Human-induced quake zones identified in mid-U.S.

by Artemis on May 12, 2015

A comprehensive, preliminary report on human-made or induced earthquakes has been published by the U.S. Geological Survey (USGS), revealing 17 new areas in eight states that experience increased seismic activity.

The study, titled “Incorporating Induced Seismicity in the 2014 United States National Seismic Hazard Model – Results of 2014 Workshop and Sensitivity Studies,” is the organisations first attempt at quantifying the impact of induced U.S. earthquakes.

A boom in the oil and gas industry appears to have caused a rush of earthquakes in the mid-U.S., as drilling techniques such as hydraulic fracturing, “fracking,” and most notably the injection of wastewater into deep basement rocks, are causing fault lines to reach breaking point, the report explains.

“The vast majority of these [earthquakes], we suspect, are from waste water disposal,” explained Austin Holland, the state seismologist at the Oklahoma Geological Survey in Norman.

“These earthquakes are occurring at a higher rate than ever before and pose a much greater threat to people living nearby. This report represents our first step in identifying and quantifying the ground shaking from induced earthquakes,” said Mark Petersen, chief of he USGS National Seismic Hazard Mapping Project in Colorado.

Highlighting the increased frequency of induced quakes in the mid-U.S. is the southern region of Kansas, the report explains, which has seen its number of seismic stations grow from two to 21 in a relatively short time.

The report explains that for more than 30 years, earthquakes larger than a magnitude 2 would strike the Harper and Sumner counties of Kansas no more than twice a year. Since 2013, however, earthquakes larger than magnitude 2 have occurred in the region 192 times, a staggering rise.

Historically, man-made earthquakes across the U.S. have only ever caused minimal damages, with the largest being a 5.6 magnitude event that impacted Oklahoma in 2011, damaging several buildings.

But experts involved with the study feel confident that “there are certainly faults large enough to produce a magnitude 7.”

The rise of induced earthquakes across the U.S. is perhaps something investors in catastrophe bonds and reinsurance contracts should keep an eye on. As far as we understand here at Artemis, cat bond deals that protect against U.S. earthquakes fail to specify, or differentiate between natural quakes and man-made ones.

This suggests that investors are exposed to every earthquake with no distinction based on the source in event definitions in transaction terms, and therefore have exposure to natural events and induced ones also, the latter of which will be unmodelled.

And as asset values hike, coupled with the increased frequency and potentially increased severity of induced quakes across the U.S., reinsurance, insurance, catastrophe bond and insurance-linked securities (ILS) investors’ exposure levels to U.S. earthquakes could also rise.

The study stresses that its findings are preliminary, and that a new version of the report will be released later this year, as science agencies and regulators “finally seem to be taking induced earthquakes seriously.”

You can read the full preliminary report here.

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