American Oil and Gas Reporter - September 2015 - 155

ConventionCoverage: Kansas Independent Oil & Gas Association
wells in the counties' five areas of "seismic
concern," based on their "seismic action
scores." He said those limits impacted
23 of 74 wells within the five zones.

Lasting Repercussions
W. Lynn Watney, a senior scientific
fellow at the KGS, posited there likely
was a link between high volumes and
rates of brine disposal and earthquakes,
since KGS geologic and engineering
models indicated that injection had increased pore fluid pressure and likely
stress acting on faults in the Sedgwick
Basin.
He commented that Kansas was not
alone, showing a map of areas with suspected nontectonic activity ranging from
Utah to Alabama.
"However, there is not a one-and-one
correlation between barrels of oil equivalent produced or brine injected in a well
and specific earthquakes," Watney added.
"We cannot jump to conclusions based
on a few months of data," he continued,
alluding to the drop in seismic activity
since March. "But, we can watch what is
happening in Oklahoma's Mississippian
Lime play, where injection and production
have been fairly steady, while Kansas'
Mississippian production activity has declined."
Buchanan reported that the KGS was
installing more seismic monitoring stations
in south-central Kansas, mentioning that
the KGS was participating in an induced
seismicity work group involving 24 states,
the Interstate Oil & Gas Compact Commission, and the Ground Water Protection
Council.
In response to a question about why
the Sedgwick Basin, where the Harper
and Sumner county disposal wells are
located, is so impacted by seismicity,
Buchanan called the Arbuckle formation,
which runs through much of central
Kansas, the "poster child" for exposing
high-porosity units right above basement.
"Conversely, the Bakken is the poster
child for pockets of disposal wells without
increased seismicity," he said. "It takes a
very unusual set of circumstances for
(induced seismicity) to happen. There
has to be high-porosity units above the
basement, and the faults you are transmitting to have to be oriented so that it
doesn't take much pressure to move them.
While we seem to meet those criteria in
Harper and Sumner counties, and in Oklahoma, there are many parts of the state
and country that don't."
❒

KIOGA Speakers Emphasize
Geopolitical Energy Trends
WICHITA, KS.-The domestic energy
market is one thread in a vast web, interwoven with several global-scale threads.
And to understand this web's local aspects,
one must first look at the whole interconnecting web, a market analyst recommends.
During KIOGA's membership luncheon Aug. 3, global energy analyst Kent
Moors gave his keynote presentation on
the geopolitical, financial and industrial
factors influencing oil markets.
The executive chair of the Global Energy Symposium and founder/editor of
Oil and Energy Investor, Moors commented, "Few people expected oil prices
to get this low this fast."
He predicted that, by January, West
Texas Intermediate prices would reach $72
a barrel and Brent would go to $80.
According to Moors, since the shale
revolution began, the oil market has been
in a three-way deadlock among Russia, the
Organization of Petroleum Exporting Countries, and North America. "Eventually, the
price was being determined by how much
oil America was bringing on line," he said.
Thus, OPEC chose to flood the market,
sacrificing price to maintain market share,
he explained.
However, Moors pointed out that many
countries within OPEC were split in their
ability to absorb these low prices. While
larger producers such as Saudi Arabia
can, he said smaller ones such as Angola
could not. Consequently, he opined, OPEC
collectively cannot and likely will not
continue this strategy for much longer.
Even so, Moors theorized that OPEC
was so concerned with maintaining market
share in the face of the U.S. shale boom
because it was a "dry run or dress rehearsal"
for the years to come. "The United States
and Canada account for only 14 percent
of global shale resources," he explained.
"China is the country with the most extractable shale oil; the United States is
only fifth. Those other countries are several
years away from developing their resources,
but when they do, OPEC still will want to
maintain as much market share as it can."
Moors predicted the Iranian nuclear
agreement would not affect oil prices for
18 months. He noted that Iran's oil fields
were very old, and he figured it would
take at least a year to bring in the necessary
investment and equipment to put them
back on line.

Moors said Asia would continue to
drive demand, and predicted Saudi Arabia
would have to lower its premiums to
Asia to maintain market share. "Saudi
Arabia's entire strategy is based on the
assumption that the U.S. export ban will
be lifted soon," he stated.

Securing Energy
The interrelationship between energy
and national security also was addressed
by KIOGA's breakfast keynote speaker.
Former Congressman and retired Lieutenant Colonel Allen B. West, who now
serves as president and chief executive
officer of the National Center for Policy
Analysis, shared his beliefs on energy's
geopolitical importance.
West highlighted the relationship between energy and national security by
citing examples from World War II. "The
main reason Japan attacked Pearl Harbor
was because we cut off its supply of raw
materials and energy resources," he recounted. "One of the German Panzer divisions' main targets during the Battle of the
Bulge was an American fuel depot. Energy

While Iranian oil appears to be on its
way to the world market, U.S. production
continues to face restrictions, observes
former Congressman and retired Lieutenant Colonel Allen B. West, who now
serves as president and chief executive
officer of the National Center for Policy
Analysis. West's remarks discussed energy's central importance in military preparedness and national security.

SEPTEMBER 2015 155

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