Why oil companies don't fret over earthquakes

Why oil companies don't fret over earthquakes

Posted By Steve LeVine  Wednesday, January 4, 2012 - 2:30 AM

  

Are Chinese, French, Canadian, U.S. and other oil companies truly eager to work in earthquake-prone, middle-class American residential neighborhoods? Probably not. Yet such is the incongruity on the U.S. shale gas patch -- a simultaneous rash of earthquakes near drilling sites, and a rush of multi-billion-dollar investments from around the world. The allure of shale gas and oil -- a bonanza under way in the U.S., with the promise of similar discoveries elsewhere -- is outweighing mortal and public relations risks.

The latest temblor, registering 4.0 on the Richter scale, was Saturday in Youngstown, Ohio. Though no one recalls prior earthquakes in the area, it is the 11^th there since last March, and may be the result of the disposal of some 14.8 million gallons of drilling wastewater over the last year, reports Bloomberg's Mark Niquette.

Scientists long ago documented earthquakes in association with drilling near seismic fault lines, Paul Hsieh of the U.S. Geological Survey told the Associated Press. Indeed, in November, similar seismic eruptions occurred in non-earthquake zones in the U.K. John Armbruster of Columbia University's Lamont-Doherty Earth Observatory told the AP that the Youngstown temblors will probably continue. "The earthquakes will trickle on as a kind of a cascading process once you've caused them to occur," he told the agency. "This one year of pumping is a pulse that has been pushed into the ground, and it's going to be spreading out for at least a year."

Shale gas critics are taking aim at the earthquake danger. On her blog at the National Resources Defense Council, an environmental advocacy group, Briana Mordick said such quakes are preventable, but that in the case of Youngstown, seismic risk was not a factor in approving the wastewater injection wells. Christopher Swann, a columnist for Reuters, expects a serious PR backlash -- "greater public opprobrium over [shale-gas drilling] and stricter government oversight both look likely in 2012," he writes.

Yet, in a note yesterday to clients, Credit Suisse forecasts a significant increase in oil company investment in shale gas and oil. Over the next three years, companies will be able to tap $200 billion in excess cash, according to Credit Suisse, which calls the money "a significant source of fire."

Shale gas and oil are the targets of a historic-scale land rush. Interest in such reserves helped topush overseas offers for U.S. oil and gas fields to $51 billion in 2011, the highest sum in more than a decade, reports Bloomberg. The number of drilling rigs working on horizontal U.S. wells was up 23 percent last year, the agency said.

The balance of force is potent -- a predictable environmentalist rejection of earthquakes, and the profit motive in an era of low economic growth and high joblessness.

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