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Greed, Politics and the Biggest Oil Boom in Decades

17 minute read

Angela Spotts dreams of earthquakes. Not of her house falling through a crack in the earth or her walls tumbling down. She imagines them happening, their seismic waves buckling the red dirt plains outside. She often gets jolted awake at night, not knowing if she’s feeling an actual quake or if it’s in her mind. If it’s real–and more often than not these days, it is–she looks at the clock, makes a note of the time so she can report it, and tries to go back to sleep.

Spotts, 54, lives in Stillwater, home of the Oklahoma State Cowboys and the National Wrestling Hall of Fame, a favorite city of oil and gas baron T. Boone Pickens that was named, according to locals, because the water was always calm. Today it is one of the most seismic places on the planet.

In 2007, Oklahoma had one earthquake of magnitude 3–the lowest level at which they can usually be felt–or higher. Last year, there were 907. The state now has more 3-plus earthquakes than California and is on pace to have twice as many magnitude-4 quakes as in all of 2015. Of the 12 largest tremors in the state’s history, 10 have occurred since 2011. Four have struck since November, including the third largest, a 5.1 tremor that hit outside Fairview on Feb. 13. The town has felt more than 50 quakes since then.

No place in the world has ever experienced earthquakes at such a rate in such a short time, let alone somewhere wholly unprepared for them. As a result, a state accustomed to dodging tornadoes is scrambling to get a handle on a destructive force of a completely different nature. Many residents now download earthquake-tracker apps–the state’s two largest newspapers have launched online maps–and try to predict the strength of nearby quakes on Facebook (closest guess wins bragging rights). Schools have begun conducting quake-preparedness drills. Interest in earthquake insurance–if residents can get it–has skyrocketed, while property values for those living near fault lines have plummeted. It’s gotten so bad that some are considering something more reminiscent of Tom Joad’s time: leaving the state altogether.

At the center of it all is what virtually everything in Oklahoma has revolved around since statehood: oil and gas. The energy business indirectly accounts for 1 in 5 jobs around the state and roughly 10% of its GDP. Oklahoma City’s tallest buildings are named for oil and gas companies. The state’s sports stadiums bear the names of energy firms and their billionaire founders. Even the state capitol sits atop a giant oil field, surrounded by pump-jacks dipping their beaks into the earth below. Energy makes or breaks Oklahoma. And right now, it’s breaking it.

Following years of denials, state officials finally acknowledged last April what scientists had been saying publicly for some time: Oklahoma’s transformation into a seismic hot zone is connected to its most important industry. From 2010 to 2014, oil production in the state nearly doubled and natural gas grew by almost 50%, according to the research firm RegionTrack. New drilling technologies made it possible to extract oil from sites once considered too watery, while the soaring price of crude made it worth the hassle. But it turns out that disposal wells, which inject back into the earth the salty wastewater that comes to the surface alongside oil and gas, have been lubricating the fault lines buried deep beneath the prairie floor. Those shifting faults have led to so many earthquakes that the U.S. Geological Survey (USGS) tells TIME it plans to issue a new hazard map in late March that ranks Oklahoma as one of the most quake-prone states in the nation. On earlier maps, Oklahoma was a seismic afterthought.

Yet state leaders have been hesitant to take any measures that might anger the energy industry. For years, the official line was that the quakes were naturally occurring; others claimed, incorrectly, that the state had always had significant seismic activity. Some still say more research needs to be done. Even during this year’s State of the State address, Governor Mary Fallin praised first responders in tornadoes, floods and blizzards. But when a legislator called out, “And earthquakes!” the governor said, “I wasn’t going to say that word, but thank you for reminding me.”

The omission speaks to a larger point. For over a decade, Oklahoma has been one of the biggest beneficiaries of America’s oil boom. Two pioneers of the fracking revolution, Chesapeake Energy and Devon Energy, are headquartered in the state. As oil prices climbed over $100 a barrel, Oklahoma’s tax base grew, its unemployment rate fell, and the state even landed its first big-league sports team–the NBA’s Oklahoma City Thunder.

