Path Home Shows 2014 Show Archive October 2014 Show 1442 Oklahoma Horizon TV Show 1442

Oklahoma Horizon TV Show 1442

This week on Oklahoma Horizon, we look at energy, earthquakes and our economy.
Oklahoma Horizon TV Show 1442

Oklahoma Horizon TV Show 1442

For more information visit these links:

Oklahoma Department of Energy

Oklahoma Geological Survey

USGS

OSU School of Geology

Cactus Drilling

Show Details

Show 1442: Oklahoma Horizon TV
Air Date: October 19, 2014

 

Transcript

Rob McClendon: Here’s what’s coming up on your “Horizon.” No one will argue that the energy sector drives our state’s economy – a firmly held belief that was first shaken on a Saturday night after an OSU football game. Look at the ESPN announcer on the right. See those wide eyes? That’s what you look like when you feel a 5.6 magnitude earthquake on the top of Boone Pickens Stadium.

Kirk Herbstreit: Just to let you know – dead serious, as I’ve been talking to you we just had, I think, an earthquake. Aftershock here, so.

Rob: A reaction not unlike many Oklahomans who have never felt the ground shake before. Today, our focus is on energy, earthquakes and our economy. This is a show you don’t want to miss. Stay with us for “Oklahoma Horizon.”

Male Announcer: “Oklahoma Horizon” is made possible by the Oklahoma Department of Career and Technology Education.

Female Announcer: Oklahoma’s investment in CareerTech provides more than nationally recognized technology education and training. It produces solid financial returns for the state’s economic future. Oklahoma CareerTech, elevating our economy.

Male Announcer: And the Oklahoma Department of Agriculture, Food and Forestry, helping good people grow good things. And now, from the CareerTech studios in Stillwater, here’s your host, Rob McClendon.

Rob McClendon: Hello, everyone. Thanks for joining us here on “Horizon.” Well, it’s hard to imagine an industry any more important to Oklahoma than energy. Not only does the sector provide one in four jobs in the state, it also generates one out of every three dollars in gross state product. With more here’s our Andy Barth.

Andy Barth: Well, with Oklahoma’s energy industry booming, Gov. Mary Fallin held her annual energy conference to showcase the industry’s success and what its future holds. And everyone in attendance is thrilled with its progress.

Andy: Energy plays a big role in Oklahoma’s economy.

Mary Fallin: Energy is one of our key industries in our state.

Andy: Which is why Gov. Fallin hosted Oklahoma’s fourth annual energy conference – an event highlighting the state’s energy success.

Fallin: Close to one third of our revenue is generated by some form of energy.

Andy: Since 2009, Oklahoma has seen a 69 percent increase in energy production. The state produced 111,000 barrels of oil in 2013 alone. Oklahoma ranks sixth in the nation in wind energy and ranks No. 1 when it comes to per capita infrastructure for compressed natural gas – leaving the state wide open for business.

Fallin: Oklahoma is seen, actually, and is rated as the No. 1 best place in the world by the Frasier Institute for oil and gas investment.

Andy: Resulting from high-tech improvements.

Jim Roth: We’ve been on the forefront of technological advances, whether it’s below ground or now with wind technology and how it’s improving with its capacity factors way up, and the numbers look a lot better.

Andy: Jim Roth is an environmental lawyer in Oklahoma and says as the energy industry advances many consumers will have more options.

Roth: You’re gonna see a lot of innovation. I think you’ll see the price of solar come down. You’re gonna start to see where farmers and ranchers and business owners and eventually many homeowners are starting to install energy capacity usage within their own built environment, and that’s a paradigm shift. And I think Oklahoma can continue to be on the front edge of those kinds of issues.

Andy: Currently, one in four Oklahomans are employed by the energy industry – an impact that continually drives the state’s unemployment rate down.

Fallin: We have frankly a low unemployment rate right now. It’s gone from 7 percent four years ago down to 4.5 percent. Oklahoma recognizes that you have to have the skill sets that are important to the energy sector, whatever form of energy it might be.

Andy: And because the energy industry is thriving in the state, U.S. Rep. Tom Cole says other industries are returning home.

