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Insight: Arkansas lawsuits test fracking wastewater link to quakes

Norman and Mary Mahan are seen outside their home in Wooster, Arkansas, August 5, 2013. REUTERS/Jim Young
Norman and Mary Mahan are seen outside their home in Wooster, Arkansas, August 5, 2013. REUTERS/Jim Young

By Mica Rosenberg

GREENBRIER, Arkansas (Reuters) - Tony Davis, a 54-year-old construction worker in central Arkansas, said he welcomed the boom in natural gas drilling that brought jobs and new businesses to his hometown starting about a decade ago. But that was before the earth shook.

In 2010 and 2011, the quiet farming town of Greenbrier, Arkansas, was rattled by a swarm of more than 1,000 minor earthquakes. The biggest, with a magnitude of 4.7, had its epicenter less than 1,500 feet from Davis's front porch. "This should not be happening in Greenbrier," Davis recalls thinking. He said the shaking damaged the support beams under an addition to his home.

Then came another surprise: University of Memphis and Arkansas Geological Survey scientists said the quakes were likely triggered by the disposal of wastewater from hydraulic fracturing - commonly known as fracking - into deep, underground wells. That finding prompted regulators from the Arkansas Oil and Gas Commission to order several wells in the area shut down, and the earthquakes soon subsided.

It also prompted Davis and more than a dozen of his neighbors to file five lawsuits in federal court against Chesapeake Operating Inc, as the owner in 2010 of two injection wells near Davis' home, and BHP Billiton, which purchased Chesapeake's shale gas assets in 2011.

Another company, Clarita Operating LLC, owned a third well that was shut down, but the company went bankrupt and was dropped from the litigation in 2011.

Chesapeake and BHP both declined to comment, citing policies not to discuss ongoing litigation. In court documents they denied they were responsible for the quakes and for any damage the quakes may have caused.

The litigation marks the first legal effort to link earthquakes to wastewater injection wells, according to a search of the Westlaw database and interviews with legal experts, and the first attempt to win compensation from drilling companies for quake damage.

If any of the earthquake cases make it to a jury and the plaintiffs prevail, the outcome could spark additional litigation, since wastewater injection wells are used not only in fracking, but in other kinds of oil and gas drilling and geothermal energy production.

"The scientific community is really focusing on this issue so I imagine we will see more cases because of that," said Barclay Nicholson, a Houston lawyer who represents major oil and gas companies and is not involved in the Arkansas cases. "That's one of the new battlegrounds."

LITIGATION WAVE

The first of the suits, filed in U.S. District Court in Eastern Arkansas, is scheduled to go to trial before Judge J. Leon Holmes next March, though the parties have been engaged in settlement talks, according to the court docket.

The Arkansas Independent Producers & Royalty Owners, an oil and gas industry group, acknowledges that scientists found a possible connection between the disposal wells and the spate of minor quakes in and around Greenbrier.

But J. Kelly Robbins, the group's executive vice president, said the companies had no way of knowing of any such link before wastewater injection began, and he said the operators shut the wells down when questions were raised.

"The appropriate state agencies stepped up, collected data, did what they were supposed to do and made a decision," Robbins said in an interview. "Industry abided by that and those wells were closed."

Robbins also said that while Arkansas is a traditional oil and gas producing state, fracking in the Fayetteville shale had brought billions of dollars of investment and boosted the state's natural gas production ninefold in seven years.

The earthquake cases are part of a wave of litigation that has followed the rapid expansion in natural gas production across the United States using fracking, a drilling process that deploys a highly pressurized mix of water and chemicals to break apart shale rock to release oil and gas.

Since 2009, some 40 civil suits related to fracking have been filed in eight states, claiming harm ranging from groundwater contamination to air pollution to excessive noise.

So far none of the lawsuits has made it to trial and about half have been dismissed or settled, with company lawyers mainly arguing that a link between fracking and contaminated groundwater or other environmental problems has not been proven, according to a Reuters analysis of legal filings.

The U.S. Environmental Protection Agency is expected to issue a major report on fracking and drinking water next year that could have an impact on these cases, lawyers closely following the litigation say.

FINDING FAULT

The Arkansas litigation does not target fracking itself, but rather the disposal of the leftover toxic, briny water known as "flowback." Millions of gallons of wastewater are typically trucked from the fracking site to the well site, where they are injected thousands of feet underground into porous rock layers, often for weeks or months at a time.