But after its steady rise, the price of oil has fallen to $30, thanks to decreased demand and a global supply glut. And the downturn is being felt particularly hard in the Sooner State. Large energy companies have laid off thousands of employees. Smaller outfits are losing money on every barrel. Chesapeake–which put its name on the Thunder’s downtown arena–lost 80% of its value in the past year. Businesses that depended on the sector are suffering as a result. Greco Motors, near Oklahoma City, said it has gone from selling one car a day to 12 a month.

And Aubrey McClendon, Chesapeake’s swaggering co-founder and former CEO, died in a high-speed, single-car crash on March 2, one day after being indicted for rigging oil and gas leases. It was hard not to see in the timing a tragically symbolic end to the boom he helped create. “It’s pretty bleak,” says Chad Warmington, president of the Oklahoma Oil & Gas Association, describing the state of the industry. “The mood is extremely negative.”

As nearly any longtime resident will proudly tell you, Oklahoma has weathered busts before. But there is a big difference between the current climate and the 1980s, the last time the price of oil tanked so rapidly. In addition to lost jobs and shrinking 401(k)s, Oklahomans now have to contend with the ground shaking beneath their feet. The energy boom may be over, but the man-made geological mess it created has gotten worse.

“You have scientists warning us that a big one is coming,” says Spotts, who became a vocal industry critic when an oil well showed up within 900 ft. of her house. “The more we shake, the worse it’s going to get. It’s coming.”

South of the unincorporated township of Leonard, Okla., along Glasnost Road, sits what’s left of the Leonard Geophysical Observatory, a series of mildewy structures filled with outdated seismographs and faded maps of the USSR. This, says Jerry Boak, the director of the Oklahoma Geological Survey, was the one place where earthquakes were monitored throughout the state–“until we started having all of this activity.”

When the OGS was founded in 1908 to study the state’s natural resources, Oklahoma was seismically asleep. It remained so quiet that in 1990 this outpost was chosen as one of three locations where the Soviet Union could monitor nuclear activity anywhere in the U.S. under the Threshold Test Ban Treaty. It was a perfect site: in the middle of the country in a place with virtually no seismicity to get in the way.

Historically Oklahoma had about one earthquake a year, on a par with states like South Dakota and North Carolina. But the frequency ratcheted up as the oil boom took hold. By 2009, it had 20. The next year it had 35. Then on Nov. 5, 2011, around 10:53 p.m., an earthquake measuring 5.6 struck near Prague, a small town about 50 miles east of Oklahoma City. It was powerful enough to collapse a tower at a nearby college and was felt in parts of Arkansas, Kansas and Missouri.

“It felt like a plane hit the front of our house,” says resident Sandra Ladra, 65. Her stone fireplace, which reached the top of her 28-ft. A-frame ceiling, began to crumble. One of the stones fell and crushed her knee. “I thought we were going to die,” says Ladra, who is suing two energy companies for damages.

The Prague earthquake was the strongest ever recorded in Oklahoma. The timing, many scientists say, was no coincidence. For years, the primary way to extract fossil fuels was by drilling a hole vertically into the earth. It was a costly endeavor, with a success rate of only about 1 in 3 wells. But over the past decade, new technologies including horizontal drilling and hydraulic fracturing, better known as fracking, allowed drillers to complete wells more quickly and efficiently. Horizontal drilling captures five times as much oil as a vertical well and can drill in two weeks’ time what used to take months, while fracking, which uses high-pressurized water to break apart underground rock, allowed companies to tap new sources of shale oil and gas. Today, the industry’s drilling success rate is closer to 80%.

Those technologies helped companies expand domestic exploration in places like the Mississippian Lime, a carbonate rock formation thousands of feet belowground in north-central Oklahoma and south-central Kansas. Part of an ancient shoreline that ran through Oklahoma millions of years ago, the area had been only lightly drilled because it was filled with water that was too expensive to separate from the oil and gas at the surface. But as the price of oil increased, energy companies now had the capability–and the financial incentive–to pull it out of even the most waterlogged formations.

“This is a by-product of $100 oil,” says Mark Zoback, a Stanford University geophysicist and an adviser to the oil-field-services giant Baker Hughes. “Those formations had been known about forever, but because they produced so much water, it was uneconomical.”

