Even through the market turmoil of the past couple of years, the Permian has been a production powerhouse, lately churning out an average of nearly 5 MMb/d of crude oil and 14 Bcf/d of natural gas. But is the Permian on shaky ground? Well, sort of. Distinct areas within both the Midland and Delaware basins in West Texas have experienced an increasing number of higher-magnitude earthquakes that have been linked to the saltwater disposal (SWD) wells that E&Ps use to get rid of the massive volumes of “produced water” their oil and gas operations generate. As a result, regulators have been ordering some of these disposal wells to be shut down and directing producers and midstreamers to develop “seismic response action plans” aimed at reducing the frequency and severity of quakes. In today’s RBN blog, we look at what has been happening on the earthquake front in West Texas and how E&Ps can deal with it.
We’ve seen this movie before, right? Through the first half of the 2010s, Oklahoma, home of the SCOOP/STACK production area, experienced a sharp increase in the frequency and magnitude of earthquakes — there were 585 tremors with a magnitude of 3.0 or greater in 2014 and 887 in 2015, compared to an average of only three per year in the 2000-09 period (see Figure 1). The trend was soon attributed to the injection of massive volumes of produced water from oil and gas production into deep SWD wells in specific geologic formations, especially the Arbuckle, the deepest sedimentary layer in the Sooner State. Oklahoma regulators stepped in, shutting down a number of SWD wells and establishing (and later updating) protocols for the use of existing and planned wells. The frequency of earthquakes has plummeted — fewer than 30 tremors of 3.0 or higher magnitude were recorded in 2021, and the state’s first quake of 2022 happened on January 31 (a 4.5!). The seismicity problem, while not fully resolved, is being carefully monitored and managed with only limited impact on oil and gas operations.
Figure 1. Significant Earthquakes in Oklahoma (3.0 or higher magnitude). Source: U.S. Geological Survey
Fast-forward to now and shift to the Permian Basin in West Texas. There, in recent months, the frequency and magnitude of earthquakes have spiked in three regions: the Midland-Odessa area (parts of Midland, Ector, Andrews and Martin counties), eastern Martin County in the Permian’s Midland Basin, and northern Culberson and Reeves counties in the Delaware Basin. In response, the Railroad Commission of Texas (RRC) has taken steps to address the situation, again with the aim of reducing the number of “felt” earthquakes (magnitude of 3.5 or higher) — the kind of tremor that people notice and maybe get a little nervous about — by creating Seismic Response Areas (SRAs) and managing the flows into the SWD wells that are believed to be contributing to seismic activity. Next, we’ll provide more detail on what’s been happening. After that, we’ll discuss how E&Ps and midstreamers active in these areas are responding — and what all this means for current and future oil and gas production in the Permian Basin. (A special thanks to our friends at B3 Insight for their help on this.)
Between February 2020 and September 2021, there were a few dozen 3.0-or-higher-magnitude earthquakes (green dots in Figure 2) — and six 3.5-or-higher events — in an area of the Midland Basin from northeastern Ector County to southwestern Martin County known as the Gardendale SRA (outlined by orange line). These included a 3.7 tremor in southwestern Martin County, about eight miles northwest of Midland, on September 7, 2021, and two 3.6 earthquakes northeast of Odessa in February 2020 and May 2021.
After determining that SWD well injection likely contributes to seismic activity in the Gardendale SRA, the RRC staff in September 2021 asked operators there to reduce the volume of produced water they inject into these wells. Further, the commission requested that operators refrain from using SWD wells that have been permitted but are not in service, and said that it would not approve any additional permits for SWD wells within the Gardendale SRA for at least a year.
Figure 2. The RRC’s Gardendale Seismic Response Area. Sources: RRC, RBN
After a 3.6 earthquake in northeast Odessa on October 26 and a 3.5 quake north of Midland on November 16, the RRC on December 1 took what it called “a focused response.” More specifically, it required seven deep disposal wells (deep generally meaning anything below the Wolfcamp formation) in the Gardendale SRA that are within 3 miles of a recent 3.0-or-higher earthquake to suspend injection effective December 15 until further notice.
Then, on December 15 and 16, the TexNet Seismic Monitoring Program reported four earthquakes in northwestern Midland County with magnitudes of 3.1, 3.6, 3.7 and 3.3 (in order of occurrence). This series of tremors led the RRC staff to determine that injection into deep geologic strata — below the top of the Strawn Formation and especially the Ellenburger Formation — was likely contributing to recent seismic activity in the Gardendale SRA. The commission said that, as a result, it was suspending all disposal well permits to inject produced water into deep strata within the boundaries of the Gardendale SRA, effective December 31. The action applied to 33 deep disposal wells, 24 of which were active, with the rest either inactive or new and not yet ready to operate.
Eastern Martin County (Stanton)
Nine 3.0-or-higher-magnitude earthquakes have occurred in eastern Martin County in the past few months (green dots in Figure 3), including a 4.6 quake on December 28 and a 4.2 tremor on New Year’s Eve. Again, the RRC staff determined that SWD well injection was likely contributing to seismic activity in this area, established the Stanton Seismic Response Area (outlined by orange line), and directed the oil and gas industry players in the area to develop an operator-led response plan. The RRC’s stated goal is the successful implementation of an industry response plan that will result in no more earthquakes of 3.5 or higher magnitude after 18 months of the plan’s implementation. If the commission’s staff is not satisfied with what E&Ps and midstreamers come up with, it said it was prepared to implement its own seismic response action plan after 90 days.
