American Oil and Gas Reporter - October 2015 - 25

IndustryDigest
RRC Examiners Decide
Azle, Tx., Earthquakes
Weren't Industry's Fault

AUSTIN, TX.-The Texas Railroad
Commission says evidence does not
support any linkage between
wastewater injection wells and seismic
activity northeast of Fort Worth.
Because the evidence doesn't support a
finding of fact that the wells are likely
contributing to seismic activity, the
examiners recommend RRC allow them
to continue operating.
RRC hearing examiners say they
could not find proof that wells operated
by XTO Energy Inc. or EnerVest
Operating LLC were responsible for a
series of earthquakes near the Texas
towns of Azle and Reno. However, they
add the commission cannot conclude
the seismic events are solely the result
of natural tectonic processes.
The RRC examiners say the
evidence doesn't confirm that fluids
injected into the Ellenburger formation
by disposal wells operated by the
companies contributed to seismic
activity, and that the wells were
constructed and operated in accordance
with their permits.
A Southern Methodist University
study, Casual Factors for Seismicity
Near Azle, Tx., claimed injection well
operations caused the seismic events
recorded between November 2013 and
April 2014. Its seismic analysis
indicates the reported earthquake
activity is consistent with two steeply
dipping faults near the injection wells.
The study contends that based on
modeling and the absence of historical
earthquakes near Azle, wastewater
disposal represents the most likely
cause of seismic activity.
However, at its RRC hearing held
June 15, EnerVest successfully argued:
* The initial formation pressure in
the Ellenburger was between 4,120 and
4,163 psi. In a May 2015 inspection,
using downhole direct pressure
measurement, the formation pressure
was measured at 4,172 psi, leading
EnerVest to conclude there had been no
significant formation pressure change
during the well's operation.
* Geologic and stratigraphic
evidence indicates faults within the
Ellenburger have a displacement of 150
feet, and would not create effective

permeability barriers to horizontal
flows. Thus, the company asserts, fluids
would dissipate rapidly around the
wellbore and into the formation, and
pressure would not increase along a
fault plane.
* Seismic events in the Azle region
have occurred, but have not been
reported by residents or recorded by
seismographs. According to its analysis,
EnerVest says five events recorded by
the USGS monitoring network
originated in basement rock.
EnerVest also complained the SMU
study used a model incapable of
handling the highly anisotropic
geological and hydrological system that
includes the Ellenburger, and did not
include the Precambrian crystalline
basement rock in which the initial
earthquakes originated. r

ments as high as $500,000. News reports point out regulators are authorized
to demand supplemental bonds on top
of those base-line requirements, basing
the amount on factors such as potential
liabilities, royalties, rental fees and decommissioning costs.
If projected decommissioning costs
are 50 percent or less of a company's
net worth, news reports indicate the bu-

BOEM Rewrites Rules
On Financial Assurance
For Offshore Facilities

WASHINGTON-The Bureau of
Ocean Energy Management has released proposed guidance it says it will
use to determine if an oil or gas company operating on the Outer Continental
Shelf has the financial ability to carry
out its leasing obligations, primarily decommissioning costs.
The proposed guidance is part of a
revised notice to lessees that will replace NTL 2008-N07, the bureau says.
The revised NTL will provide updated
criteria for determining a lessee's ability to self-insure its OCS lease based on
its financial capacity and strength.
BOEM says the revision also includes
updated procedures for requiring additional security for oil, gas and sulphur
leases.
According to BOEM, its principal
goals are to ensure taxpayers never have
to pay to decommission an OCS facility
and the environment is protected. It says
managing risks in the early stage of a
lease will provide lessees negotiated solutions that improve business certainty
and leverage company strengths.
Companies must put up at least
$50,000 in surety bonds for offshore
leases before they begin planning or operating, media reports say. Financial requirements increase after that, with developed leases having bonding requireOCTOBER 2015 25

American Oil and Gas Reporter - October 2015

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