BILL ANALYSIS Ó
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| SENATE COMMITTEE ON NATURAL RESOURCES AND WATER |
| Senator Fran Pavley, Chair |
| 2011-2012 Regular Session |
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BILL NO: AB 591 HEARING DATE: June 14, 2011
AUTHOR: Wieckowski URGENCY: No
VERSION: May 27, 2011 CONSULTANT: Katharine Moore
DUAL REFERRAL: Environmental QualityFISCAL: Yes
SUBJECT: Oil and gas production: hydraulic fracturing.
BACKGROUND AND EXISTING LAW
The Division of Oil, Gas, and Geothermal Resources (DOGGR)
exists within California's Department of Conservation. DOGGR's
Supervisor (supervisor) has extensive and broad authority to
regulate activities associated with the production and removal
of hydrocarbons (e.g. oil and gas) from the ground, including
the subsurface injection of water and other fluids, and the
application of pressure or other means to enlarge existing or
create new channels to promote the underground movement of
hydrocarbons into production wells (Public Resources Code (PRC)
§ 3106). This authority is granted in order to prevent damage
to life, health, property, natural resources, and underground
and surface water suitable for irrigation or domestic purposes.
The owner or operator of any oil and gas well must keep, or
cause to be kept, a careful and accurate log, core record, and
history of the drilling of the well which must periodically be
reported to DOGGR (PRC § 3210 et seq.) where it subsequently
becomes a matter of public record.
"Hydraulic fracturing" or "fracking" of hydrocarbon wells to
enhance oil and gas recovery is an increasingly popular
subsurface process/technique. One county in Pennsylvania
reported roughly twenty-seven times more applications for
fracking in 2009 compared to just two years earlier. Due to
technological innovations, fracking by itself and in combination
with advanced drilling techniques have allowed companies to
develop previously uneconomic oil and gas reserves, such as
those located in subsurface shale formations throughout the
United States. Once an oil or natural gas well is drilled and
properly lined, fluids are pumped down to an isolated portion of
the well at pressures high enough to cause or enlarge cracks in
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the subsurface shale formation. These cracks or fractures allow
oil and natural gas to flow more freely into the well and then
to the surface. The pumped fracking fluid is usually - but not
always - comprised almost entirely of water with a small
fraction of additional substances (less than a few percent by
volume) added to enhance the process. The US Environmental
Protection Agency (EPA) has reported that two to five million
gallons of fracking fluid may be necessary to sufficiently frack
one well in a shale formation - a considerable amount of water.
The fluid volume needed, its chemical composition and physical
characteristics will vary depending upon the particular
conditions of each well. In some instances, additional
materials, such as sand, are also pumped into the well to keep
the cracks open.
Fracking has been a boon to domestic oil and gas production.
Its popularity, however, has led to increasing public
controversy. Fracking has been associated with groundwater and
surface water contamination, as well as other adverse
environmental impacts. Several states - including Wyoming and
Texas, among others - are starting to investigate and monitor
fracking more diligently. New legislation has been proposed and
restrictions on the practice considered. At the federal level,
the US EPA has undertaken a new comprehensive review of
hydraulic fracturing with results expected to be reported in
2014.
According to the oil and gas industry, hydraulic fracturing has
been used in California for several decades. Wells have been
fracked in Kern, Ventura, Santa Barbara and Los Angeles
counties, at a minimum. Industry reports suggest that hydraulic
fracturing will most likely increase statewide: the Monterey
shale formation, which stretches from Northern to Southern
California, is considered the largest onshore shale opportunity
in the United States, and is receiving increasing attention.
Several oil companies have purchased leases covering several
hundreds of thousands of acres to drill the Monterey shale. If
these investments produce positive returns, the state could see
a proliferation of hydraulic fracturing operations by various
oil companies in the near future. However, at least one drilling
location in Monterey County has already generated significant
community concern and opposition to fracking.
On January 13, 2011, Senator Pavley wrote the supervisor to
inquire about hydraulic fracturing activity in California. On
February 16, 2011, the supervisor replied and acknowledged that
DOGGR had no reliable information on the extent of hydraulic
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fracturing activities and has imposed no reporting or permitting
requirements on the practice despite the clear regulatory
authority to do so. Regardless of several industry and
engineering reports to the contrary, DOGGR claimed that
hydraulic fracturing does not occur on a large scale in
California. DOGGR does not have data on the safety, efficacy,
and necessity of hydraulic fracturing as currently employed in
California.
PROPOSED LAW
This bill would:
Make a series of legislative findings regarding
hydraulic fracturing as used in the development of oil and
gas resources in California including:
o defining the technique,
o recognizing the long history of its
application within the state and DOGGR's existing
authority to regulate the practice, and
o given the state's geologic and seismic
complexity, the critical lack of available data
necessary to evaluate its impact on the state's
natural resources.
