BILL ANALYSIS ----------------------------------------------------------------- | | | SENATE COMMITTEE ON NATURAL RESOURCES AND WATER | | Senator Fran Pavley, Chair | | 2009-2010 Regular Session | | | ----------------------------------------------------------------- BILL NO: SB 571 HEARING DATE: April 14, 2009 AUTHOR: Maldonado URGENCY: No VERSION: As Introduced CONSULTANT: Estella Cisneros DUAL REFERRAL: No FISCAL: Yes SUBJECT: Geothermal Resources BACKGROUND AND EXISTING LAW Geothermal energy is natural heat generated deep inside the earth. Generally, this heat is only usable when it occurs near the earth's surface and heats underground water. Geothermal resources are generally found in two forms: dry steam and hot water. Dry steam is rare and valuable, due to the relatively few mineral impurities it contains. Geothermal wells are drilled into the more permeable, steam-bearing fracture zones to tap the resource. Hot water geothermal resources are more common but also more difficult to develop because they require dealing with the highly mineralized geothermal water and the disposal of spent geothermal water. Geothermal wells bring hot water to the surface at high pressure and convert the water into steam. Existing law authorizes the State Oil and Gas Supervisor to deny approval of an operator's proposed gas and oil well operations if the operator fails to remedy a violation, fails to pay a civil penalty, or fails to pay assessed charges. The approval denial is in effect until the operator remedies the violation to the satisfaction of the supervisor, pays the civil penalty, or pays the assessed charges. PROPOSED LAW This bill would extend the State Oil and Gas Supervisor's authority to deny approval of an operator's new or expanded geothermal well operations if the operator fails to pay a civil penalty, fails to remedy a violation, or fails to pay the required well fee. It would extend current authority to include geothermal well operations. 1 ARGUMENTS IN SUPPORT According to the author, "The State Oil and Gas Supervisor does not have authority to deny approval of geothermal well operations proposed by an operator who has failed to comply with an order, pay civil penalties or well fees, or remedy other violations. Thus, an out-of-compliance operator may currently expand operations, and, therefore, increase opportunities for noncompliance while continuing to ignore their legal obligations associated with current operations." The necessity for the bill rests on the high costs to the state to remediate a geothermal well, which is currently about $250,000. Stopping a bad actor from developing new or existing well operations means the State will have to assume responsibility to remediate fewer geothermal wells. ARGUMENTS IN OPPOSITION None received COMMENTS Argument in Opposition, as cited in Fact Sheet The author generously noted in his fact sheet that one argument in opposition to the bill is that denying proposed well operations could limit the resources available to correct outstanding well violations or pay penalties and well fees. Although the Committee recognizes that possibility, the ability of the State to stop non-compliant operators from expanding well operations outweighs any potential lost revenue from allowing non-compliant operators to expand or develop new well operations. SUPPORT None Received OPPOSITION None Received 2