A company is asking the Oklahoma Corporation Commission to stop a driller from fracking near an underground natural gas storage facility.
Oneok Gas Storage requested Red Bluff Resources Operating to not do a hydraulic fracturing project near Oneok’s Edmond Gas Storage Unit and facility. The Journal Record’s Sarah Terry-Cobo reports Red Bluff’s project would run a lateral wellbore underneath a substantial portion of the underground storage cavern. She writes Oneok is concerned the frack job could damage the rock formation where the natural gas is formed.
Jacob McCleland: You’re listening to the Business Intelligence Report, a weekly conversation about business news in Oklahoma. I’m Jacob McCleland, and I’m talking today with Journal Record senior reporter Sarah Terry-Cobo. Sarah, thank you for joining us.
Sarah Terry-Cobo: Hi Jacob, thank you for having me, it’s great to be here.
McCleland: You recently wrote about one energy company’s effort to stop another from moving forward on a project. The players here are Oneok Gas Storage and Red Bluff Resources Operating. We’ll get to the conflict in just a second, but first, Sarah, who are Oneok and Red Bluff? What do they do?
Terry-Cobo: So Oneok is a natural gas pipeline and processing company. They were founded way back at the turn of the twentieth century to move natural gas through pipelines. Now they also do that, moving natural gas across state lines and they also serve electric power plants. And also take natural gas from wellsites and send them to big processing stations. And Red Bluff is a private oil and gas driller.
McCleland: Ok, great. Now here’s where it gets interesting: Oneok operates the Edmond Gas Storage Unit and facility. As I understand this, this is kind of a cavern where Oneok stores natural gas. A big underground cavern. Is this kind of a gross oversimplification?
Terry-Cobo: Not really. This particular “cavern” so to speak isn’t like a cave. It’s more like an old oil and gas reservoir that has had all the petroleum sucked out of it. That is one place where companies store natural gas under pressure before it is sent in a pipeline to an electrical power plant. Oneok operates four natural gas storage fields, all of them old reservoirs. They basically inject the gas, store it under pressure until it is needed, then they draw it out again and send it on down the pipeline.
McCleland: So Oneok asked the Oklahoma Corporation Commission to stop Red Bluff from moving forward with a hydraulic fracturing project. Explain for us why they don’t want Red Bluff to do this project?
Terry-Cobo: Because this well has a horizontal wellbore that’s really close to the bottom of this gas storage reservoir. Red Bluff estimated in its regulatory documents that is about 300 feet or so from the bottom. But Oneok’s engineers think it might be a lot closer. And because it is really hard to predict exactly where the actual fractures will go in any frack job, Oneok wants to make sure there is no potential for that frack to damage the underground storage reservoir. They asked a Commission judge to temporarily halt the frack or any other remedial operations.
McCleland: What has Red Bluff done a s a result?
Terry-Cobo: So at first they gave Oneok a week to do some analysis, which is what is required by law, according to Oneok’s filings with the commission. But then when Oneok asked for more time for an analysis, Red Bluff wasn’t really on board. So Oneok asked the commission for an emergency to stop the frack and take more time to examine the storage reservoir.
McCleland: What is the Corporation Commission doing as a result of Oneok’s request?
Terry-Cobo: So it is in the hearing docket before an Administrative law judge. There was a bit of back and forth, but there will be a hearing before a judge on July 10th.
McCleland: I’m not terribly familiar with underground natural gas storage facilities. Are there instances of these facilities being damaged in the past?
Terry-Cobo: Yes. Well there was one in Texas that was in an actual salt cavern, way back in 2004, another one in Kansas that resulted in some gas explosions that damaged 26 businesses and caused two deaths. But perhaps the most notable one was Aliso Canyon, that’s outside Los Angeles. So the leak in the natural gas storage reservoir started in October 2015 and continued for four months until officials could get it under control. About 4,000 homes in the area had to be evacuated because natural gas, or methane, as it is sometimes called, is hazardous to breathe. That is considered the largest natural gas leak in U.S. history.
It also lead this quasi-governmental agency to set guidelines for policy makers. That’s what the Interstate Oil and Gas Compact Commission, or I-O-G-C-C, did. They released this underground gas storage guide for policymakers back in May. And the Aliso Canyon incident showed that many states don’t really have any rules to protect underground gas storage caverns.
McCleland: When will the Corporation Commission make a decision?
Terry-Cobo: Hard to say, really. The hearing is set for the 10th, but there can always be delays if either side request more time. A judge can make a recommendation, which then goes to the three-member panel and the Commissioners must vote by majority to make an order final.
McCleland: I’ve been talking today with Sarah Terry-Cobo. She’s the senior reporter at the Journal Record newspaper. Sarah, thank you so much.
Terry-Cobo: Absolutely. It’s my pleasure, Jacob.
McCleland: KGOU and the Journal Record collaborate each week on The Business Intelligence Report. You can find this conversation at kgou.org. You can also follow us on social media. We're on Facebook and Twitter, @journalrecord and @kgounews.