A series of earthquakes that rumbled from an oil and gas wastewater well in Ohio last year has highlighted the state's new role in the regional drilling landscape. Over the last couple of years, Ohio has become a dumping ground for wastewater.
Last year, drillers pumped more than 500 million gallons of toxic fluid—nearly 40 percent more than in 2010—into the state's injections wells, where energy companies pump waste into porous rock formations deep underground for permanent storage. With more than 170 injection wells in operation, Ohio is by far the region's leader in this area, with New York and Pennsylvania each having only a handful of injection wells. Ohio's regulators approved 29 new injection wells last year. Applications for 19 more are pending.
But the earthquakes, and a series of more restrictive injection guidelines published in March, raise the question of whether Ohio can continue taking so much wastewater from neighboring states without alienating either drillers with higher costs or voters spooked by the quakes.
"It's a very important issue and potentially a limiting factor," said John Conrad, a spokesman for New York's Independent Oil and Gas Association, an industry group. Conrad owns an environmental consulting firm that operates in New York and Pennsylvania, and he said wastewater disposal is becoming an increasingly expensive headache for the region's drillers. With natural gas prices at historic lows, he said it's becoming tougher for drillers to justify drilling new wells, with waste disposal costs being one of many factors. "Right now, there doesn't appear to be any really low cost option."
The problem is likely to get worse.
Until last spring, drillers in Pennsylvania's booming Marcellus Shale disposed of most of their wastewater by flushing it into rivers. But after that practice was found to be polluting waterways, Pennsylvania prohibited drillers from discharging untreated waste. Drillers now reuse more of their wastewater, but there are limits to this recycling. At some point, the companies must dispose of some wastewater, and they've turned to Ohio's injection wells to take it.
Pennsylvania hasn't released data on waste disposal since its new wastewater rules went into effect. But more than half of the waste injected in Ohio last year came from out of state, according to Ohio officials, with Pennsylvania likely being the biggest source.
More waste could be headed to Ohio from New York. By the end of the year, New York's regulators are expected to finalize a set of rules that would finally allow high volume fracking in horizontal wells. The draft rules, released last year, prohibit surface discharge. Conrad said that with few other options for in-state disposal, drillers would need to rely on Ohio's injection wells.
To top it off, energy companies in Ohio are in the early stages of what they hope will be the nation's next big oil boom, drilling into the little-explored Utica Shale. They've drilled 62 wells so far, with another 200 expected by the end of the year, said Heidi Hetzel-Evans, a spokeswoman for the Ohio Department of Natural Resources, which regulates both drilling and wastewater disposal.
Hetzel-Evans said the state's new wastewater disposal guidelines will prevent further earthquakes. Once the earth started shaking near an injection well in Youngstown last year, department inspectors began testing the well and reviewing records. All indications were that the problem well was operating within permitted guidelines, and that there was no way it could have been causing earthquakes. But with the help of researchers from Columbia University, the state eventually determined that the injection well was, in fact, the most likely cause of the quakes. What the regulators hadn't realized, according to a department report, was that there was an unmapped fault nearby that had already accumulated seismic stress and was ready to slip. The injected fluid likely reached the fault and acted as a lubricant, according to the report.
The new guidelines would require companies to submit more comprehensive seismic data and prohibit injection into the formation where the Youngstown quakes originated. There's also a proposal to use a portion of the fees collected from waste injection—five cents per barrel for in-state waste and 20 cents for out-of-state—to fund research that will further map the state's faults. The rules fall short of requiring companies to perform expensive seismic tests, though Hetzel-Evans said the department will continue to evaluate whether that may be necessary.
Ohio hasn't projected how much wastewater drillers may be seeking to inject in coming years, but Hetzel-Evans said there is plenty of capacity.
"We have not run out of injection well space," she said.
However, increased public awareness, coupled with the more stringent regulations, could be leading to higher disposal costs, according to a recent report from ClearView Energy Partners, a Washington, D.C.-based energy research firm. The report was released in January, after the Ohio quakes but before the state's new injection guidelines were announced. It said the average cost for injection disposal is $10-$15 per 1,000 gallons and identified the potential for higher disposal costs, in reaction to the earthquakes, as one of several emerging risks for drilling companies.
The Ohio Oil and Gas Association, an industry group, did not respond to requests for comment.
Travis Windle, a spokesman for the Marcellus Shale Coalition, which represents drillers across the region, said the group is confident that injection will continue to be a "workable option," for disposal. But he added that drillers are turning more and more to reusing their wastewater, reducing costs and lessening environmental impact.
State data show that drillers in Pennsylvania, which hosts the most extensive Marcellus Shale drilling, reused about half of their wastewater in the first half of 2011, before the state prohibited drillers from discharging to streams.
Meanwhile, Ohio officials say their injection guidelines, some of which can be implemented through administrative changes and some of which require legislation, will make the state's oversight program among the best in country. The federal EPA oversees wastewater injection, but states can regulate the practice if their rules are at least as stringent as federal guidelines, a status Ohio has enjoyed since 1983.
But the rules haven't placated anti-fracking activists, who have added Ohio's earthquakes to their list of reasons why fracking should be halted. Other environmental groups are lobbying for even tougher rules in Ohio, and, perhaps more important, for tougher enforcement.
"Our concern more so is whether or not the Ohio Department of Natural Resources has adequate resources to monitor and inspect and follow up on violations," said Jed Thorp, of the Sierra Club's Ohio chapter. Thorp is concerned that more injection could lead to more quakes. "They are relying on the industry to self report any violations they may have."
The Department of Natural Resources currently has 30 oil and gas inspector positions, though a few are vacant. But Hetzel-Evans said the agency expects to have between 80 and 90 inspectors by next spring. She said the inspectors are able to visit each injection well at least once every 12 weeks, far more often than the once-a-year visits required by the EPA.
All sides agree that while higher costs or logistical bottlenecks could present energy companies with new challenges, the drilling industry and state regulators are likely to find solutions to these significant hurdles.
"I don't think they're going to allow anything to really slow down the process," Thorp said.