Frackquake lawsuits present PR dilemma for industry, evidence hurdle for plaintiffs

W.J. Kennedy Mar. 28, 2016, 12:05pm


OKLAHOMA CITY (Legal Newsline) - The negative publicity surrounding lawsuits alleging the oil and gas industry are responsible for earthquakes in Oklahoma is likely to cause more damage than the outcome of any of the suits - despite the plaintiffs' challenge of finding evidence tying fracking to the surge in activity.

Industry lawyers say the merits of the allegations of a connection between the underground disposal of brine - a byproduct of oil and gas drilling - and a spike in earthquakes may not matter. Meanwhile, the Oklahoma Geological Commission says half of a flurry of recent earthquakes have occurred away from larger injector wells and that it can't be sure that there is any link between fracking and earthquakes.

“Any repercussions legally will likely be limited to the confines of Oklahoma because its geology is different from other states,” said attorneys Eric R. Skanchy and Michael N. Mills in the Sacramento, CA, office of Stoel Rives LLP.

“But the publicity the cases generate will not be good for the industry in the court of public opinion. We should expect more of these types of cases in other states.”

In the last six months, four suits, two of which seek class action status, claiming personal injury and property damage have been filed in district courts.

Also, the Sierra Club and Public Justice have filed in federal court for declaratory and injunctive relief, citing the federal Resource Conservation and Recovering Act (RCRA). RCRA allows citizen lawsuits over hazardous waste.

The suits allege damage from a spike in earthquakes that scientists have linked (with a so-far indeterminate handle on the degree of cause and effect) to deep well disposal of the water.

The water is a mixture of ancient seawater recovered from reservoirs, water injected in the formation being drilled and any additives in the water being injected.

The lawsuits could rely on studies that blame the increase in earthquakes on saltwater disposal. Defendants have filed motions to dismiss one of the class actions, claiming the plaintiffs have failed to show any evidence as to how their wastewater wells have caused harm.

In July, the Oklahoma Supreme Court opened the door for the lawsuits by ruling that Sandra Ladra of Prague could pursue her personal injury claim in state court and not have her case relegated to the Corporation Commission, which regulates the oil and gas industry in the state.

The decision allowed, by extension, a property damage suit by Jennifer L. Cooper, also of Prague, to go forward. Cooper is seeking class action status. Both are suing New Dominion LLC of Tulsa and Spess Oil Co. of Cleveland, OK, in Lincoln County District Court.

A separate class action suit by April Marler and Lisa Griggs was filed in Logan County District Court on Jan. 12, against Devon Energy, Chesapeake Operating LLC, New Dominion and SandRidge Energy. And a group of Edmond residents filed a property damage suit on Jan. 21 in Oklahoma County District Court against a dozen energy companies.

The Sierra Club suit was filed on Feb. 16 in U.S. District Court.

Oklahoma has approximately 3,200 active disposal wells, and the pressure needed to send the water back down into the earth varies.

Some wells in the Arbuckle Formation, where they range from 4,000 feet to 10,000 feet in depth according to the Oklahoma Geological Survey, require virtually no pressure since the rock there is so permeable.

In the Arbuckle, injection has been going on for more than 70 years, but in recent years, the volume statewide doubled from about 80 million barrels per month in 1997 to about 160 million barrels per month in 2013.

The Corporation Commission recently included more than 1,000 Arbuckle wells in central Oklahoma under a “yellow light” designation, even though some areas around the wells have shown minor or no seismic activity.

The protocol is similar to an earlier one in the western part of the state. Under the directive, the wells must reduce the water being deposited by 40 percent, according to Commission spokesman Jim Palmer. The goal is a reduction of more than 300,000 barrels a day from the 2015 average injection volumes.

“As a precautionary measure, we really increased our area of activity over the past 12 months,” Palmer said.

Legislation recently passed by the Oklahoma House, moreover, gives the Commission more authority to intervene in what it deems are emergency situations.

While most in the industry don’t dispute the connection between the water injection and earthquakes, they point out that most of the induced seismicity goes unnoticed.

“Most of these would be on the order of a stick of dynamite exploding 4,000 underground,” said Michael P. Joy, who holds a Ph.D. in geology and is an attorney with BakerHostetler’s Denver office. “You can detect it with a seismometer but you wouldn’t feel it.”

For its part, the Oklahoma Department of Transportation has found no damages to state roads or bridges in areas where the earthquakes have been detected, according to a spokesperson for the Department.

Director of the Oklahoma Geological Survey, Jeremy Boak, explained that the water raises fluid pressure on the faults, making it easier for them to slip and undergo an earthquake.

But he added it’s impossible to say if, for instance, a series of minor quakes, on the order of magnitude two or three, can add up to cause any damage like shaking a brick loose from a building - or even whether the quake that causes the damage isn’t a naturally occurring one.

“We had a swarm of earthquakes larger than magnitude 3.5 earlier this year,” Boak said. “About half were a good distance away from any large injector wells. It’s possible there could be a connection to the wells, but we can’t be sure at this point.”

The science is still developing. In April 2015, the U. S. Geological Survey (USGS) released a report outlining a preliminary set of models to forecast how hazardous ground shaking could be in the areas where sharp increases in seismicity have been recorded.

A statement from the USGS said that the models ultimately aim to calculate how often earthquakes are expected to occur in the next year and how hard the ground will likely shake as a result.

“This is a difficult problem because it is unknown why induced seismicity occurs near some fluid injection wells and not at others,” the report said. “A helpful first step would be to compile a common format (and publicly accessible) database for wastewater injection operations that can be used to compare observed seismicity with exploration activities.

“This would also encourage the information exchange between industry and scientists.”

No guarantee exists that a lack of hard standards will help the industry in court, especially if the cases go before a jury as demanded in the complaints.

Carter Williams, of counsel in Baker Donelson's Houston office, cites a 2014 ruling in Parr v. Aruba Petroleum, Inc. in which a Texas jury awarded nearly $3 million to the Parr family for health issues allegedly caused by nearby drilling on a nuisance claim that did not require scientific proof.

“There was no scientific expert testimony there, which should have been required by the court,” Williams said.

“It boiled down to a toxic tort masquerading as a nuisance suit. My fear is that again with the Oklahoma cases we won’t be dealing with any scientific standards - no real proof of direct cause and effect.”

Williams added that he found the definitions of the proposed “class” in the recent complaints “strange,” particularly as they seek to include all Oklahoma property owners, whether they have been damaged by an earthquake or not.

“Earthquakes don’t lend themselves to class action treatment,” he wrote in an email, “since in most cases (particularly in rural or even suburban areas) the amount of people suffering injuries would not be so numerous to prevent joinder (the action of bringing parties together), in contrast to something like the Gulf oil spill, which generated hundreds of thousands of claims.”

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