in any way trigger these small earthquakes,” said Larry Lunardi, Chesapeake vice president for geoscience. The Ellenberger is a porous layer of rock 2 miles deep.

Seismographic data collected since November on quakes too minor to be felt put their epicenter at about 14,764 feet deep and centered within 3,300 feet of the well, Frohlich said. Because of the depth, chances are “extremely remote” that drilling and fracturing of the Barnett Shale itself to produce gas caused the tremors, Lunardi said.

Drilling Regulations

The airport is “very interested in learning more about this,” said airport spokesman David Magana. “All of our drilling has been in accordance with FAA and other applicable agencies’ regulations, and we feel pretty good about it.” The airport got $181 million and a 25 percent royalty from Chesapeake under terms of a 2006 lease allowing the company to explore its property.

Most production wells in the Barnett Shale are 5,000 to 8,000 feet deep, said Ramona Nye, a Railroad Commission spokeswoman.

The Barnett Shale yielded about 1.4 trillion cubic feet of gas last year, 5.3 percent of U.S. production of the heating and power-plant fuel, according to the Perryman Group, an economic and financial analysis firm based in Waco, Texas.

Chesapeake, Devon Energy Corp., XTO Energy Inc. and EOG Resources Inc. are among the largest of more than 220 producers working in the Barnett Shale.

Texas Tremors

The measuring devices were placed near the airport following a series of quakes that began on Oct. 30. The tremors shook people in their beds and knocked pictures off walls, according to news reports at the time. The quakes measured 2.5- to 3.0-magnitude, or relatively minor intensity, the U.S. Geological Survey reported. A 3.3-magnitude quake occurred in the area May 16.

Studies of the Cleburne quakes will take time to yield results, said Chris Hayward, Southern Methodist University Geophysics Research Projects director.

“I don’t think anybody would be surprised if they find they’re connected here,” said Cleburne Mayor Ted Reynolds. “Of course, we don’t know now if they are, but one has followed the other.”

Royalties paid to property owners where the gas is produced have added between $5 million and $7 million a year to the city, which has a $60 million annual budget, Reynolds said.

Drilling in the shale has slowed since natural-gas prices began to fall from $13.58 per million British thermal units on July 3, 2008. Prices closed at $3.37 yesterday.

Frohlich, who has written a book on the history of Texas earthquakes, said neither Cleburne nor the airport area has a history of seismic activity. There are at least two prior instances when minor quakes were induced by drilling in Texas, in 1978 and 1993.

To contact the reporters on this story: Thomas Korosec in Dallas at tkorosec@sbcglobal.net; Jim Polson in New York at jpolson@bloomberg.net.

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