Kyle Murray, an OGS hydrogeologist, says firms went from drilling 50 to 100 wells per month to up to 250 in 2015, with some wells producing 65 barrels of water for every barrel of oil. Alfalfa County, at the state’s northern edge, jumped from producing 40 million barrels of wastewater annually to 200 million. In 2014, the entire state produced an estimated 3 billion barrels. Much of this water, which Boak describes as saltier than the Dead Sea, was then injected into the porous Arbuckle zone, a series of carbonate rock formations about 7,000 ft. below the surface. It was thought to be the perfect candidate, Murray says, because it could accept the fluid and was far from freshwater sources.

Few realized, however, just how much pressure was building up in the Arbuckle, stressing fault lines in the crystalline basement rock below. Some seismologists liken the scenario to an air-hockey table. Imagine the puck and the table as two separate rock formations on opposite sides of a fault. When the air is off, the puck sits still. But turn the air on and the puck begins to move because the friction is reduced. Those billions of barrels, says Art McGarr, a geophysicist with the USGS’s Earthquake Hazards Program, reactivated faults that hadn’t moved in 300 million years.

After Prague, earthquakes started happening in places where residents had never even felt a rumble. At her home in Guthrie, Lisa Griggs was woken up by the Prague quake roughly 60 miles away. By 2014, she was feeling a tremor every few weeks, then every few days. On June 26, 2015, there were 50 quakes recorded near Guthrie, causing her house to make what she describes as a twisting motion.

“That night there were a whole bunch of people on Facebook together,” Griggs says. “We were like, Oh my God, this is terrifying. It’s not stopping.” She says the quakes led to more than $100,000 in damage to her home and spurred her to file a class-action lawsuit against four of the state’s largest energy companies.

During the June 26 quake swarms, Pat Duggan fired off a string of real-time texts to his state representative: “Another one, eight in a row.” “Another one, 10 now.” “This is crazy.” “The biggest one yet.” “They’re just constant.”

Scientists have known that humans can induce earthquakes since the late 1960s, when researchers found that chemical waste injected underground at the Rocky Mountain Arsenal caused a series of quakes that were felt in nearby Denver.

By 2013, many leading experts were confident that the same phenomenon was at play in Oklahoma. But the OGS repeatedly said there wasn’t enough information to establish a link between oil and gas drilling and the state’s increased seismicity. In March 2013, the agency attributed the Prague quake to “natural causes.” To critics, the unwillingness to acknowledge the connection was less about scientific ignorance than political back-scratching.

The energy sector is a generous donor, and Governor Fallin has been treated particularly well. In her 2014 campaign, Fallin received more money from oil and gas than any other industry, according to state records. When a Fallin aide contacted Devon Energy after the Prague quake, emails obtained by the news site EnergyWire show her office received a memo from the company that read in part: “There is no current evidence that oil and gas operations had anything to do with the recent large earthquakes in Oklahoma.” According to EnergyWire, the memo was circulated among state officials for use as talking points. Fallin declined to comment for this story.

In September 2014, after legislative hearings on the cause of the quakes, state representative Mark McBride, vice chair of the energy and natural-resources committee, released a statement saying: “Currently, there is no scientific evidence that there is a correlation between the injection wells and seismic activity.”

It would take another seven months until the state belatedly acknowledged what the scientific community and many in the public already knew. “Until about a year ago, I think they were trying to pretend that we didn’t exist,” says McGarr, the USGS geophysicist. “But they were finally forced into the realization that their techniques that led to enormous volumes of wastewater disposal have led to some large, damaging earthquakes.”

By April 2015, the OGS abruptly reversed course and released a statement saying the agency “considers it very likely” that there’s a tie between disposal-well volumes and earthquakes. Still, many remain hesitant to point the finger at the industry that made Oklahoma. In Fairview, where an oil well greets visitors as they enter town, some residents say they’ve heard the rise in quakes could be linked to the recent drought. The mayor of Oklahoma City, who worked closely with energy firms and their executives to help revive the city’s downtown, also questions the relationship.

“I don’t know what’s causing them,” says Mayor Mick Cornett. “I have no idea. How would I know?” When told geologists believe there’s a link, Cornett, who says the city is not making any special preparations for a big one, replied, “Well, I’m not a scientist.”