Figure 3. The RRC’s Stanton Seismic Response Area. Sources: RRC, RBN
Northern Culberson and Reeves Counties
Since January 2020, there have been scores of 3.0-or-greater seismic events (green dots in Figure 4) in northern Culberson and Reeves counties — a key production area in the Delaware Basin — and 15 earthquakes of 4.0 or higher magnitude, with six of the stronger quakes occurring between September 3 and October 3, 2021. Once again, the RRC staff’s analysis of available information determined that the tremors were caused at least in part by SWD well injection.
In response, the commission’s staff has established the Northern Culberson-Reeves SRA (outlined by yellow line) to reduce the seismic hazard there — again with the goal of no more 3.5-or-higher-magnitude earthquakes after 18 months of the response plan’s implementation. Absent coordinated industry response, RRC staff said that, as with the Stanton SRA in eastern Martin County, it was prepared to implement its own plan for the Northern Culberson-Reeves SRA after 90 days if the industry failed to step up to the plate. Citing progress toward the development of a plan by E&Ps and midstreamers in the area, RRC staff recently gave the industry another 30 days (until February 22) to implement its plan.
Figure 4. The RRC’s Northern Culberson-Reeves Seismic Response Area. Sources: RRC, RBN
What’s Being Done
As we said in our Splish Splash blog series back in 2018, production wells in the Permian — especially in the Delaware Basin — typically generate several barrels of produced water for each barrel of crude oil, and that produced water needs to be gathered, treated, and/or disposed of, with the predominant solution today being subsurface injection utilizing SWD wells. Since we wrote that blog, the volume of produced crude and accompanying water in the Permian has grown substantially, with some estimates putting the total volume at 20 MMb/d. We also discussed the growing number of pipeline systems that E&Ps and midstream companies were developing to more efficiently transport produced water from production wells to SWD wells. (Previously, most produced water was being trucked to a disposal location.) The build-out — and, in some cases, the interconnection — of those systems has continued ever since, giving their operators increasing flexibility regarding where the produced water is sent.
That flexibility is critically important now to E&Ps in the Gardendale, Stanton, and Northern Culberson-Reeves SRAs, where many of the local SWD wells on which they depend are being shut down or facing limits on their allowable injection rates. If E&Ps can’t find a way to deal with the produced water — hundreds of thousands of barrels per day, in many cases — they would need to ratchet down or even shutter production from existing wells and slow or suspend the completion of new wells or drilled-but-uncompleted wells (DUCs) in those areas. And no one wants to do that when West Texas Intermediate crude is selling at close to $90/bbl.
The good news for many E&Ps in the three SRAs is that there are extensive produced-water pipeline systems in place that can allow some or even all of the produced water that had been bound for the impacted SWD wells to be piped to other wells instead. In other cases, produced water may need to be transported by truck either to nearby pipelines or to other, more distant SWD wells that are not affected by the region’s seismic response action plans. There are other options too. One is to lay new pipes to interconnect existing-but-unconnected produced-water pipelines to enable produced water to flow to SWD wells unimpacted by the RRC’s SRAs. Another, longer-term solution for regions facing SWD well injection constraints may be to develop systems to treat and recycle produced water for use in the hydraulic fracturing of new wells and DUCs.
There are a few catches to all this, though. One is that, aside from the case of already interconnected and redundant pipeline systems, none of these alternatives are as simple as they may sound. Trucking produced water is highly inefficient and very costly compared to piping — the volumes are massive, for one, and it’s common knowledge (and not just in the oil patch) that it’s almost impossible to find truckers to hire nowadays. Building new pipelines takes time, hard-to-find workers, and money and, as we hinted at above, developing produced-water recycling networks isn’t a quick fix — or a cheap one.
Still, our understanding is that, so far at least, E&Ps and their midstream partners are finding work-arounds that are enabling them to maintain production in the three SRAs — or at least finding ways to offset production there by shifting their activity to other, unaffected areas nearby. Whether more areas in the Permian Basin will be affected by SWD-well-induced tremors is an important matter that we will continue to monitor.
“I Feel the Earth Move” was written by Carole King and appears as the first song on side one of Carole King’s second studio album, Tapestry. Released in April 1971 as one half of the double-A-sided single backed with “It’s Too Late,” the song went to #1 on the Billboard Hot 100 Singles chart. Personnel on the record were: Carole King (vocals, keyboards), Danny Kootch (guitar), Charles Larkey (bass), and Joel O’Brien (drums).
Tapestry was recorded during January 1971 at A&M Studios in Hollywood, with Lou Adler producing. Released in February 1971, the album went to #1 on the Billboard 200 Albums chart, has been certified 13x Platinum by the Recording Industry Association of America, and has sold over 25 million copies worldwide. The LP received four Grammy Awards in 1972, including Album of the Year. Several artists have covered songs from Tapestry, including James Taylor, Aretha Franklin, and Barbra Streisand. An interesting side note is the album cover, shot by photographer Jim McCrary, which was taken at a windowsill in King’s home in the Laurel Canyon neighborhood in the Hollywood Hills. It featured King holding a tapestry she had created, with her cat Telemachus sitting at her feet. Three singles were released from the LP.
Carole King (Carol Joan Klein) is an American singer, songwriter, and musician. Her career started in 1958 as a staff songwriter at the Brill Building (the center of the music industry at the time) in New York City. She has written or co-written 118 hits that made it to the Billboard Hot 100 Singles chart and has released 17 studio albums, four live albums, seven compilation albums, one soundtrack album, and 34 singles. King has won five Grammy Awards, received a Grammy Lifetime Achievement Award, and is twice a member of the Rock and Roll Hall of Fame, once as songwriter and once as a solo artist. She is also a member of the Songwriters Hall of Fame and has received a Kennedy Center Honor and a Library of Congress Gershwin Prize for Popular Song. King continues to write, record, and perform.