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Shale gas 'fracking' halted after possible quake link Add to ...

Already under fire over perceived threats to local water sources, the natural gas industry is facing a new challenge: earthquakes.

A small energy company halted its shale gas drilling and hydraulic fracturing program in Britain after two mild earthquakes were recorded in the vicinity, an area where such tremors are rare.

The rapid development of massive reserves of unconventional shale gas has transformed the North American energy industry, making abundant natural gas the fuel of choice for the electricity sector. Oil and gas companies that had planned to import liquefied natural gas are now looking at exporting surplus gas to Asia and other markets.

European countries are eager to replicate that shale gas boom. However, environmental issues threaten to stall development in Europe, even as U.S. states such as New York and Texas clash with Washington over federal regulation.

Now, the controversial drilling activity is being linked to earthquakes - first in Arkansas, where companies are developing the prolific Fayetteville play, and now at Britain's first shale gas exploration site, near Blackpool in northwest England.

U.K.-based Cuadrilla Resources suspended its hydraulic fracturing - in which chemically laced water is injected at high pressure to crack open gas-bearing rock - pending a review of the seismic activity near the Preese Hall drilling site.

The British Geological Survey said it recorded a 1.5-magnitude earthquake on Friday, following a 2.3-magnitude quake in April, both near the drilling site operated by Cuadrilla. Neither caused any damage.

In a statement posted on its website, the BGS said evidence suggests the high pressure "fracking" - as the process is also known - may have caused the quakes.

"The timing of the two events in conjunction with the fluid injection suggests that they may be related," it said.

In Arkansas, the state's oil and gas commission and the Arkansas Geological Survey said they have found no evidence that drilling or hydraulic fracturing caused a series of earthquakes there this spring.

But they have not ruled out a link to the companies' practice of reinjecting wastewater into the geological structures.

"We see no correlation" between the drilling and fracking and the earthquake activity, AGS director Bekki White said in a telephone interview Wednesday. "As far as whether it is related to injection of fluids, we still have not determined whether it is or whether it is naturally occurring."

She said the area is known as a highly active seismic zone.

The state's oil and gas commission has imposed a moratorium on the drilling of new reinjection wells in Arkansas until the end of July. Companies such as BHP Billiton Ltd. and Clarita Operating LLC have said they will not inject wastewater into existing wells until the moratorium is lifted.

BHP acquired the property in Arkansas in March as part of a $4.75-billion (U.S.) acquisition of U.S. shale gas assets from Chesapeake Energy Corp.

Company spokesman Rubin Yogarajah said BHP is working with regulators to resolve concerns about water injection and seismic activity.

"Our goal is to develop the Fayetteville Shale in line with our values of ensuring that we fully protect people, the environment and communities in which we operate," he said.

BHP and Clarita face class-action lawsuits from residents who claim the gas drilling triggered earthquakes, poisoned water sources, and caused other pollution. The industry says the area has naturally occurring seismic activity as well as methane in well water.

The shale gas boom has triggered battles between industry and the environmental community, and state and federal regulators over the potential threat to local water sources from not only drilling and fracturing, but the disposal of wastewater.

In Canada, Quebec imposed a partial moratorium on shale gas drilling pending further study, but the industry is booming in Western Canada, and small-scale exploration programs are planned in New Brunswick and Nova Scotia.

This week, New York Attorney-General Eric Schneiderman sued the U.S. federal government to force the Delaware River Basin Commission to undertake more extensive environmental reviews below allowing shale gas drilling in the basin, which provides drinking water to New York City, Trenton, N.J., and Philadelphia.

Texas has passed a law requiring companies to reveal some of the chemical ingredients of the fracturing fluid, and warned the Obama administration that it would oppose all efforts to impose federal regulations.

Travis Windle, spokesman for industry group Marcellus Shale Coalition, condemned the "frivolous lawsuits and more unnecessary regulatory red tape - which will add no environmental benefit." The association represents companies developing the prolific Marcellus deposit in Pennsylvania and West Virginia, including Calgary-based Talisman Energy Corp.

But environmentalists argue there are simply too many questions about the safety of hydraulic fracturing to allow drilling without environmental assessment of the site.

Kate Sinding, of the Natural Resources Defense Council, said that while the earthquake itself was not dangerous, it provides disturbing evidence that fracking fluids could find their way into water supplies.

"There are these persistent questions which I don't think anybody has answered yet about the potential for long-term migration of contaminants," Ms. Sinding said.

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