Northern Culberson-Reeves Seismic Response Area – Up to 2 M Barrels per Day ofSWD Injection held at bay for Area Operators
In another blow to SWD operators in Texas, on October 20,2021, the Texas RRC established the Northern Culberson-Reeves (NCR) Seismic Response Area (SRA) due to an increase in 4.0 M or greater seismic events in the region. Fifteen 4.0 M or greater earthquakes have occurred in the region since January 1, 2020 with 6 of these events transpiring between September 3, 2021 and October 3, 2021. The RRC has determined that “SWD well injection is likely contributing to seismic activity in this area.”
The RRC has identified 88 SWD wells in the SRA, 45 of which have been actively injecting (as of this publication). Of the 45 wells actively injecting, only 9 have injected at rates higher than the RRC’s new proposed max daily injection, which they are assigning (proposing) on a well-by-well basis. For operators of the active wells, in aggregate injecting about 683K BPD currently, the restrictions will have noteworthy financial ramifications. The active well operators had allowable permitted daily volumes of 2,238 K BPD, about three times what they are currently injecting, meaning they should have been able to inject an incremental 1,555 K BPD. Now that growth outlook of 1,555K BPD has been restricted to 237 K BPD, with at least 9 wells restricted immediately.
The impact is highest for those investors and users of deep, high-rate wells. A number of these deep injectors have gone into the area in recent years; of the 43 permitted but inactive wells, 8 are permitted for between 50,000 and 90,000 BPD. Of the active wells, 21 are permitted at volumes 50,000 BPD or greater, and 10 are permitted to inject up to 90,000-100,000 BPD. While most are injecting nowhere close to these rates (only two are approaching 40,000 BPD), all of these wells have been pulled back to between 10,000 BPD – 30,000 BPD, which is where most of the “lost injection barrels” will come from.
Proposed cuts in max injection volume would cut total theoretical SWD capacity (both active and permitted but inactive) by nearly 2 million barrels per day, or 730 million barrels per year. (We note that disposal wells are regulated by two factors: maximum daily injection rates, and maximum surface pressure measurements. Many wells may attain maximum surface pressures before maximum volumes are achieved.)
While concrete details of plans to reduce seismicity in the SRA have not been laid out, the RRC has set forth a goal to reduce seismicity in the area, with no more 3.5 M or greater earthquakes after 18 months of implementation. The RRC has also called on industry to assist in coordinating the response plan, giving operators 90 days to reply. In the absence of a coordinated industry response, the RRC is “prepared to implement its own seismic response action plan for the NCR SRA after 90 days.”
For more information regarding NCR SRA: https://www.rrc.texas.gov/oil-and-gas/publications-and-notices/manuals/injection-disposal-well-manual/summary-of-standards-and-procedures/seismicity-review/seismicity-response/