Together with the California Earthquake Authority (CEA), RMS co-hosted a webinar on May 17 for the CEA’s global panel of catastrophe reinsurers to explore how new earthquake science and RMS modeling impacts the CEA and its markets. The CEA is one of the largest earthquake insurance programs in the world with nearly one million policyholders throughout California. In the webinar, we analyzed and shared insights about the risk to the CEA book using the new Version 17 RMS North America Earthquake Models which was just released on April 28.
Oklahoma, Colorado, and Texas have all experienced unusually large earthquakes in the past few years and more earthquakes over magnitude 3 than ever before.
Over a similar time frame, domestic oil and gas production near these locations also increased. Could these earthquakes have been induced by human activity?
Figure 1: The cumulative number of earthquakes (solid line) is much greater than expected for a constant rate (dashed line). Source: USGS
According to detailed case studies of several earthquakes, fluids injected deep into the ground are likely a contributing factor – but there is no definitive causal link between oil and gas production and increased earthquake rates.
These larger, possibly induced, earthquakes are associated with the disposal of wastewater from oil and gas extraction. Wastewater can include brine extracted during traditional oil production or hydraulic fracturing (“fracking”) flowback fluids – and injecting this wastewater into a deep underground rock layer provides a convenient disposal option.
In some cases, these fluids could travel into deeper rock layers, reduce frictional forces just enough for pre-existing faults to slip, and thereby induce larger earthquakes that may not otherwise have occurred. The 2011 Mw 5.6 Prague, Oklahoma earthquake and other recent large midcontinent earthquakes were located near high volume wastewater injection wells and provide support for this model.
However, this is not a simple case of cause and effect. Approximately 30,000 wastewater disposal wells are presently operated in the United States, but most of these do not have nearby earthquakes large enough to be of concern. Other wells used for fracking are associated with micro-earthquakes, but these events are also typically too small to be felt.
To model hazard and risk in areas with increased earthquake rates, we have to make several decisions based on limited information:
- What is the largest earthquake expected? Is the volume or rate of injection linked to this magnitude?
- Will the future rate of earthquakes in these regions increase, stay the same, or decrease?
- Will future earthquakes be located near previous earthquakes, or might seismicity shift in location as time passes?
Induced seismicity is a hot topic of research and figuring out ways to model earthquake hazard and possibly reduce the likeliness of large induced earthquakes has major implications for public safety.
From an insurance perspective, it is important to note that if there is suspicion that the earthquake was induced, it will be argued to fall under the liability insurance of the deep well operator and not the “act of God” earthquake coverage of a property insurer. Earthquake models should distinguish between events that are “natural” and those that are “induced” since these two events may be paid out of different insurance policies.
The current USGS National Seismic Hazard Maps exclude increased earthquake rates in 14 midcontinent zones, but the USGS is developing a separate seismic hazard model to represent these earthquakes. In November 2014, the USGS and the Oklahoma Geological Survey held a workshop to gather input on model methodology. No final decisions have been announced at this time, but one possible approach may be to model these regions as background seismicity and use a logic tree to incorporate all possibilities for maximum earthquake magnitude, changing rates, and spatial footprint.
Figure 2: USGS 2014 Hazard Map, including zones where possibly induced earthquakes have been removed. Source: USGS
Today marks the 25th anniversary of the magnitude 6.9 Loma Prieta earthquake which rocked California’s San Francisco Bay Area on October 17, 1989. To commemorate the anniversary and raise awareness about resilience against earthquakes, Dr. Robert Muir-Wood, RMS chief research officer, and Dr. Patricia Grossi, RMS senior director of global earthquake modeling, hosted a Reddit Science AMA (Ask Me Anything).
They discussed a number of topics; participants expressed curiosity not just for routine details like the best immediate action in the event of a quake, but also what fault lines are at risk and the finer points of earthquake insurance.
Here are just a few of the subjects they tackled in a conversation that generated close to 200 comments by Thursday afternoon – you can also read the entire Reddit thread.
Is the Bay Area is better prepared [now] than for the Loma Prieta quake? What role have you (or other scientists) played in planning?
Grossi: There’s been a lot of work by PG&E, BART, and other agencies to mitigate earthquake risk – as well as the new span of the Bay Bridge. In addition, the California Earthquake Authority has been encouraging mitigation – and have mitigation incentives if you retrofit your home to withstand earthquake ground shaking. Scientists can help by creating strategic plans or perform cost-benefit analyses for mitigation/retrofit.
Is there a link between fracking and earthquakes?
Muir-Wood: The term ‘earthquake’ can cover an enormous range of sizes of energy release. Fracking may sometimes trigger small shallow earthquakes or tremors. One day there might be a bigger earthquake nearby and people will argue over whether it was linked to the fracking. The link, however, will remain tenuous.
Am I being overcharged for earthquake insurance? I was charged $1,500 a year with a 15 percent deductible.
Grossi: Premiums associated with the coverage seem high (as generally double premiums here in California). However, they are based on price-based pricing. The coverage is meant to be a ‘minimum’ coverage – and provide protection for the worst-case scenario.
Is Tokyo due for another big earthquake?
Muir-Wood: The Big One happened beneath Tokyo in 1923, and before that a similar Big One (not quite on the same fault) occurred in 1703. The 1923 earthquake is not so likely to come around again. However, there was a M7 earthquake in 1855 that occurred right under Tokyo and may be the type of damaging earthquake we can expect. It could do a lot of damage.
Was there anything we missed you wanted to discuss? Please let us know in the comments.