Tom Cole: We see manufacturing being reignited. Energy costs are lower so a lot of jobs that we used to export are actually coming back to the United States.

Andy: And Cole says Americans see the value in domestically produced energy.

Cole: People see the advantages of energy security. You know, this has been a huge driver in our economy and producing millions of jobs. But right now we’ve got turmoil in the Middle East, and you haven’t seen gas prices shoot up. And people notice those sorts of things.

Andy: Oklahoma energy – powering and employing our state.

Andy: And while the industry continues to thrive, many companies can’t find enough skilled workers to hire, leaving a huge opportunity and challenge for the state when it comes to employment.

Rob: Well, thank you, Andy. Now, we do have several stories streaming on our website about the work underway to train the workforce to fill the energy industry’s job demand. Just head to okhorizon.com where we have those stories streaming under our value added section. Now, when we return we’ll examine the growth of earthquakes in the state and the threat they could have on our economy.

Male Announcer: You’re watching “Oklahoma Horizon,” featuring some of the good things that are happening in the great state of Oklahoma.

Rob McClendon: Well, the growth in drilling is sparking new life in communities around the state. According to the Corporation Commission, 2,600 new wells were completed last year. And amid all that activity, Oklahoma has seen an exponential growth in the number of earthquakes in the state. And whether that’s just coincidence or causal is a common subject of debate. Joining me now is our Courtney Maye.

Courtney Maye: Oklahoma is certainly shaking, passing California and topping the charts for the most seismic activity in the nation. And many people are pointing fingers at the oil and gas industry.

Courtney: Shawn Hull loves his new home but not all the cracks.

Shawn Hull: All right, here you see some of the cracks that have been repaired, and then with the earthquake last week have been unrepaired.

Courtney: A problem that went from bad to worse as the number of earthquakes grew.

Shawn: We were actually sitting in the living room, and people thought that a car hit the house, and I realized we were having an earthquake.

Courtney: The average number of earthquakes over a 3.0 magnitude in Oklahoma has increased from an annual average of less than five to more than 300 in 2014.

Todd Halihan: Now, we are quite seismically active. We actually passed up California for our rate.

Courtney: Todd Halihan is an OSU geologist who studies earthquakes around the globe and says there is increasing evidence that it’s injection well sites – not fracking – that is causing the growth in earthquakes in Oklahoma.

Halihan: Injection-induced seismicity is a very reasonable hypothesis for generating those. And they’ve done that with data analysis and with modeling of those phenomenon.

Courtney: And Halihan says this is not new news. Researchers have known since the ’60s that water injection produces seismic activity.

Halihan: That process was first shown to be a problem with causing seismicity back in the 1960s at a place called the Rocky Mountain Arsenal and followed up by an experiment where Chevron teamed up with the USGS to test the concept, and in the early ’70s they made their own earthquakes. And so they could show beyond a reasonable doubt that you could make an earthquake by injecting water.

Courtney: And that’s why Gov. Mary Fallin announced the launch of a Seismic Activity Council consisting of members from the oil and gas industry, the Oklahoma Geological Survey, the Corporation Commission and university researchers.

Mary Fallin: Basically, we know that Oklahoma’s always had seismic activity, but over the last couple years we’ve seen more seismic activity in our state, and that’s concerning to our citizens.

Courtney: And the governor says by linking scientists and energy experts already studying the issue together, the state can develop sound regulatory practices and policies.

Fallin: We think it’s important that we deal with factual information, accurate data, and to be able to collaborate and to share that information so that we can be able to tell the public what is going on in the state of Oklahoma and to address those concerns.

Halihan: We’ve never pumped this hard and this long into injection well system. And so we, we have some things we can go off of, but we’ve not done this experiment before to say absolutely what the risks look like.

Courtney: So while the scientists study, insurance agents like Barry Patton are keeping busy writing new earthquake policies.

Barry Patton: Originally there was probably less than 1 percent. Now, I would guess probably around, between 5 and 10 percent have either gotten it or asked about it -- one of the two.

Courtney: A growing demand for a policy that was once unheard of in this state.

Patton: About everybody that I do a review on or talk to asks about that. We’ve got to the point now where we just tell ’em about it anyway.

Courtney: A problem that Halihan says may not be going away anytime soon.

