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Oil and gas extraction causing destructive earthquakes in Groningen and Oklahoma

Printed below is an English translation of an article published today by the Dutch Financial Times, Financieele Dagblad. It is partly about NAM Nederlandse Aardolie Maatschappij BV., a joint venture between Royal Dutch Shell and ExxonMobil each owning a 50% share in the company responsible for the earthquake blighted Groningen Gas Field and the consequential potential bill for untold billions in damages. The article discusses the similarity with recent earthquake activity in Oklahoma arising from shale oil and gas extraction.

Begins

Do the ‘shale farmers’ go after the Groningers?

Jeroen Groot • Economics & Politics

The bottom trembles and walls tear in Oklahoma. Yes, that sounds familiar, and the cause is also: oil and gas extraction. Is a ‘Groningen scenario’ taking place in the US, including shutting down the taps? Then it quickly ends with low oil prices.

The damage will be viewed in November 2011 at a St. Gregory’s University building in Shawnee, Oklahoma. Photo: Hollandse Hoogte / AP | Associated Press

On Friday it was hit again in the US state of Oklahoma: an earthquake of 3.6 on the Richter scale. As far as known, this quake did not cause any damage, but that was different on Sunday 4 March. Then the places Enid and Breckenridge, 150 kilometers north of Oklahoma City, were hit twice in rapid succession by a quake with a force of 4.2.

‘Houses with cracks in the walls, doors that can no longer open or close. People reacted quite startled, ‘Mike Honigsberg tells us by telephone from Enid. Honigsberg is director of the Garfield County Emergency Management, a kind of crisis center for calamities such as large fires and nowadays also earthquakes. These are, as in Groningen, associated with the extraction of oil and gas.

The question is: should the shale farmers in the US soon shut down the tap just like the NAM in Groningen? If that happens, the consequences for the oil and gas market will be enormous.

Spot cheap

This market has been completely turned upside down in recent years due to the increase in American production as a result of the shale revolution. Natural gas is now very cheap in the US, and crude oil is still considerably cheaper than a few years ago. Other producers, such as the oil states in the Middle East, are forced to limit their own production to keep prices up to a certain level.

But if a ‘Groningen scenario’ takes place in the US, it soon ends with that flood of extra oil, and most probably also with those low prices.

Wastewater

In Oklahoma they are not nearly that far yet. The first quakes date back to 2009. In the meantime, scientists have done more research into how the quakes are caused. The culprit seemed to be the waste water. The drilling process produces a lot of polluted water. This water is injected deep into the soil by local producers. The water then ends up in old wells, away from the groundwater, and does no harm, was the thought.

But this procedure is now designated as the main cause of the earthquakes. The pressure of the water caused the tension on underground fault lines to become too large and that the earth started to move. This fact also offered the oil producers an immediate solution: the fracking could continue, only the procedure for the waste water was adjusted. Less water, less fast. And indeed the number of earthquakes decreased.

Until recently.

Also in other areas

Most worrying about some of the most recent earthquakes: they are now also taking place in the area where little or no water is injected into the soil – although these ‘new’ quakes are as yet limited in strength.

And that brings the discussion back to the consequences of fracking itself, says professor of geology Todd Halihan of Oklahoma State University. ‘Everyone is still very nervous. The government has now installed a warning system, which forces producers to drill more slowly or, in the worst case scenario, to stop. But a complicating factor is that we are dealing here with hundreds of different oil companies, and they all point to each other as the cause of earthquakes. ‘

Risk

In Groningen it took years and years before everyone agreed that gas extraction was the cause of the earthquakes, but now at least one guilty remains: the Dutch Petroleum Company, half owned by the British-Dutch Shell and for half of the American company ExxonMobil.

But the comparison with Groningen is also flawed, says seismologist Hanneke Paulssen, who works at Utrecht University. ‘The earthquakes in Groningen are, simply put, caused by subsidence. The gas is removed and the earth starts to move. Fracking is a completely different technique, in which cracks in the rock are temporarily pressed open. Fracking in itself does not have to be unsafe, but in general it does apply: the longer you continue with the extraction of oil and gas, the greater the risk of earthquakes. ‘

Earthquakes and oil extraction

Safety

Opponents of the oil extraction in Oklahoma therefore seize the new earthquakes to again argue for the immediate stopping of oil extraction. “It is the duty of the government to put the safety and health of the citizens first”, says Johnson Bridgwater of the local section of the Sierra Club, a US environmental organization.

But just like in Groningen, Oklahoma also has great financial interests. The shale oil boom yields millions of dollars and thousands of jobs, and according to the oil industry the risk of earthquakes is grossly exaggerated. “Earthquakes caused by fracking are rare and stop quickly if the drilling process is halted or modified,” said Kim Hatfield, vice president of industry association OIPA, the Oklahoma Independent Petroleum Association. For the time being, the oil industry and the local government are monitoring ‘monitoring’: paying close attention to what is happening underground and intervening where necessary.

It is for the Americans to hope that the earthquakes will remain limited, as the industry claims. Gas production has now been drastically reduced in Groningen, but earthquakes are still occurring. And nobody knows how long they will continue.

 

The US does not have a NAM

In the United States, the owner of the land also owns everything that is deep in that soil. That is a crucial difference with the Netherlands, where the natural gas revenues under the Groningen mainly flow towards the NAM and the state treasury. The US has many small oil and gas companies, often farmers under whose land oil and gas is found. With hydraulic fracturing, or ‘fracking’, it suddenly became possible to extract fossil fuels from shale rock at a reasonable cost, as a result of which this form of oil and gas extraction has boomed in recent years. The shale revolution now also attracts the big players from the industry. For example, British-Dutch Shell is active in the US in this area. On Friday, Sky News reported that Shell would even want to expand: together with investor Blackstone, Shell would prepare a bid of $ 10 billion on the shale activities of the mining company BHP Billiton.

SOURCE DUTCH ARTICLE

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1 Comment on “Oil and gas extraction causing destructive earthquakes in Groningen and Oklahoma”

  1. #1 Andy
    on Mar 12th, 2018 at 17:53

    Look at what is happening in P.N.G. – consequences of oil/gas exploration, fracking, and mines.

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