Value at Induced Risk: Injection‐Induced Seismic Risk From Low‐Probability, High‐Impact Events
Cornelius Langenbruch, William L. Ellsworth, Jeong‐Ung Woo, David J. Wald
Abstract
Abstract The increasing number of damaging earthquakes, induced by underground injection of fluids, demonstrates the need of a structured methodology for critical thinking about and clear communication of induced seismic risk. Using the Pohang, South Korea, geothermal project and the damaging (US$75M) local magnitude M L 5.35 induced earthquake in 2017, we present a straightforward methodology that summarizes induced seismic risk in a single time‐dependent number, the Value at Induced Risk (VaIR). VaIR quantifies the amount of economic losses that will not be exceeded at a given confidence level. Our method reveals that the Pohang project was exposed to a 2% chance of causing economic losses of US$140M or more (1% of US$3.2B or more). The high risk could have been identified during the sequence of reservoir stimulation, lasting almost 2 years. VaIR opens new ways to assess and communicate risk to all stakeholders for informed risk management decision making.