Halihan: The U.S. Geological Survey and the Oklahoma Geological Survey put out an announcement at the beginning of May saying our risk for something greater than a 5.5 had increased significantly.

Courtney: Not good news for homeowners like Hull.

Hull: This here is the garage.

Courtney: Who just keep finding more cracks.

Hull: And, uh, what you see is previously repaired cracks and also brand new cracks that are contributing to the old cracks as well. And a brand spankin’ new one right over there.

Courtney: Creating an environment that Halihan believes is not good for the industry either.

Halihan: It’s actually risky for both the citizens and the industry. And people look at it as citizens against the industry, but it’s actually risky for both of them. When they looked at which wells might be causing this, it’s typically a small number. Almost all injection wells operate aseismically – meaning they don’t cause earthquakes. It’s a small number that are at a really high rate. And so it doesn’t mean you have to shut the whole thing down; you have an option of pulling back part way. But the process that Oklahoma’s developed is being banned at various places around the world because of concerns about whether they can operate safely. And so without having a framework to do that here, where we have trouble trying to deal with people that are not operating as responsibly as they could, what happens is both people are put at risk and the industry is put at risk for people that are spending a lot of effort to make sure they’re doing it properly when other folks aren’t.

Rob: Now, Courtney, I think Dr Halihan’s comments were particularly interesting because, I was at the governor’s energy conference, and I had someone from the industry say the exact same thing to me -- that the industry needs to look at that relationship between the two and if there is something there, mitigate it.

Courtney: Well, changing how and how much water is injected into the ground could definitely affect a company’s bottom line. But at the same time, so could a class action lawsuit from a person who thinks that they’ve been harmed by the earthquakes.

Rob: What about the assertion that we hear that there is just more seismic activity worldwide?

Courtney: Well, according to Dr Halihan, he says that there’s no peer-reviewed research that suggests that from a global standpoint that we are more seismically active.

Rob: Final question. Does anyone know how strong these earthquakes could get?

Courtney: Dr Halihan said that a recent study just came out that said an injection induced earthquake could produce a 6.0 on the seismic scale. And he warns that that could be even stronger if a fault were already set to go off, and it pushed that over.

Rob: All right. Thank you, Courtney. Certainly something that I’m sure we’ll be talking about later. Thank you so much.

Courtney: You’re welcome, Rob.

Rob: Now, if you’d like to hear more from Todd Halihan on everything from the history of seismic-induced quakes to the false equivalencies we’re often guilty of here in the media, go to our website at okhorizon.com and look for this week’s video blog where I’ve included more of his comments.

Female Announcer: Still to come on “Oklahoma Horizon,” could your electricity bill be going down? But first, life on a drilling rig.

Rob McClendon: Well, while Oklahoma may well have diversified its economy in recent years, the rise or fall of the energy industry still makes a huge impact on the state. Oklahoma’s energy giants may make billions, but they also spend millions that spreads economic ripples throughout the state. And it all starts in some of the most remote places, with drilling crews that work rain or shine. It’s a taxing job but one that pays very well. We sent our Alisa Hines out to spend a day on one of those rigs, and she joins me now.

Alisa Hines: Rob, the old way of drilling was like this: Drill a hole, move the rig, drill another hole, move the rig and so on. Nowadays, with horizontal drilling, they can drill a hole in one direction and stay where they are, drill another hole in a different direction and still stay where they are, and continue until they’re finished drilling multiple wells in all directions. This keeps the drilling company’s footprint very small by disturbing less land, and it’s quite economical, too. We had the opportunity to go out with Cactus Energy to one such rig and see just what a day in the life of a rig crew is really like.

Alisa: Things are turning at Cactus Energy.

Greg Simpson: Right now the stage of the well that we’re in, we are going straight down.

Alisa: Down, down, down straight as she goes, until the horizontal curve. Greg Simpson is the tool pusher and says it’s an amazing feat.

Greg Simpson: If you don’t try to bend it at a 90 degree angle, it will come out still straight. You know, that’s the reason why it takes say like 900 feet or more, for one reason, to build your curve so you’re not bending the pipe.

Alisa: Kind of like throwing a curve ball just further than home plate. Directional driller Brian Loyd.

