BILL ANALYSIS Ó
AB 982
Page 1
Date of Hearing: April 15, 2013
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 982 (Williams) - As Introduced: February 22, 2013
SUBJECT : Oil and gas: hydraulic fracturing
SUMMARY : As part of any notice of intent to drill, rework, or
deepen an oil and gas well where hydraulic fracturing will
occur, requires the operator of an oil and gas well to (1)
provide a groundwater monitoring plan for review and approval by
the Division of Oil, Gas, and Geothermal Resources (DOGGR) and
the appropriate regional water quality control board and (2)
provide information related to the source, quantity, and
disposal of water used in the hydraulic fracturing operations.
EXISTING LAW :
1)Creates DOGGR within the Department of Conservation.
2)Requires DOGGR to do all of the following:
a) Supervise the drilling, operation, maintenance, and
abandonment of wells and the operation, maintenance, and
removal or abandonment of tanks and facilities attendant to
oil and gas production, including certain pipelines that
are within an oil and gas field, so as to prevent, as far
as possible, damage to life, health, property, and natural
resources; damage to underground oil and gas deposits from
infiltrating water and other causes; loss of oil, gas, or
reservoir energy, and damage to underground and surface
waters suitable for irrigation or domestic purposes by the
infiltration of, or the addition of, detrimental
substances.
b) Supervise the drilling, operation, maintenance, and
abandonment of wells so as to permit the owners or
operators of the wells to utilize all methods and practices
known to the oil industry for the purpose of increasing the
ultimate recovery of underground hydrocarbons and which, in
the opinion of DOGGR, are suitable for this purpose in each
proposed case.
3)Requires the operator of any well, before commencing the work
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of drilling the well, to file with DOGGR a written notice of
intention to commence drilling. Drilling shall not commence
until approval is given by DOGGR. If DOGGR fails to give the
operator written response to the notice within 10 working days
from the date of receipt, that failure shall be considered as
an approval of the notice.
4)Establishes, under California law, the Porter-Cologne Water
Quality Control Act, which designates beneficial uses of
water. These beneficial uses include municipal and industrial
uses, irrigation, hydroelectric generation, livestock
watering, recreational uses, fish and wildlife protection, and
aesthetic enjoyment.
5)Enforces California's water quality standards through Water
Quality Control Plans adopted by the State Water Board and the
nine Regional Water Boards. Requires Water Quality Control
Plans to include implementation programs to achieve and
maintain compliance with water quality objectives.
THIS BILL:
1)Defines "hydraulic fracturing" as the injection of fluids or
gases into an underground geologic formation with the
intention to cause or enhance fractures in the underground
geologic formation, in order to cause or enhance the
production of oil or gas from a well. Alternate terms include,
but are not limited to, "fracking," "hydrofracking," and
"hydrofracturing."
2)As part of any notice of intent to drill, rework, or deepen a
well where hydraulic fracturing will occur, requires the
operator to provide a groundwater monitoring plan for review
and approval by DOGGR and the appropriate regional water
quality control board. The groundwater monitoring plan shall
include, at a minimum, all of the following information:
a) The current water quality of the groundwater basin
through which the well will be drilled that is sufficient
to characterize the quality of the aquifer and identify the
zone of influence of the proposed well.
b) Water quality data or a plan to obtain data regarding
the presence and concentration of the constituents to be
used in, or that can be influenced by, the drilling
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process.
c) A plan that includes sites for monitoring wells, which
will allow the detection of contamination associated with
well operation during and after the period of its active
use.
d) An emergency monitoring plan that will be implemented in
the case of well casing failure or any other event which
has the potential to contaminate groundwater.
3)Requires the water quality monitoring data to be submitted
electronically to the State Water Resource Control Board
geotracker database and any public data registry identified by
DOGGR for disclosure of hydraulic fracturing data.
4)Does not impose the bill's requirements if the appropriate
regional water quality control board confirms that the
proposed well will not penetrate or will not be located within
the zone of influence of an aquifer that is designated for a
beneficial use.
5)Requires that any notice of intent to drill, rework, or deepen
a well where hydraulic fracturing will occur, include all of
the following information:
a) A description of the estimated quantity of water planned
to be used in the hydraulic fracturing process.
b) The source or sources of the water to be used.
c) A specific plan for disposing of wastewater produced by
the hydraulic fracturing process.
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose of the Bill. According to the author's office:
AB 982 attempts to address potential groundwater
contamination through the use of hydraulic fracturing.
[DOGGR] has the statutory authority to regulate
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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. DOGGR has released a draft for discussion
of regulations on hydraulic fracturing [as discussed
below in more detail], but the draft does not intend
to require monitoring of groundwater quality. While
the discussion does contain provisions for testing a
well's cement casing (the barrier between soil, water
and the fluids injected), casing failure isn't the
only way in which groundwater may be contaminated.