The agency tasked with regulating the energy industry is the Oklahoma Corporation Commission (OCC), a state body formed in 1907 to oversee utilities and private companies that provide public services. Before the state’s about-face on quakes, the OCC took limited action on disposal wells. Since then, it has issued more than a dozen directives to energy companies to close down disposal wells, limit their depths and lower their wastewater volumes. After a series of quakes in Edmond, an affluent suburb of Oklahoma City, the most stringent orders yet were issued this year. They cover 10,000 sq. mi. and 600 disposal wells in the seismic hotbeds in northwestern and central Oklahoma. From June 2015 to January 2016, wastewater disposal has fallen by 451,000 barrels per day, according to state officials. The new orders would cut an additional 800,000 barrels a day.

“We’re taking on much larger programs than in the past,” says Tim Baker, head of the OCC’s oil and gas division. “And we’re not going away.” Wastewater volume, however, is self-reported, and the OCC has just 55 inspectors to check more than 1,000 Arbuckle disposal wells. “I’m not going to say that every report is perfect,” says OCC spokesman Matt Skinner. “On wells we deem critical, we are hands-on. Our inspectors are there and reading the meters.”

Others point to parts of Arkansas and Kansas that have reduced seismic activity tied to disposal wells. But Baker says those instances are more isolated. Arkansas, for example, only needed to plug four wells to halt quakes. “Our problem has always been the magnitude,” Baker says.

Oklahoma secretary of energy and environment Michael Teague admits the state’s initial response was slow but points to the $1.4 million in emergency funding Fallin recently directed to OGS and OCC as evidence of a revived commitment. “We’re putting resources into research because we need to understand the problem,” Teague says, adding that the governor is “absolutely engaged in this. It’s [part of] every cabinet meeting.”

The energy industry, however, has not had a similar conversion. In December, SandRidge Energy defied an OCC directive to shut down wells in Alfalfa County, relenting only after the commission threatened legal action. Warmington, who leads the industry’s largest trade group, admits to a correlation between injection activity and earthquakes but will not say that disposal wells are the cause. “We’re not denying there’s a tie, but the science is evolving,” he says.

As quakes continue, many residents are learning that they’re not covered for damage. The state’s insurance department estimates that 15% to 20% of residents now have earthquake insurance, but it’s typically catastrophic coverage, meaning homes often need to be lying in a pile for a successful claim to be filed. Most residents instead are dealing with the cumulative toll of dozens of smaller quakes.

“What pisses me off is that we’ve changed the assumption of risk to live in the state of Oklahoma, and we seem to be O.K. with it,” says state representative Cory Williams, a Stillwater Democrat whose bill requiring insurers to cover induced earthquakes failed in the legislature.

“This is death by a thousand cuts,” says David Poarch, a lawyer behind a lawsuit against 12 energy firms. Poarch’s suit is one of several, including one filed by the Sierra Club in February, attempting to limit disposal-well volume.

Whatever the outcome of those suits, the slumbering oil economy may prove to be its own watchdog. In March, there were just 70 active oil rigs in the state, down from a high of 214 in September 2014. Wastewater-disposal volumes also decreased in 2015. And the number of quakes is down by about 20% in 2016 compared with last year.

But even as the oil boom recedes, its dangerous legacy will remain. Earthquakes create their own momentum: the more magnitude-3 quakes you have, the more 4s; the more 4s there are, the more 5s–and Oklahoma is already on pace to have more 4s this year than in 2015. Some researchers worry about even longer-term consequences. Daniel McNamara, a USGS geophysicist, says he believes if all disposal-well activity stopped today, the state could still have earthquakes for decades. “I have never seen anything like it and never read anything like it in history,” he says.

Later this month, the USGS plans to release its new earthquake-hazard map, which cities and states use when creating building codes and calculating insurance rates. The map, which had been based on a 50-year time horizon, used to come out every six years and never included induced earthquakes. But Oklahoma has changed the agency’s calculus. The map will now be released annually and will include man-made quakes. USGS officials say Oklahoma will look a lot like California: a big splotch of bright red.

Living inside that red zone will be residents like Spotts. In the fall, she and her husband were sitting on the sofa when a 4.3 quake hit Stillwater. “It whiplashed us,” she says. “We looked at each other and said, I don’t want to own a home anymore. How do we live here and grow old?” They want to move but worry they won’t get enough for their home given the quakes. “I’m not going to run from the fight,” Spotts says. “But I don’t know if I can live in it anymore.”

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