Brian Loyd: I’ve drilled a well that was 2 miles, lateral was 2 miles, and we was within 2 foot of where we was supposed to be when we finished that well, so you can [laugh] get very accurate, very accurate.

Alisa: Which isn’t a quick process.

Simpson: It normally takes us 11 to 13 days to drill a well at this depth. And the measured depth is say 10-7 and we usually go through ’em pretty quick.

Alisa: All done with a small crew.

Simpson: Your driller does just that. He’s there in the driller’s cabin. He’s the one that operates the rig, runs the rig, whether it’s tripping pipe or doing the actual drilling of the well itself. Then you have your derrick hand. Whenever we’re tripping pipe, he works up in the derrick, whether he’s loading the elevators to put pipe in the hole or to unlatch the elevators to wrap pipe back in the derrick. Then you have your motor man. He does everything. He kinda looks over the mechanical equipment but he also works on the floor during tripping activities. And then you have your two roughnecks. And they do everything from tipping pipe to making connections to helping out, whether it’s mixing chemicals for your drilling fluid to cleaning on the rig.

Alisa: And safety is key.

Simpson: You’ve got two things here – safety and money. Safety comes first because if we’re not safe, well, then can’t anybody make any money. Because first of all, you just really don’t want to get nobody hurt. I mean, after all, that’s a human being, and you want them to go home the same way that they came.

Alisa: Rigs so technologically advanced, safety is much easier.

Simpson: This style of rig that is behind me, the only time that we use tongs is to make the bit up or to break the bit and then we set them back down on the ground. We have an iron roughneck that we call an SD-80. It makes the pipe up, torques the pipe or breaks the pipe and spins it out. So you’re saving a lot of chances there for smashing body parts, being in a pinch point, you know, and so that, that has changed dramatically and made it tremendously safer.

Alisa: For long-term driller Sam Maddox, he likes working on this particular rig.

Sam Maddox: Most of them are all break-handle rigs – the older ones. I mean, this, you’re on the floor in the weather. This is a Cadillac rig – out of the weather, good environment. It’s changed a lot.

Alisa: And after 87 hours on the job --

Maddox: I’m going home.

Alisa: Even with the long hours away from home, it’s a job that Simpson says he enjoys.

Simpson: It’s a good living. It’s a hard living physically and mentally at times. But it’s a good living. I’ve been in it for about 27 years, I mean, this is all I’ve ever done.

Alisa: Making a good living drilling for what runs the world – one oil well at a time.

Rob: So Alisa, 87 hours in a week sounds like a heck of a lot of time to be at work.

Alisa: Shifts for drillers like Cactus Energy are typically 12 hours, then the crew goes off-site and cleans up at a bunkhouse. The good news is they actually only have to work one week on and then one week off, making it a little easier on the crew -- all except the directional driller, and he has to stay until the drilling is complete.

Rob: Now, I’ve heard people say that on some of these rigs, they work in just all types of weather.

Alisa: Yes, they do. Whether it be thunderstorms or ice storms, drilling will continue -- with the exception of too much ice that makes it hazardous or lighting that is also hazardous. And when we shot, it was in the heat of summer, and we had to wear the same fire retardant clothing the crew does. And I can tell you – those aren’t comfortable in the heat either.

Rob: So what about tornados?

Alisa: Well, Rob, since many are out on the plains in the open, they do have to contend with tornados. In fact, Cactus Energy lost a rig when a tornado picked it up, turned it around, and sat it back down – only not in the same shape as it found it in.

Rob: So what did the crew do in that situation?

Alisa: They actually have one of their buildings that is tied down and designed to withstand tornados that they all go and get in to ride out the storm.

Rob: All right. Interesting story, Alisa, and certainly an interesting job. Thank you so much.

Alisa: You’re welcome, Rob.

Rob McClendon: Want to share something you’ve seen here today? Well, all of our episodes are streaming on our YouTube channel at OklahomaHorizonTV, or you can subscribe to our weekly free podcast on iTunes.

