PetroQuest Among Oklahoma Operators Told to Suspend Frack Waste

  • Regulators order shutdown after earthquake rocks state
  • Debt-laden company skipped interest payment last week

PetroQuest Energy Inc. was ordered to shut four of its wastewater-disposal wells in Oklahoma, just days after the oil and gas producer skipped an interest payment and said it may face bankruptcy.

The wells were among 37 ordered to suspend operations by the Oklahoma Corporation Commission, which regulates the state’s oil and gas activity. The regulator took the unprecedented action of mandating the shutdown of the wells within a 500-square-mile area around the town of Pawnee, the site of Saturday’s earthquake that measured 5.6 in magnitude, according to the U.S. Geological Survey.

Oklahoma, a region previously not known for intense seismic activity, began having a significant number of earthquakes in 2009, the same year area oil companies began using fracking to shatter deep rock layers to extract oil and gas. Fracked wells produce large quantities of wastewater, which drilling companies inject into ultra-deep disposal wells.

As oil production surged, so too did the disposal of wastewater from fracked fields that scientists have tied to earthquake activity. Today, there are about 35,000 active wastewater disposal wells, though only a few dozen have been linked to quakes, according to a Bloomberg Intelligence report in May.

PetroQuest Affected

PetroQuest was the only U.S. publicly traded company among the operators affected by the commission’s measure. The Lafayette, Louisiana-based company has until Sept. 10 shut in its wells, according to the commission’s mandate.

Officials from PetroQuest couldn’t be reached by e-mail or telephone Sunday to comment on the commission’s action or provide the total number of disposal wells the company operates in the state.

PetroQuest skipped an interest payment that was due Sept. 1 on $135.6 million in debt and said it may consider financing arrangements, “joint ventures, asset sales, exchange offers and a filing under Chapter 11 of the U.S. Bankruptcy Code,” according to a regulatory filing. The company operates mainly in the Texas, Gulf Coast basin and Oklahoma regions.

First Time

This was the first time the state regulator has issued the mandatory measure, commission spokesman Matt Skinner said by telephone. Governor Mary Fallin signed a bill into the law that provided such powers last April.

The number of earthquakes measuring 3.0 or higher reached 890 last year, followed by 375 this year through June 22. At that rate, the number of earthquakes would fall to less than 800 this year, still a far cry from only two in 2008. Saturday’s quake tied a state record set in 2011.

State agencies and scientists were working to piece together what caused Saturday’s earthquake, Jefferson Chang, research scientist with the Oklahoma Geological Survey, said by e-mail.

“As an earthquake physicist in Oklahoma, one of my goals is to determine how to differentiate between tectonic versus human-induced earthquakes,” he said. “It’s a hot topic, especially in this state, and there is no clear answer to that question yet.”

Officials for Enterprise Products Partners LP, Kinder Morgan Inc., Magellan Midstream Partners LP and Enbridge Inc., which operate petroleum terminals, pipelines and storage facilities in Cushing, said their sites sustained no damage and that operations were normal.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE