BILL ANALYSIS Ó
SB 1281
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Date of Hearing: August 13, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1281 (Pavley) - As Amended: August 4, 2014
Policy Committee: Natural
ResourcesVote:6-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires the Division of Oil, Gas and Geothermal
Resources (DOGGR) to collect information regarding unlined oil
and gas field sumps. This bill also sets state policy for the
use of water in oil and gas production activities.
Specifically, this bill:
1)Requires DOGGR to annually provide an inventory of all unlined
oil and gas field sumps to the State Water Resources Control
Board (SWRCB) and the California regional water quality
control boards.
2)Declares state policy that oil and gas field exploration,
development, and production use water produced through oil
field activities and other recycled water to the extent
feasible. Encourages the use and reuse of water initially
unsuitable for domestic or irrigation purposes.
3)Requires new oil and gas field exploration, development and
production to use recycled water for the duration of drought
declared as a state of emergency. States that recycled water
includes water that is produced from an oil or gas well that
has been separated from the oil and treated.
4)Prohibits new oil and gas field exploration, development, and
production from using water obtained from a groundwater basin
or high priority sub-basin if this use would compromise
existing use for domestic or irrigation purposes pursuant to
state law declaring the use of water for domestic purposes is
the highest use of water and that the next highest use is for
irrigation.
SB 1281
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5)Requires additional information on water used during oil and
gas field activities on the monthly statement filed by an
owner of a well as specified.
6)Makes various findings and declarations.
FISCAL EFFECT
1)Potential significant GF revenue losses from state leases and
royalties resulting from restricted or terminated oil
operations throughout the state.
As one example, in 2013 the state received $400 million from
the Wilmington field, a water injection operation, in the Long
Beach Area. This bill may restrict continued operations.
2)One-time costs in the range of at least $1 million from the
Oil, Gas, and Geothermal Administrative Fund over a period of
up to two years for the expansion of the reporting system to
include additional required information.
3)Ongoing costs of $125,000 from the Oil, Gas, and Geothermal
Administrative Fund for the management of the expanded data.
COMMENTS
1)Purpose. California is suffering from one of the worst
droughts since it became a state; 2014 is the driest year in
terms of rainfall since 1850.
The author contends the amount of water used in oil and gas
field exploration, development and production is of continuing
and significant public concern. Much of California's oil and
gas production is located in arid parts of the Central Valley
and where existing groundwater may be depleted or under threat
of depletion.
Current required water use reporting to DOGGR does not provide
sufficient information to understand the sources and uses of
water in the oil and gas fields.
This bill will clarify the use of water in the state's oil and
gas fields.
2)Background. A report from the California Environmental
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Resources Evaluation System (CERES) highlighted groundwater
depletion in some of the principal areas of oil and gas
production in California. Specifically, the report looked at
Kern County, which pumped about three-quarters of California's
oil from over 40,000 conventional oil wells in 2010. Kern
County also has an active agricultural sector with over
800,000 acres of irrigated farmland. Although the county
meets demand through surface and groundwater sources, its
strong reliance on groundwater pumping over the last several
decades has resulted in substantial groundwater declines.
Although the oil and agricultural industries have coexisted
for many years in Kern County, elevated water use for
hydraulic fracturing in the context of massive drought could
alter this course. The CERES states there are growing
concerns that the agriculture sector will find it more
lucrative to sell their water for oil exploration than for
growing crops.
3)Unlined Sumps. According to the Central Valley Regional Water
Board (CVRWB), produced water, which accounts for about 95% of
the fluids produced during oil well production (the other 5%
is oil), was historically disposed of by discharge to dry
stream channels or unlined surface impoundments (sumps). A
sump is a surface impoundment or excavated depression used to
separate crude oil, water, and solids in oil fields.
CVRWB is in the process of reviewing unlined sumps in its
jurisdiction. Many of the sumps are covered by out-of-date
waste discharge requirement (WDR) permits, and CVRWB is
working to bring these up-to-date, where needed. This bill
will require DOGGR to collect information on unlined sumps,
which would help CVRWB revise these old permits.
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081