At a time when Shell and other companies have downplayed their investment in northern Oklahoma and western Kansas, Oklahoma City-based SandRidge Energy Inc. is confident efforts in the area will pay off.
“This is the No. 1 project for us. This is the entire focus of the company, our capital and our intellectual capital. So this is what we do very well,” CEO James Bennett said during the company’s analyst day last week.
One challenge companies face in the region is what to do with the large volumes of high-salinity water produced along with the oil.
The rock layers that contain oil typically also hold large amounts of saltwater. The average well in Oklahoma produces 10 times as much water as oil, but in the Mississippian, that ratio can climb as high as 20 to 1. The water also tends to be three to five times saltier than the ocean.
Since 2010, SandRidge has spent nearly $500 million to build a network of 160 saltwater disposal wells and 900 miles of pipeline along the Oklahoma-Kansas border. The system is pumping underground about 41 million gallons of saltwater every day and has a capacity of more than twice that amount.
“This system is very important in supporting our growth in the Mid-Continent,” Bennett told The Oklahoman on Friday. “We were a first-mover in terms of installing a robust pipeline-based produced water system in the Mid-Continent.”
The system all but eliminates the need for trucking water from the well sites at a cost of about $2 per barrel.
The Oklahoma Geological Survey, the U.S. Geological Survey and others have been studying whether the state’s swarm of quakes over the past few years could be connected with water disposal wells like what SandRidge has built along the Oklahoma-Kansas border.
One report co-authored by a former University of Oklahoma professor and a U.S. Geological Survey researcher connected the state record 5.7 magnitude quake in 2011 to an injection well near Luther, but the Oklahoma Geological survey has said the incident appears “consistent with a natural earthquake.”
Injection and disposal wells have been used for much of the state’s history. While oil and natural gas activity has picked up in Oklahoma in recent years, oil and water production still pale compared to levels seen in the 1980s and 1920s.
The Oklahoma Corporation Commissioner this month unanimously approved rules requiring water injection well operators throughout the state to collect daily information on injection volume and pressure.
If approved by the Legislature, operators would have to provide the information if the commission asks for it.
SandRidge has supported the rule changes and has been meeting the proposed requirements since the system was built three years ago, Bennett said.
“We’re more than happy to comply,” he said. “We think it makes a lot of sense.”
Bennett pointed out, however, that it is still unclear whether industry activity has played any role in the quakes.
“We can’t make the mistake of confusing correlation with causation. The organizations studying this haven’t found evidence that explains the relationship between natural and induced seismic activity,” he said.
“We do know the nature of our business gives us a lot of access to geologic data. The best thing we can do is support the work of those taking this data. When it comes to understanding activity, our most important role is to facilitate that science. We will continue to work with OCC (Oklahoma Corporation Commission), OGS (Oklahoma Geological Survey), OIPA (Oklahoma Independent Petroleum Association) and similar groups in Kansas and Texas to make sure we’re responsible corporate citizens and community partners.”