April 9, 2018 / 6:15 PM / a year ago

UPDATE 1-Oklahoma orders cut to disposal well volumes following quakes

(Adds comments from OCC and Blueknight Energy Partners)

By Liz Hampton

HOUSTON, April 9 (Reuters) - Oklahoma regulators forced an oil and gas producer to reduce operations on a well used for disposing saltwater following a large earthquake over the weekend that set off a series of seismic activity in the state, Matt Skinner, spokesman for the Oklahoma Corporation Commission (OCC), said on Monday.

The temblors occurred near Perry, Oklahoma, in the northwestern part of the state, within an area singled out by regulators for the frequency of earthquakes from oil and gas production activities.

The first quake occurred on Saturday, registering at magnitude 4.6, and was followed by several others, including a magnitude 4.5 earthquake that hit near Perry early Monday morning, according to the U.S. Geological Survey.

The OCC forced M M Energy Inc to reduce operations on Saturday on a disposal well in the area from 17,000 barrels per day (bpd) to 5,000 bpd, Skinner said.

“This is an ongoing situation, and further actions are possible,” the OCC wrote in a notice issued midday Monday.

A representative for M M Energy did not immediately respond to a request for comment.

The reduction will be phased in with the final volume reached no later than 30 days, Skinner added.

It was unclear whether the directive had impacted production.

Disposal wells have been blamed for an uptick in earthquakes across the state in recent years, which topped out at 903 magnitude 3.0 or greater earthquakes in 2015 versus just 35 quakes per year in 2012, according to the Oklahoma Geological Survey.

The Oklahoma Corporation Commission has since issued tougher regulations on oil and gas operators in affected areas in a bid to curb the quakes. The frequency of magnitude 3.0 or greater earthquakes fell to just over 300 last year.

Perry, Oklahoma, is about 50 miles from Cushing, a town sometimes referred to as the “Pipeline Crossroads of the World” and home to massive storage tanks. Currently, about 35 million barrels of oil are held in Cushing, according to the U.S. Energy Information Administration.

A spokesman for Magellan Midstream Partners, which owns about 12 million barrels of capacity at Cushing, said its pipelines and terminals were operating normally on Monday. Enbridge Energy Partners, which has about 20 million barrels of storage, also said there was no impact to its operations, and Blueknight Energy Partners said operations were normal.

Phillips 66 said its Ponca City refinery about 40 miles from Perry was not affected. (Reporting by Liz Hampton Additional reporting by Devika Krishna-Kumar in New York and Erwin Seba in Houston; editing by Diane Craft and Phil Berlowitz)

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