BILL ANALYSIS Ó
AB 591
Page 1
Date of Hearing: April 25, 2011
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 591 (Wieckowski) - As Amended: April 12, 2011
SUBJECT : Oil and gas production: hydraulic fracturing
SUMMARY : Requires an operator of an oil and gas well, before
drilling a well, to file with the Division of Oil, Gas, and
Geothermal Resources (DOGGR) an application to commence drilling
that includes specific information related to hydraulic
fracturing operations.
EXISTING LAW :
1)Creates DOGGR in the Department of Conservation.
2)Requires DOGGR to supervise activities related to oil and gas
wells, tanks, and facilities so as to prevent damage to life,
health, property, natural resources, and underground and
surface waters suitable for irrigation or domestic purposes.
3)Requires DOGGR to collect information and prepare maps
regarding oil and gas wells and the location and extent of
groundwater and surface water for irrigation or domestic
purposes that might be affected.
4)Requires the operator of any well, before commencing the work
of drilling the well, to file with DOGGR a written notice of
intention to commence drilling. Authorizes drilling only
after DOGGR approves the notice of intention to commence
drilling.
THIS BILL :
1)Requires DOGGR to collect information and prepare maps
regarding oil and gas wells and the location and extent of
groundwater and surface water for irrigation, domestic,
industrial, or wildlife purposes that might be affected.
Requires the maps to be posted on DOGGR's internet Web site.
2)Requires an operator of a well, before drilling a well, to
file with DOGGR an application to commence drilling.
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3)Requires the application to include the following information:
a) The type of exploration and production techniques that
the operator will use at the well or wells.
b) Information regarding the chemicals, if any, that will
be injected into the well for hydraulic fracturing or other
production enhancement methods in the exploration or
production process.
c) The estimated amount and source of water that will be
used in the exploration or production from the well.
d) Any radiological components or tracers to be injected
into the well and a description of the recovery method, if
any, for those elements or tracers, the expected recovery
rate, and disposal method for recovered components or
tracers.
e) The location of any known seismic faults within five
miles of the well.
4)Requires an operator of a well to immediately notify DOGGR if
the information provided in the application changes over the
course of the exploration and production process.
5)Requires an operator of a well to notify every property owner
and occupant of property within one mile of the well of any
chemicals that were injected into the ground that are known to
cause cancer or reproductive toxicity.
FISCAL EFFECT : Unknown
COMMENTS :
1)Background. Recent news events have brought to light the use
of hydraulic fracturing in underground shale formations for
oil and gas development. Mostly due to innovative hydraulic
fracturing techniques, companies have been able to tap
enormous amounts of gas from underground shale formations
throughout the United States. There has been, however, an
environmental cost associated with hydraulic fracturing. For
example, in Pennsylvania, there was a report of tens of
thousands of gallons of toxic fracturing fluid that leaked
onto residential property, killing trees and contaminating
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water. The U.S. Environmental Protection Agency (EPA) has
reported that two water wells in Texas were contaminated by
gas from hydraulic fracturing. The investigative news Web
site ProPublica, which Congress relies on for information on
this subject matter, found over 1,000 reports of water
contamination near drilling sites.
In response to the controversy surrounding hydraulic
fracturing, several states, local governments, and even
Quebec, Canada have imposed moratoriums on hydraulic
fracturing or required disclosure of fracturing fluid
information. Many other states have introduced hydraulic
fracturing related legislation this year.
According to the oil and gas industry, hydraulic fracturing
has been used in California for decades. Reports from various
sources suggest that hydraulic fracturing in California will
likely increase significantly in the upcoming years. DOGGR,
although having statutory authority to regulate hydraulic
fracturing, has not yet developed regulations to address the
activity. Moreover, DOGGR does not have information that
indicates where and how often hydraulic fracturing occurs
within the state, nor does it have data on the safety,
efficacy, and necessity of hydraulic fracturing as currently
employed in California.
The bill requires an oil and gas company to provide DOGGR with
specific information related to hydraulic fracturing before
commencing drilling. This information will help DOGGR
understand the extent to which hydraulic fracturing is used in
California and to identify any health, safety, and
environmental issues that have gone undetected. This
information could also be used in the future to develop
legislation and/or regulations to reasonably and effectively
regulate hydraulic fracturing.