The bill additionally investigates how water intensive
fracking operations may be. The problem is that
California scrutinizes all sectors of water use,
including agriculture, urban and environmental. We
have historically fought over the allocation of water
and are on the verge of investing billions into the
peripheral tunnels for the purpose of massive water
conveyance. Some speculate that the high price of
water being moved by the tunnels will be unaffordable
for farmers, yet will be available for oil companies
to use for fracking operations. Information about how
the oil and gas industry impacts water supply is
crucial as our state makes major investments and
decisions about water. If the amount of water used by
oil and gas jeopardizes access for farmers, drinking
water uses or ecosystems, then the state should
seriously consider the practice.
2)Background on Hydraulic Fracturing. According to the Western
States Petroleum Association (WSPA), hydraulic fracturing
(a.k.a. fracking) is one energy production technique used to
obtain oil and natural gas in areas where those energy
supplies are trapped in rock (i.e. shale) or sand formations.
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 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
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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.
In 2005, Congress enacted what is colloquially referred to as
the "Halliburton Loophole," which exempts hydraulic fracturing
(except when involving the injection of diesel fuels) from the
federal Safe Drinking Water Act. As a result of this action,
the US Environmental Protection Agency (US EPA) lacks the
authority to regulate hydraulic fracturing activities that do
not use diesel fuel as an additive.
Around the same time that Congress exempted hydraulic
fracturing from the Safe Drinking Water Act, the country
experienced a boom in the production of shale oil and gas.
From 2007 to 2011, shale oil production increased more than
fivefold, from about 39 million barrels to about 217 million
barrels, and shale gas production increased approximately
fourfold, from 1.6 trillion cubic feet to 7.2 trillion cubic
feet. This increase in production was driven primarily by
technological advances in horizontal drilling and hydraulic
fracturing that made more shale oil and gas development
economically viable.
But with this boom comes various issues with regard to
environmental health and safety, which has caused enormous
public anxiety. Cases of environmental contamination
attributed to hydraulic fracturing have been reported in
Wyoming, Texas, Colorado, West Virginia, and Pennsylvania.
Consequently, governments at all levels across the country are
looking to regulate the practice and address these concerns.
3)What are the environmental risks associated with hydraulic
fracturing? According to a recent report from the US
Government Accountability Office (GAO), which is a
independent, nonpartisan agency that works for Congress,
"[d]eveloping oil and gas resources?poses inherent
environmental and public health risks, but the extent of risks
associated with shale oil and gas development is unknown, in
part, because the studies we reviewed do not generally take
into account potential long-term, cumulative effects." The
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GAO's report discusses, among other things, the risks to water
quantity and water quantity.
With regard to water quantity, water is used for well drilling
operations to make drilling mud as well as to cool and
lubricate the drill bits. Water is also the primary component
of hydraulic fracturing fluids. According to the GAO, "the
amount of water used for shale gas development is small in
comparison to other water uses, such as agriculture and other
industrial purposes. However, the cumulative effects of using
surface water or ground water at multiple oil and gas
development sites can be significant at the local level,
particularly in areas experiencing drought conditions." It
should be noted that the oil and gas industry and DOGGR both
assert that the amount of water used for hydraulic fracturing
in California is a fraction of what is used in other states.
This assertion is based on information voluntarily provided by
oil and gas operators. It is not clear whether this
information is representative of all hydraulic fracturing in
the state. Additionally, with the potential for a hydraulic
fracturing boom in the Monterey Shale (which is explained in
more detail below), it would be too speculative to determine
the type and amount of hydraulic fracturing that will take
place in the future and how much water will be needed.
With regard to water quality, the GAO explains that shale oil
and gas development pose risks from contamination of surface
water and ground water as a result of spills and releases of
hydraulic fracturing chemicals, produced water, and drill
cuttings. Spills and releases of these materials can occur as
a result of tank ruptures, blowouts, equipment or impoundment
failures, overfills, vandalism, accidents, ground fires, or
operational errors.
The potential for the spill and release of chemicals involved
in hydraulic fracturing has received a great amount of public
attention. According to a recent 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. As for produced water, it can carry
a range of contaminants, including hydraulic fracturing
chemicals, salts, metals, oil, grease, dissolved organics, and
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naturally occurring radioactive materials. Drill cuttings
(i.e. the broken bits of solid material removed from drilling)
may contain naturally occurring radioactive materials.
The potential for underground migration is also a potential
risk to water quality. The GAO explains that "[u]nderground
migration can occur as a result of improper casing and
cementing of the wellbore as well as the intersection of
induced fractures with natural fractures, faults, or
improperly plugged dry or abandoned wells. Moreover, there
are concerns that induced fractures can grow over time and
intersect with drinking water aquifers." It should be noted
that the oil and gas industry has provided information
claiming that hydraulic fracturing typically occurs thousands
of feet below the earth's surface and that the well casing for
these wells extends below an impervious layer of rock "that
would prevent any migration of fluids up into the drinking
water supply." Assuming that the industry is correct, there
is still the problem with well casing failures. A 2000
Society of Petroleum Engineers 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."
In Pennsylvania, poor cementing around a well casing allowed
methane to contaminate the water wells of 19 families.