Seismologists say fracking can cause tiny "micro earthquakes" that are rarely felt on the surface. The process of disposing of the wastewater, though, can trigger slightly larger quakes when water is pumped near an already stressed fault, even one that hasn't moved in millions of years, according to the U.S. Geological Survey.

Only a handful of the 30,000 injection wells across the country have been suspected of causing earthquakes, the U.S. Geological Survey has said.

That rare event likely happened in central Arkansas, said Scott Ausbrooks, a geologist at the Arkansas Geological Survey in Little Rock who lives in Greenbrier and said he received calls from panicked neighbors when the quakes were rattling the town more than a dozen times a day.

Ausbrooks said he became interested in studying wastewater injection in the area because it had previously experienced some earthquakes, including a notable swarm in the 1980s.

He worked with Steve Horton from the University of Memphis Center for Earthquake Research and Information to set up seismic monitors around eight disposal wells. They found that 98 percent of the 2010-11 swarm of small quakes occurred within 3.7 miles of two of the wells.

"Given the strong spatial and temporal correlation between the two wells and seismic activity on the fault," Horton wrote in a study published in "Seismological Research Letters" in the March/April 2012 issue, "it would be an extraordinary coincidence if the recent earthquakes were not triggered by the fluid injection. For these reasons, I conclude that fluid injection triggered the recent seismicity."

It was only after the wastewater injection wells went online that scientists discovered a previously unknown fault, now called the Guy-Greenbrier fault, Ausbrooks and Horton said.

The Arkansas Oil and Gas Commission declared a permanent moratorium on new injection wells in almost 1,200 square miles (3,100 sq km) around the newly discovered fault. The commission now requires new wells to be between 1 mile and 5 miles from known faults, and it more closely monitors the amount and pressure of injected wastewater.

The EPA currently has no regulations relating to earthquakes and disposal wells - known as Class II wells - but the agency began working on a report addressing the issue in the wake of a spike in quakes in the central and eastern United States.

In a November 2012 draft report, the EPA said it was studying "injection-induced seismicity" in central Arkansas; north Texas; Braxton County, West Virginia; and Youngstown, Ohio.

In Texas, operators in 2009 voluntarily plugged two disposal sites after regulators started investigating whether the wells touched off several quakes around the Dallas Forth-Fort Worth International Airport. Virginia's Department of Environmental Protection in 2010 reduced the rate of wastewater injection allowed after a series of small tremors. And in Ohio, officials shut down five injection wells in Youngstown following a 4.0 earthquake on New Year's Eve 2011 in an area that had never experienced seismic activity before, the EPA report said.

The EPA said the draft, obtained by the specialized news service EnergyWire through a Freedom of Information Act request, was a "technical report" as opposed to a policy blueprint and "is still under development."

SEEKING PLAINTIFFS

While the federal regulatory process plays out, the relationship between injection wells and earthquakes could first be thrashed out in court. Defense lawyers say proving negligence could be a difficult hurdle.

"You have to prove that the conduct was unreasonable," said Thomas Daily, an Arkansas lawyer who represents energy firms and is not involved in the earthquake cases. "You are not liable for a bolt out of the blue."

The plaintiffs' attorneys, from the Little Rock firm Emerson Poynter, claim the companies should have known the risks of drilling in a historically seismic area.

"The scientific proof is absolutely there," said plaintiffs' lawyer Scott Poynter.

Emerson Poynter lawyers said they currently represent 35 homeowners, about half of whom have yet to file lawsuits but plan to do so in state court. Along U.S. highway Route 65, which cuts through Greenbrier, the firm sprung for a billboard that features an illustration of a cracked brick wall next to the caption, "Earthquake damage?" written in a shaky looking font. The firm's phone number is at the top.

No matter how many people sign on, state regulators said the lawsuits will not deter oil and gas drilling.

"It's something that happened, we addressed it and developed some rules to keep it from happening again and everyone has moved on," said Lawrence Bengal, director of the Arkansas Oil and Gas Commission. "Whether the past will result in some award of money to someone I really don't know. But I don't know what more could have been done."

(Reporting by Mica Rosenberg; Additional reporting by Elizabeth Dilts; Editing by Eric Effron and Tim Dobbyn)

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