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Man-Made Earthquakes Aren’t Just Real—They’re Officially An Insurance Risk

by Ben Jervey

June 12, 2017
EPA Administrator Scott Pruitt by Gage Skidmore via Wikimedia Commons (cc)

Before Trump picked him to oversee the Environmental Protection Agency, Scott Pruitt served as Oklahoma’s attorney general from 2011 until 2017. Over the course of his controversial tenure, an epidemic of earthquakes emerged. Though the Sooner state is “lousy with fault lines,” these quakes weren’t exactly the natural ground-rumblers my colleagues might experience in GOOD’s Los Angeles offices. Instead, nearly all of this seismic activity has been caused by the deep underground injection of salty wastewater, a troublesome byproduct of hydraulic fracturing—otherwise known as fracking for oil and natural gas.

According to the U.S. Geological Survey, prior to 2009, when oil and gas fracking in Oklahoma and neighboring states really started to boom, Oklahoma experienced roughly two earthquakes a year. Now, the state sees as many as two or three earthquakes each day, leaping from an annual average of 99 between 2009-2013 to 585 in 2014. By 2015, the state endured 887 earthquakes, including 30 that topped 4.0 on the Richter scale. 

Graph courtesy the U.S. Geological Survey.

The oil and gas industry has tried to dismiss these “induced” tremors as minor, sowing doubt about their causation. But the national USGS as well as Oklahoma’s own Geological Survey have since made it clear that oil and gas wastewater caused these quakes. And last week, for the first time ever, the insurance industry made it clear that these earthquakes are a serious economic threat.

On Thursday, RMS, the risk management analyst for the insurance industry, released models factoring “induced” (or manmade) earthquake risk, intended to assist companies in setting appropriate insurance premiums.

Image via Twitter / U.S. Geological Survey.

Buried in its otherwise technical press release is this stunner (emphasis mine):

The model now includes induced seismicity, making it the first available tool on the market for analyzing property risks from man-made earthquakes across Oklahoma, Kansas, Ohio, Arkansas, Texas, Colorado, New Mexico, and Alabama. This functionality will allow clients of RMS to consider risks from earthquakes linked to oil and gas extraction.

The economic impact may run in the billions, according to this RMS blog post previewing the new model:

As for Oklahoma, the situation is becoming critical as the seismic activity shows no signs of stopping: A swarm of induced earthquakes has erupted beneath the largest U.S. inland oil storage depot at Cushing, and in September 2016 there was a moment magnitude 5.8 earthquake located eight miles from the town of Pawnee—which caused serious damage to buildings. Were a magnitude 6+ earthquake to hit near Edmond (outside Oklahoma City) our modeling shows it could cause billions of dollars of damage.

Tally this up as yet another real economic cost of America’s unrestrained pursuit of energy dominance, on top of the myriad of environmental, health, and social costs.

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Man-Made Earthquakes Aren’t Just Real—They’re Officially An Insurance Risk