Require that those engaged in the hydraulic fracturing
of a well provide to the well's owner or operator a
complete list of the chemical constituents used in the
hydraulic fracturing fluid and all of the associated
standardized Chemical Abstract Service (CAS) identification
numbers.
Require that the history of the drilling at the well
provided to DOGGR be modified to include:
o the source and amount of water used in the
exploration or production of the well,
o data on the use, recovery and disposal of any
radiological components or tracers injected into the
well, and
o if hydraulic fracturing is used, disclosure of
the chemical information data described above.
Clarify the reporting requirements of the owner or
operator of the well to DOGGR of the history of work
performed at the well including copies of all appropriate
logs, tests or surveys performed and the hydraulic
fracturing data described above.
Require DOGGR to make the hydraulic fracturing data
collected publicly available on its own web-site on a
well-by-well basis.
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ARGUMENTS IN SUPPORT
According to the author, "DOGGR does not have specific
information about what hydraulic fracturing techniques are being
used in the various production areas throughout the state. The
extraction of unconventional hydrocarbon resources whether from
fracking or other methods of enhanced oil recovery can be
extremely water intensive. Because some exploration and
production techniques and processing could potentially
compromise water resources, it is important that regulators have
a clear understanding of what is happening in the field. Given
DOGGR's statutory responsibility to balance resource protection
with hydrocarbon extraction, the use of water should be
considered when looking at permits. Fracking uses a variety of
chemicals, including known toxins. These chemicals include
diesel fuel and ethylbenzene (both known carcinogens) and
ethylene glycol (a chemical associated with birth defects,
female and male infertility, and other disorders)."
"Exploration and production from oil shale formations is
expected to increase in California. Some investors are looking
to oil shale in California as one of the largest potential
sources of unconventional oil in the U.S. The collection of
information required by this bill will allow DOGGR to better
assess potential risks."
According to the Natural Resources Defense Council, "AB 591 is a
very reasonable approach that ensures that the state agency
responsible for overseeing oil and gas drilling is regulating
fracking and making information about it available to the
public."
ARGUMENTS IN OPPOSITION
AB 591 has been substantially amended since the letters in
opposition to the bill were submitted in the Assembly. These
amendments at least partially mitigated concerns raised by the
opponents, and make it difficult for committee staff to
specifically address objections to the current version of the
bill. In general, however, opponents maintain that hydraulic
fracturing techniques are safe, and not associated with any
contamination. While the California Independent Petroleum
Association notes that "the concept of full disclosure of
hydraulic fluids in the original version of AB 591 was one that
Ýthey] did not object to", the others maintain that this is
redundant given the information already provided on Material
Safety Data Sheets.
COMMENTS
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Is additional authority required to regulate hydraulic
fracturing in California ? DOGGR apparently failed to regulate
or systematically collect data on hydraulic fracturing in
California, despite clearly having the broad authority to do so
and regardless of the evidence that fracking has been used in
California for decades. AB 591 provides explicit legislative
direction to DOGGR to begin, at a minimum, monitoring fracking.
State regulation is necessary as the permanent underground
injection of chemicals used in hydraulic fracturing is not
regulated at the federal level by the US EPA. Congress exempted
the use of most fracking fluids - with the exception of diesel -
from the Safe Drinking Water Act, although most other subsurface
injections are regulated to protect the drinking water supply.
Defining hydraulic fracturing : As currently written, this bill
includes a legislative finding that provides a definition of
hydraulic fracturing. Existing statutory language encompasses
this definition, and, as noted elsewhere, already provides DOGGR
with the authority to regulate hydraulic fracturing. While the
"mix of chemicals" referred to in the findings is sufficiently
general to include the variety of materials known to be injected
into a well during the hydraulic fracturing process, it neglects
that different materials serve varying functions. For example,
a liquid compound may be injected to prevent bacterial growth
while a solid material is used to help keep the fracture open.
For clarity, the committee may wish to provide a definition of
hydraulic fracturing in statute (Amendment 1)
Report back to the Legislature : While AB 591 calls for rapid
on-line reporting of hydraulic fracturing data on DOGGR's
web-site, the committee may wish to require DOGGR to compile the
collected data into a comprehensive report to facilitate
legislative oversight (Amendment 2).
Exploratory wells and potentially confidential information: The
overarching goals of AB 591 are the collection and (reasonably)
rapid public dissemination of hydraulic fracturing data. This
is, in part, to help allay concerns regarding the perceived
potential impacts of hydraulic fracturing on public health and
the environment in the vicinity of fracked wells. The lack of
fracking information available to the public likely exacerbated
these concerns. At the same time, however, well owners and
operators have a legitimate need, long recognized by the state
(PRC § 3234), to prevent certain information, such as well log
data, gathered from exploratory wells from becoming immediately
public. It is important to note that this exclusion applies to
exploratory wells only, not to those in production. For onshore
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exploratory wells, up to two years of confidentiality may be
readily granted, upon request. The supervisor has discretion to
grant up to an additional two years (for a total of four years)
confidentiality in extenuating circumstances without public
review. As AB 591 is currently written, the hydraulic
fracturing data for exploratory wells are arguably subject to
these confidentiality provisions. This is in apparent conflict
with the intent of AB 591. The committee may wish to direct
committee staff to continue working with the author's office to
explore this issue, should this bill pass the committee
(discussed further below).
