Oklahoma City-based SandRidge Energy has cautioned its investors that further restrictions by regulators in Oklahoma and Kansas due to seismic activity in the past several years could still affect the company’s operations.
In its recent fourth quarter earnings report, the company took note of how regulators in both states took steps beginning in 2016 to restrict the amount of produced water the company could inject into its saltwater disposal wells following increased seismic activity.
SandRidge pointed out that the adoption of any new laws, regulations or directives restricting its ability to dispose of saltwater “could significantly increase our costs to manage and dispose of this saltwater, which could negatively affect the economic lives of the affected properties.”
The company said it could also mean it would be the target of third party lawsuits “alleging damages resulting from seismic events that occur in our areas of operation.”
The company has felt the impact of regulatory actions following earthquakes taken by the Oklahoma Corporation Commission and the Kansas Corporation Commission.
At least 76 SandRidge-operated disposal wells were hit with reduction action as a result of earthquakes in 2016 and subsequent restrictions put into place by the Oklahoma regulators. The Commission’s original plan covered 5,281 square miles and 245 total disposal wells that had injected wastewater into the Arbuckle formation.
A new protocol by the Oklahoma Corporation Commission in February 2018 to address seismicity in the STACK and SCOOP plays resulted in the pause of operations, at least for several hours when certain seismic data was observed. SandRidge suggested similar future protocols that could be adopted “may reduce the productivity of our operations in relevant areas.”
In Kansas, an action plan to address seismic activity in the state was recommended by a Task Force on Induced Seismicity in 2014. A Kansas Corporation Commission order in 2015, following earthquakes in Harper and Sumner Counties near the state line affected SandRidge well operations. Along with other operators of injection wells, SandRidge was forced to reduce the injection volume to no more than 8,000 barrels a day per well.
SandRidge says no additional regulatory actions in Kansas have occurred since 2017 but it stated that permit applications for new saltwater disposal well facilities “have faced increased local opposition.”