2)Hydraulic Fracturing. According to the Western States
Petroleum Association (WSPA), hydraulic fracturing is one
energy production technique used to obtain oil and natural gas
in areas where those energy supplies are trapped in rock and
sand formation. Once an oil or natural gas well is drilled
and properly lined with steel casing, fluids are pumped down
to an isolated portion of the well at pressures high enough to
cause cracks in shale formations below the earth's surface.
These cracks or fractures allow oil and natural gas to flow
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more freely. Often, a propping agent such as sand is pumped
into the well to keep fractures open.
In many instances, the fluids used in hydraulic fracturing are
water-based. There are some formations, however, that are not
fractured effectively by water-based fluids because clay or
other substances in the rock absorb water. For these
formations, complex mixtures with a multitude of chemical
additives may be used to thicken or thin the fluids, improve
the flow of the fluid, or even kill bacteria that can reduce
fracturing performance.
According to a congressional report, between 2005 and 2009,
oil and gas companies throughout the United States used
hydraulic fracturing products containing 29 chemicals that are
(1) known or possible human carcinogens, (2) regulated under
the Safe Drinking Water Act for their risk to human health, or
(3) listed as hazardous air pollutants under the Clean Air
Act. In some cases, companies injected fluids containing
chemicals that they themselves could not identify-they did not
have access to proprietary information about products
purchased "off the shelf" from chemical suppliers.
The volume of fluid needed for hydraulic fracturing varies by
site and type of formation. The EPA has reported that two to
five million gallons of fracturing fluids may be necessary to
fracture one well in a shale formation. The California Energy
Commission reports that in the development of an entire field,
the amount of water injected into a shale formation could
reach into the hundreds of millions of gallons.
When the injection fluid mixes with the shale, it may become
contaminated with radioactivity in the ground while growing
increasingly brackish. The fluid is brought back to the
surface. This wastewater is then either recycled or disposed
of.
3)Problems with Hydraulic Fracturing.
Migrating Fracturing Fluid. Although some fracturing fluids
are removed from the well at the end of the fracturing
process, a significant amount remains underground-estimates of
the fluids recovered range from 15-80% of the volume injected
depending on the site. Migration of these fluids is not
entirely predictable and many concerns have been raised about
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the fluids contaminating nearby groundwater. While the
industry claims that the fracturing fluids are injected
thousands of feet below water tables-a WSPA fact sheet shows a
diagram of fracturing occurring close to 9,000 feet below
ground level-EPA indicates that wells may extend to depths
less than 1,000 feet. In parts of the United States,
companies reported operating wells in shallower formations
that meet the federal Safe Drinking Water Act definition of
drinking water.
A 2004 EPA review on hydraulic fracturing, which is frequently
cited by industry, concluded that the injection of hydraulic
fracturing fluids into wells poses a minimal threat to
underground sources of drinking water. But this EPA report
has been criticized, and the science is open enough that EPA
is beginning a comprehensive new study of the relationship
between hydraulic fracturing and drinking water.
Well Casings. Well casing protects the underground water
table from oil, gas, and chemicals traveling through the well.
DOGGR does have a regulatory program that governs well casing
construction. Despite regulations, well failures still occur.
A 2000 Society of Petroleum Engineers (SPE) article regarding
an oil field in Kern County explained that "the well failure
rate, although lower than that experienced in the 1980s, is
still economically significant at 2 to 6% of active wells per
year." Recently, in Pennsylvania, poor cementing around a
well casing allowed methane to contaminate the water wells of
19 families.
Disposal. Concerns have been raised about the ultimate outcome
of chemicals that are recovered and disposed of in wastewater.
While there is no known recent information in California
suggesting that the disposal of fracturing fluids in
California is threatening public health and safety and the
environment, reports in other parts of the country cite major
problems with disposal, especially as it related to
radioactive materials. For example, in 2009 and 2010, public
sewage treatment plants directly upstream from drinking-water
intake facilities in Pennsylvania accepted wastewater that
contained radioactivity levels as high as 2,122 times the
drinking-water standards. Most of these sewage plants are not
required to monitor for radioactive elements in wastewater.
