BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 1281 (Pavley) - Oil and gas production: water use reporting.
Amended: April 21, 2014 Policy Vote: NR&W 8-0
Urgency: No Mandate: Yes (see staff comment)
Hearing Date: May 23, 2014 Consultant: Marie Liu
SUSPENSE FILE.
Bill Summary: SB 1281 would state that it is the policy of the
state that oil and gas field activities should use recycled
water to the extent feasible and that the use and reuse of water
unsuitable for drinking or irrigation purposes is encouraged.
This bill would also expand requirements for monthly reports
from an owner of an oil and gas well to the Division of Oil,
Gas, and Geothermal Resources (DOGGR) to include information
regarding the use of water on the oil field.
Fiscal Impact:
One-time costs of up to $1.3 and $2.9 million from the Oil,
Gas, and Geothermal Administrative Fund (special) over a
period of one to two years for the expansion of the oil and
gas well information reporting system for additional required
information.
Ongoing costs of $125,000 from the Oil, Gas, and Geothermal
Administrative Fund (special) for the management of the
expanded data.
Background: Existing law requires the owner of an oil and gas
well to report monthly to DOGGR regarding specified information,
including the amount of oil and gas produced from each well in
the past month and the disposition of the gas produced (PRC
§3227).
SB 4 (Pavley) Chapter 313, Statutes of 2013 established a
regulatory program for oil and gas well stimulation treatments
(e.g. hydraulic fracturing, acid well stimulation) which
includes, among other things, a study, the development of
regulations, a permitting process, and public notification and
disclosure. Section 3160 of the Public Resources Code states
required content of the regulations, including full disclosure
of the composition and disposition of hydraulic fracturing
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fluids and acid stimulation treatment fluids. At a minimum, this
disclosure includes the source, volume, and specific composition
and disposition of all water, including water that is used as a
base fluid and water that is recovered from the well following
the treatment.
Proposed Law: This bill would state that it is the state's
policy that oil and gas field operations should use, or treat
and use, water produced through oil field activities and
recycled water, to the extent feasible. The use of water
unsuitable for drinking or irrigation is encouraged.
This bill would also require the following information to be
included in the monthly reports that well owners are required to
submit to DOGGR: (1) the source of fluid or gas injected into
each well, including the source and amount of water used to
generate injected fluid or gas; and (2) the treatment of water
and the use of treated or recycled water in oil and gas field
activities.
Staff Comments: The information from the monthly reports is
currently input into DOGGR's oil and gas well information system
called WellStat. WellStat includes information on active wells,
production and injection volumes, production and injection days,
and well permitting and field inspection data. If WellStat was
expanded to include the new water-related information required
by this bill, DOGGR anticipates needing one-time costs between
$1.3 and 2.9 million for coding, database design, testing, and
training. Ongoing costs of $125,000 for one PY would also be
necessary to assist in the management of the expanded
information system. By having this new data in WellStat, DOGGR
will be able to do detailed analysis of the data, such as the
relative use of recycled water vs fresh water in a particular
oil field or region.
However, this bill only requires that this information be
submitted and is silent on what DOGGR is to do with the data.
Under this bill, it would be permissible for DOGGR to create a
simple database just for the new water-related information at a
significantly lower cost. The utility of such a database would
be significantly less than an expansion of WellStat, but could
be sufficient for aggregating statewide data.
This bill is tagged as a state mandate as it modifies a crime or
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infraction. However, there are no reimbursable costs.