In the months after Sept. 11, 2001, as U.S. security officials
assessed the top targets for potential terrorist attacks, the
small town of Cushing, Okla., received special attention. Even
though it is home to fewer than 10,000 people, Cushing is the
largest commercial oil storage hub in North America, second only
in size to the U.S. government's Strategic Petroleum Reserve.
The small town's giant tanks, some big enough to fit a Boeing
747 jet inside, were filled with around 10 million barrels of
crude at the time, an obvious target for someone looking to
disrupt America's economy and energy supply.
The FBI, state and local law enforcement and emergency
officials, and the energy companies that own the tanks formed a
group called the Safety Alliance of Cushing. Soon, guards took
up posts along the perimeter of storage facilities and newly
installed cameras kept constant surveillance. References to the
giant tanks and pipelines were removed from the Cushing Chamber
of Commerce website. In 2004, the Safety Alliance simulated a
series of emergencies: an explosion, a fire, a hostage situation.
After the shale boom added millions of additional barrels to
Cushing, its tanks swelled to a peak hoard of more than 60
million barrels this spring. That's about as much petroleum as
the U.S. uses in three days, and it's more than six times the
quantity that triggered security concerns after Sept. 11. The
Safety Alliance has remained vigilant, even staging tornado
simulations after a few close calls.
Now the massive oil stockpile faces an emerging threat:
earthquakes. In the past month, a flurry of quakes have hit
within a few miles of Cushing, rattling the town and its massive
tanks. According to the Oklahoma Geological Survey, more than a
dozen quakes have registered 3.0 or higher on the Richter scale
within a few miles of Cushing since mid-September. The biggest,
registering at 4.5, hit about three miles away on Oct. 10.
This is all part of the disturbing rise in earthquakes in
Oklahoma, which has corresponded to increased fracking activity
and oil production in the state. Since 2008, Oklahoma has gone
from averaging fewer than two earthquakes per year that measure
at least 3.0 in magnitude to surpassing California as the most
seismically active state in the continental U.S. This year,
Oklahoma is on pace to endure close to 1,000 earthquakes.
Scientists at the National Earthquake Information Center in
Colorado recently published a paper (PDF) raising concerns that
the welter of moderate-sized earthquakes around Cushing could
increase the risk of larger quakes in the future.
Seismologists believe the quakes are the result of wastewater
injection wells used by the fracking industry. Horizontal oil
wells in Oklahoma can produce as many as nine or 10 barrels of
salty, toxin-laced water for every barrel of oil. Much of that
fluid is injected back underground into wastewater disposal
wells. It is this water, injected near faults, that many seismologists—including those at the U.S. Geological Survey—say
has caused the spike in earthquakes.
The role that fracking plays in the rise of earthquakes has been
hugely controversial in Oklahoma, where one in five jobs is tied
to the oil and gas industry. This year, as Bloomberg reported,
seismologists at the Oklahoma Geological Survey were pressured
by oil companies not to make a link between the earthquakes and fracking-related wastewater injection wells. Under the weight of
mounting scientific evidence, Republican Governor Mary Fallin's
administration in April finally acknowledged the role fracking
played in earthquake activity.
In June, the Oklahoma Supreme Court said that a woman injured in
an earthquake could sue an Oklahoma oil company for damages.
That company, Tulsa-based New Dominion, is one of the pioneers
of a new breed of high-volume wastewater injection wells that
can suck down millions of barrels of water and bury it deep
underground. In April, Bloomberg Businessweek profiled David
Chernicky, its charismatic founder and chairman.
Now that quakes appear to have migrated closer to Cushing, the
issue of what to do about them has morphed from a state issue to
one of natural security. The oil in Cushing props up the $179
billion in West Texas Intermediate futures and options contracts
traded on the New York Mercantile Exchange. Not only is Cushing
crucial to the financial side of the oil market, it is integral
to the way physical crude flows around the country.
As U.S. oil production has nearly doubled over the past six
years, Cushing has become an important stop in getting oil down
from the Bakken fields of North Dakota and into refineries along
the U.S. Gulf Coast. If even a couple of Cushing's tanks had to
shut down, or a pipeline were damaged, the impact could ripple
through the market, probably pushing prices up. That outcome is
especially likely if a spill were to knock Cushing offline for a
period of time—a scenario no less dangerous than a potential
"Induced seismicity is the most terrifying of all the fracking
risks," said Kevin Book, managing director of Clearview Energy
Partners, a Washington-based consultancy. The fact that more
quakes appear to be getting closer to Cushing is "definititely
concerning," said Book. "Anything that puts those tank farms at
risk is very serious."
So far, no damage has been reported by companies that own the
tanks. Michael Barnes, a spokesperson for Enbridge, a Canadian
company that owns the largest tank capacity in Cushing, said
employees checked for signs of damage around the facility after
the Oct. 10 quake and found none. Enbridge has not made changes
to its emergency or disaster plans in light of the quakes.
The local fire and police departments have updated their
emergency response plans to include information related to
earthquake safety. "We're fairly new to earthquakes in
Oklahoma," said Chris Pixler, Cushing's fire chief. "We've
always been good at preparing for fires and tornados, and now
we're making some changes we felt were necessary in terms of
getting information out to citizens about earthquake safety."
Each tank in Cushing is surrounded by a clay-lined berm designed
to contain the oil in the event of a rupture. Thousands of miles
of pipelines stretch beneath Cushing, connecting it to
distribution hubs all over the country. It's those arteries that
we should be most concerned about getting damaged in an
earthquake, said John Kilduff, a partner at Again Capital, a
hedge fund that focuses on energy. "Losing some of that pipeline
infrastructure could be devastating for a time," Kilduff said.
If enough damage occurred, "It could prompt an energy crisis if
oil couldn't flow the way we need it to."
State regulators are already taking action. Last month the
Oklahoma Corporation Commission, which oversees oil and gas,
ordered wells within three miles to shut down entirely and those
between three and six miles from the town to reduce their volume
by 25 percent. On Oct. 19, the OCC put all wastewater injection
wells within 10 miles of Cushing on notice. Getting to the
bottom of the state's earthquake flurry poses a huge test for
the embattled OCC, which is short on staff and has historically
had close ties to the oil and gas industry it regulates. The
regulator has typically dealt with environmental hazards such as
oil spills, not issues of seismic activity. "They not only have
to reassure their own constituents they are up to the job, but
the federal government as well," said Book. "They're one big
event away from a significant federal response."
The Obama administration has largely stayed out of the issue.
Last month, however, the Environmental Protection Agency urged
the OCC to "implement additional regulatory actions." The past
week has been relatively calm around Cushing, with only a couple
of minor rumblings that didn't hit nearby. For now, however, the
threat of quakes has the city on higher alert than the threat of
a terror strike.