(Adds reaction from lawmaker, energy secretary's statement, oil and gas group's statement, background)
By Yeganeh Torbati
WASHINGTON, July 17 (Reuters) - Oklahoma is expanding restrictions on drilling activities to stem a sharp increase in earthquakes that has damaged homes and raised concerns about the future of the energy industry in the state.
But the action, announced on Friday, fell short of more drastic measures expected after a further increase in the rate of significant quakes last month prompted the state's regulator to say the situation was a "game changer."
Oklahoma and several other states in the central United States have experienced a sharp increase in earthquakes since 2009, which scientists say is linked to underground injection of briny wastewater, a byproduct of booming oil and gas production.
Noticeable quakes - above magnitude 3.0 - now strike the state at a rate of two per day or more, compared with two or so per year prior to 2009.
The earthquakes are not related to hydraulic fracturing, or "fracking," a widely used drilling technique. Instead, researchers say, the quakes stem from the re-injection of saltwater that occurs naturally in oil and gas formations.
On Friday, the Oklahoma Corporation Commission, the state's oil and gas regulator, released a directive that expands "Areas of Interest" - parts of the state that have been worst-hit by the quakes - and adds restrictions for 211 disposal wells.
Operators of wells in the affected areas, which now include 21 of Oklahoma's 77 counties, must show regulators they are not injecting water below the state's deepest rock formation, a practice scientists say is particularly likely to cause quakes. Operators of other wells that had previously reduced injection volumes must now also inject at a shallower depth.
A previous directive by the commission in March imposed similar restrictions on 347 wells to diminish the number of the tremors. Overall, Oklahoma has about 3,500 saltwater disposal wells.
But that directive has not had the hoped-for impact. Since July 10, ten quakes of magnitude 3.0 or higher have occurred in the state, according to the Oklahoma Geological Survey.
"The problem is we've kicked the can down the road for years and we've just now started to address it," said Cory Williams, a Democratic member of the Oklahoma House who has called for a moratorium on injection wells in earthquake-prone areas.
The Oklahoma Oil and Gas Association on Friday praised the commission's new directive and said it would have a positive impact.
State officials previously said they would consider a volume cap on wells as a next step to stop the quakes. Kansas, which has also seen a spike in quakes, in March capped injection volumes in earthquake-prone areas at 8,000 barrels per day per well.
Michael Teague, Oklahoma's secretary of energy and environment, said in a statement on Friday that a council made up of state officials, scientists and energy industry officials discussed a possible reduction in injection volumes last week as a potential next step.
The number of wells injecting high volumes of saltwater has increased sharply in the last 15 years, in tandem with rising oil and gas production in the state. Wells injecting more than 100,000 barrels per month quadrupled between 2000 and 2013, according to data compiled by Matthew Weingarten, a doctoral candidate at the University of Colorado. Operators of saltwater disposal wells in Oklahoma, on average, injected about 24,000 barrels per month in 2013.
"Reducing our volume is certainly a huge component of getting our seismic activity under control," Williams said. (Reporting by Yeganeh Torbati; Editing by Steve Orlofsky)