Rob McClendon: Well, the U.S. energy boom has wiped out predictions made not so long ago that America’s demand for energy would make us vulnerable to unstable governments halfway across the globe that put simply, just don’t like us very much. Last year, domestic energy production fulfilled nearly 85 percent of U.S. demand, changing the geopolitics that have long been tied to our energy security. But you don’t have to look around the globe to see the impact the growth in domestic energy production has, just open up your electricity bill. Thanks to compressed natural gas, or CNG, electricity rates have fallen in states that use the cleaner burning fuel to power our homes and businesses. Now, earlier, I visited with Jason Brown, an economist with the Federal Reserve Bank in Kansas City, about the cost of electricity in the wake of growing natural gas production.

Rob: So, Jason, if you will, we’ve set the state for us about where we get our electricity and how we generate it.

Jason Brown: Yeah, sure. So most of our electricity are, is generated from three traditional sources. Coal, by far, is the largest source, followed by natural gas and nuclear fuel.

Rob: Uh huh, and we’ve seen a real push to get away from coal, at least here in this part of the country, and move towards natural gas. What could that mean for prices?

Brown: Yeah, so, there’s a couple things that’s happened with the, uh, large increase in the domestic supply of natural gas. It’s creating an abundance of natural gas, and so that’s gonna put downward pressure on the price of natural gas because quite honestly we don’t export very much out of the country. And within the United States, within a domestic market, utilities is the largest end-user of natural gas. And so, with the recession, another thing that happened was, it was also putting downward pressure on crude oil and natural gas prices in general. And you have this large supply come online at about the same time so what utility companies or power generators decided to do, or think about in the face of aging coal-fired plants and in the face of potentially more stringent environmental regulations that would cause the total cost of production from a coal-fired plant increasing, we’ve starting to see a shift in, towards more natural gas. So in the near term what we’ve seen is due to lower natural gas prices. Those states in which more of the electricity’s been generated from natural gas, they’ve actually seen their electricity prices fall.

Rob: Now, I’m assuming these shift towards natural gas isn’t something that can happen quickly just because of both cost and just the technology of making, building a new plant.

Brown: That’s right. That’s exactly right. So obviously there’s capital expenditure in switching, and so most often what we’re probably more like to see is that coal-fired plant would be converted to natural gas-fired plants instead of, you know, like building a brand, a brand new facility.

Rob: So if the natural gas industry is successful in getting people to switch over to natural gas, electricity production, as well as using more natural gas in their vehicles, could the laws of supply and demand, could they come into effect here about prices?

Brown: Absolutely. And so I think that’s one of the concerns that we hear, just from some of our, our business contacts is that some utility companies are a little bit more, are a little bit, uh, concerned about how quickly or their likelihood of switching a lot of their generation to natural gas. The reason is, is because historically natural gas prices have been much more volatile compared to coal and although they’ve been less volatile compared to petroleum products used for electricity generation. And so right now we’re in a low price environment and, uh, you know, general forecasts are that the prices will remain low, although the Energy Information Agency out of the Department of Energy is forecasting 30 percent rise in natural gas prices over the next five years or so. So because of that potential price increase I think some are looking towards converting, but they’re recognizing that they still need that diversified portfolio.

Rob: Yeah.

Brown: You mentioned on the demand side, so as I mentioned, utilities are already the largest end-user. The second largest end-user in the United States are actually for industrial use. So for, think of chemical manufacturing is a good example. And so that, that, there might be, you know, more demand that will come from the domestic market in that way too as domestic manufacturing finds it a comparative advantage and relatively cheaper for natural gas.

Rob McClendon: You can keep up with us throughout the week. Just head to okhorizon.com where you can see more of any of our stories, read our reporters’ behind the scenes blogs, see what others are saying about us on Twitter and face the facts with our regular updates. So reach out and touch us anywhere, at anytime.

Rob McClendon: Next time on “Oklahoma Horizon,” we’ll look at local food in neighborhood schools.

Student: It’s pretty good.

Rob: And guess who we ran into in southeastern Oklahoma?

Kids: We found Bigfoot.

Rob: That and more on Oklahoma’s show for the heartland, “Oklahoma Horizon.”

Well, looks like we’re about out of time. I’m Rob McClendon. Thanks for watching. See you back here next week.

Male Announcer: Thank you for watching “Oklahoma Horizon.”