4)Hydraulic Fracturing in California. According to a 2008 SPE
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article, hydraulic fracturing "has been applied to a large
scale in many Central and Southern California fields to enable
economic development and reasonable hydrocarbon recovery."
The article further explains that "based on initial experience
and formation properties, hydraulic fracturing has a
significant potential in many Northern California gas
reservoirs."
The Monterey shale, which stretches from Northern to Southern
California, is considered the largest onshore shale
opportunity in the United States. The Monterey shale has not
received much attention in the past due to the lack of
exploration; however, a number of oil companies have purchased
leases to drill the Monterey shale that together amount to
several hundreds of thousands of acres. One company is
expected to spend $100 million in the Monterey shale this year
by drilling 30 wells, completing a 3D seismic survey, and
leasing. If these investments produce positive results, the
state could see a proliferation of hydraulic fracturing
operations by various oil companies in a matter of a few
years.
5)Lack of Regulatory Oversight. Most injections of chemicals
are subject to the protections of the federal Safe Drinking
Water Act and require a permit under the underground injection
control program. The purpose of this permitting requirement
is to distinguish between underground injections that
threatened drinking water supplies, which are denied permits,
and those that do not, which are allowed to go forward. EPA's
regulations prohibit any underground injection that "allows
the movement of fluid containing any contaminant into
underground sources of drinking water, if the presence of that
contaminant may cause a violation of any primary drinking
water regulation?or may otherwise adversely affect the health
of persons."
Congress in 2005 modified the law to exclude "the underground
injection of fluids or propping agents (other than diesel
fuels) pursuant to hydraulic fracturing operations related to
oil, gas, or geothermal production activities" from the Safe
Drinking Water Act protections. Unless oil and gas companies
use diesel in the hydraulic fracturing process, the permanent
underground injection of chemicals used in hydraulic
fracturing is not regulated by the EPA.
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With regard to diesel injections, a congressional
investigation discovered that from 2005 to 2009, up to 14
companies injected 26,466 gallons of hydraulic fracturing
fluids containing diesel into California wells. The same
investigation revealed that not one underground injection
permit had ever been sought or granted for diesel fuel or
hydraulic fracturing fluids containing diesel.
At the state level, DOGGR does not regulate hydraulic
fracturing. In a February 16, 2011 response letter to Senator
Fran Pavley, DOGGR could not provide any detail regarding
hydraulic fracturing in California because "there are neither
reporting requirements nor regulatory parameters" regarding
the activity. In response to the senator's question regarding
information about potential risks to human or environmental
health associated with hydraulic fracturing, DOGGR simply
provided a link to EPA's "Draft Plan to Study the Potential
Impacts of Hydraulic Fracturing on Drinking Water Resources."
Despite admitting to not having information regarding
hydraulic fracturing, DOGGR has made assertions that hydraulic
fracturing does not occur on a large scale in California and
that it is generally not used in gas production in Northern
California because of problems with sand formations and
production costs. These claims are contradicted by several
industry and engineering reports.
It should be noted that DOGGR is seriously affected by the
current economic recession and the state budget crisis. It is
extremely difficult at this time for DOGGR to expand its
regulatory programs or to hire new staff. The bill recognizes
DOGGR's limitations and simply requires industry to provide
information so DOGGR and policy makers can determine how it
should prioritize the regulation of hydraulic fracturing.
6)Suggested Amendments. Industry groups have explained that
they do not always know the specific information regarding
their planned hydraulic fracturing operations at the time that
they apply for a drilling permit. Industry groups are also
concerned that the bill does not indicate whether all seismic
faults must be reported in the application or just active
faults. The author and the committee may wish to consider
amendments to the bill that (1) allow a well operator to
report hydraulic fracturing related information no less than
10 working days before drilling if the information is not
known at the time the application is submitted, (2) specify
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that the reporting requirements pertain only to active seismic
faults; and (3) make clean up amendments in the bill where
there were minor drafting errors .
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REGISTERED SUPPORT / OPPOSITION :
Support
California Coastal Protection Network
California Water Association
Clean Water Action
Environment California
Planning and Conservation League
Rural Coalition of Southern Monterey County
Sierra Club California
Ventana Conservation and Land Trust of Southern Monterey County
Opposition
American Chemistry Council
California Independent Petroleum Association
Western States Petroleum Association
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092