This bill is a work in progress : The author's office is
actively engaged in discussions with various stakeholders,
including the opponents, on the bill's specific content. While
the motivation underlying the bill is clear, the appropriate
language is evolving (for example, Amendment 3 deletes a
reference that has changed). The committee may wish to ask for
the author's commitment to include committee staff in the
on-going discussions and direct committee staff to continue
working with the author's office, should this bill pass this
committee, on aspects of the bill relevant to this committee's
jurisdiction. Should significant changes be subsequently
proposed, the committee may also wish to bring this bill back to
committee for review.
Recent Budget history : DOGGR has been relatively underfunded in
recent years, given its extensive obligations and
responsibilities. To help rectify this and improve DOGGR's
regulatory program activities, the Legislature approved 17 new
positions in the 2010 - 2011 budget year. According to the
Legislative Analyst's Office, these positions have only recently
been filled and it is not yet possible to evaluate how these
additional staff will impact DOGGR's performance. Nevertheless
in the 2011 - 2012 budget year, the Department of Conservation
requested an additional 36 positions to improve DOGGR's
environmental compliance, underground injection control and
construction site review. Eighteen positions and an additional
$2.3 million were approved in the relevant Budget sub-committees
of both houses. Additional budget control language was approved
in the Assembly sub-committee's agenda to express the intent of
the Legislature that some of the funds appropriated be used to
collect and disseminate information to the public regarding
hydraulic fracturing activities in California.
Is fracking safe ? It is impossible to answer that question for
California today given the lack of available information.
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Nationwide, however, there is considerable evidence that
suggests the increasing concern about the potential public
health and environmental impacts of the practice is warranted.
For example, in Pennsylvania there was a report that tens of
thousands of gallons of toxic fracking fluid leaked onto
residential property, resulting in dead trees and contaminated
water. Also in Pennsylvania, other evidence shows that waste
fracking fluids were substantially contaminated with radioactive
materials that accumulated in the fluids as they moved through
the subsurface formations. The US EPA has reported that two
water wells in Texas were contaminated by gas released by
hydraulic fracturing. Just a few weeks ago, a peer-reviewed
study in the prestigious Proceedings of the National Academies
of Science (SG Osborn et al., doi:10.1073/pnas.1100682108) used
multiple sophisticated chemical analytical techniques to show
that methane contamination of some Pennsylvanian drinking water
is strongly associated with the fracking of wells in a shale gas
formation, although no evidence of fracking fluid contamination
was found. For each fracked well, the range of potential
impacts will depend critically on the specific conditions
present. Plausible mechanisms exist for significant subsurface
fluid and/or gas migration, including breaches of the integrity
of the well-casing or reservoir.
Furthermore, according to a recent congressional report, from
2005 - 2009 oil and gas companies throughout the US used
fracking 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. In some instances, radioactive tracers
may be injected into wells in order to observe the extent and
success of the hydraulic fracturing.
SUGGESTED AMENDMENTS
AMENDMENT 1
Page 6, before line 25, add:
"SEC. 1. Section 3011 of the Public Resources Code is added
to read:
3011. "Hydraulic fracturing" means a technique used in
preparing a well that typically involves the pressurized
injection of water and a mix of chemicals, compounds and
materials into an underground geologic formation in order
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to fracture the formation, thereby causing or enhancing,
for the purposes of this division, the production of oil or
gas from a well."
AMENDMENT 2
Page 7, after line 37, add:
"(c) The supervisor will prepare and transmit a
comprehensive report to the Legislature on hydraulic
fracturing in the exploration and production of oil and
gas resources in California using the data provided
pursuant to subdivision (b) of section 3213 and including
relevant additional information as necessary including,
but not limited to the disposition of water used in the
process. The first report is due on January 1, 2013 and
annually thereafter."
AMENDMENT 3
Page 7, line 32, delete "paragraph (1) of"
SUPPORT
Environmental Working Group (sponsor)
Earthworks (co-sponsor)
Board of Supervisors of the County of Los Angeles
California Coastal Protection Network (previous version)
California League of Conservation Voters
California Water Association (previous version)
Clean Water Action (previous version)
Environment California (previous version)
Food and Water Watch
Natural Resources Defense Council
Supervisor Jane Parker, Monterey County Board of Supervisors
(previous version)
Planning and Conservation League (previous version)
Rural Coalition of Southern Monterey County (previous version)
Sierra Club California (previous version)
Ventana Conservation and Land Trust
Water Replenishment District of Southern California
OPPOSITION
American Chemistry Council (previous version)
California Independent Petroleum Association (previous version)
Western States Petroleum Association (previous version)
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