Morever, little data exists on (1) fracture growth in shale
formations following multistage hydraulic fracturing over an
extended time period, (2) the frequency with which
refracturing of horizontal wells may occur, (3) the effect of
refracturing on fracture growth over time, and (4) the
likelihood of adverse effects on drinking water aquifers from
a large number of hydraulically fractured wells in close
proximity to each other.
Ideally, the environmental risks referenced above would be
analyzed by the lead agency under the California Environmental
Quality Act (CEQA). However, according to the complaint in a
recent lawsuit filed against DOGGR by a number of
environmental groups, the agency has been "approving permits
for oil and gas wells after exempting such projects from
environmental review or? issuing boilerplate negative
declarations finding no significant impacts from these
activities."
4)Hydraulic Fracturing in California. According to the oil and
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gas industry, hydraulic fracturing has been used in California
for decades. The industry claims that over 90% of hydraulic
fracturing occurs in Kern County, in areas with no potable
water, no surrounding population, and no other significant
business interests. However, reports from various sources
suggest that hydraulic fracturing in California will likely
increase significantly in the upcoming years, spreading to
areas throughout the state.
A recent report from the University of Southern California
(USC) explains that "California boasts perhaps the largest
deep-shale reserves in the world. Those reserves exist within
the Monterey Shale Formation, a 1,750 square mile swath of
mostly underground shale rock that runs lengthwise through the
center of the state, with the major portion in the San Joaquin
Basin." The US Energy Department estimates that the Monterey
Shale contains more than 15 billion barrels of oil, accounting
for approximately two-thirds of the shale-oil reserve in the
United States. Additionally, according to a 2008 paper
published by the Society of Petroleum Engineers, "it is
believed that hydraulic fracturing has a significant potential
in many Northern California gas reservoirs."
DOGGR, although having statutory authority to regulate
hydraulic fracturing, has not yet developed regulations to
address the activity. As explained below, the agency is
currently focused on developing regulations that require oil
and gas operators to take certain protective measure and
provide information about hydraulic fracturing operations.
Additionally, as referenced above, DOGGR may not be conducting
adequate environmental review through the CEQA process to
determine if there are significant impacts of hydraulic
fracturing.
5)DOGGR's Draft Regulations. On December 28, 2012, DOGGR
released a pre-rulemaking discussion draft of regulations on
hydraulic fracturing. The proposed regulations attempt to
impose requirements on operators aimed to improve transparency
and safety. Specifically, the proposed regulations would
require an operator to: (1) submit information to DOGGR at
least 10 days prior to beginning hydraulic fracturing
operations and notify DOGGR at least 24 hours prior to
commencing hydraulic fracturing operations (advance disclosure
of hydraulic fracturing chemicals is not required); (2) prior
to operations, test the structural integrity of wells and
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casings to prevent fluid migration; (3) store and handle
hydraulic fracturing fluids in a specified manner; (4) monitor
a specified set of parameters during hydraulic fracturing
operations and, in case a breach occurs, terminate operations
and immediately notify DOGGR about the breach; (5) after the
conclusion of operations, monitor wells for up to 30 days and
maintain data for a period of 5 years; and (6) disclose data
to a Chemical Disclosure Registry (such as FracFocus.org) that
is not a trade secret, unless a health professional submits a
written statement of need stating that the trade secret
information will be used for diagnosis or treatment of an
individual exposed to hazardous hydraulic fracturing chemicals
and the health professional also executes a confidentiality
agreement.
These proposed regulations will be vetted through a year-long
formal rulemaking process beginning the summer or fall of
2013. In the meantime, DOGGR has conducted a public workshop
in Los Angeles and Sacramento about the proposed regulations,
with more planned in California cities like Bakersfield and
Santa Maria through July 2013.
6)A Work in Progress. There are some items in this bill that
may need further clarification, such as (1) what constitutes
the "zone of influence of the proposed [oil and gas] well" and
the "zone of influence of an aquifer," (2) how long should a
ground water monitoring plan last after a well's active use,
and (3) what aquifers are designated for a beneficial use.
Perhaps regulations can provide the clarification needed;
however, it may be better to make these clarifications in the
bill. That would take a discussion among various parties,
which staff is willing to do assuming it is agreeable with the
author and the committee.
7)Related Legislation.
AB 7 (Wieckowski), which deals with hydraulic
fracturing disclosure.
AB 288 (Levine), which deals with permitting well
stimulation.
AB 649 (Nasarian), which deals with a hydraulic
fracturing moratorium.
AB 669 (Stone), which deals with permitting
wastewater disposal from oil and gas operations.
AB 1301 (Bloom), which deals with a hydraulic
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fracturing moratorium.
AB 1323 (Mitchell), which deals with a hydraulic
fracturing moratorium.
SB 4 (Pavley), which deals with hydraulic fracturing
regulations and disclosure.
SB 395 (Jackson), which deals with wastewater
disposal wells.
REGISTERED SUPPORT / OPPOSITION :
Support
Calleguas Municipal Water District
County of Santa Barbara
Environmental Working Group
Friant Water Authority
Opposition
None on file
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092