BILL ANALYSIS Ó
AB 1905
Page 1
Date of Hearing: April 4, 2016
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Das Williams, Chair
AB 1905
(Wilk) - As Introduced February 11, 2016
SUBJECT: Natural gas injection and storage: study (Urgency)
SUMMARY: Requires the Natural Resources Agency (NRA), on or
before July 1, 2017, to complete an independent scientific study
on natural gas injection and storage practices and facilities.
EXISTING LAW:
1)Establishes the Division of Oil, Gas, and Geothermal Resources
(DOGGR) as the state's oil and gas regulator.
2)Requires the state's Oil and Gas Supervisor (Supervisor) to
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.
3)Allows DOGGR to apply to the United States Environmental
Protection Agency (US EPA) to receive "primacy" to operate the
Class II Underground Injection Control (UIC) program for oil
and gas injection wells at the state level. The US EPA
granted primacy and delegated authority to DOGGR to operate
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the UIC program in 1983.
4)Requires the Supervisor to produce a public annual report
containing information about the state's oil and gas
production and other related materials.
5)Requires NRA, on or before January 1, 2015, to complete an
independent scientific study on well stimulation treatments.
THIS BILL:
1)Requires NRA, on or before July 1, 2017, to complete an
independent scientific study on natural gas injection and
storage practices and facilities.
2)Requires the independent scientific study to evaluate the
hazards and risks and potential hazards and risks that natural
gas injection and storage pose to natural resources and
public, occupational, and environmental health and safety.
3)Requires the independent scientific study to do all of the
following:
a) Follow standard protocols of the scientific profession;
b) Identify and evaluate well construction standards and
operation techniques;
c) Determine the average age of injection wells at natural
gas storage facilities in the state and determine whether
the construction standards used in the aging wells are
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adequate to protect public and environmental health and
safety;
d) Identify the proximity of existing natural gas storage
facilities in the state to population centers and the risks
posed by those facilities to nearby populations;
e) Identify the chemicals currently used as odorants at
natural gas storage facilities in the state and the risk
they pose;
f) Evaluate potential alternatives to the odorants
currently used to determine if there are alternatives;
g) Evaluate the current state regulatory structure for
natural gas storage facilities and recommend improvements;
and,
h) Clearly identify where additional information is
necessary to inform and improve the analyses.
4)Provides that the measure is an urgency statute.
FISCAL EFFECT: Unknown
COMMENTS:
1)Aliso Canyon Leak. On October 23 2015, a natural gas storage
well, known as "SS-25" owned by Southern California Gas
(SoCalGas) and located in the Aliso Canyon storage field in
close proximity to the Porter Ranch neighborhood in Los
Angeles County began leaking natural gas. The leak continued
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until it was initially controlled on February 11, 2016, and
the well was successfully sealed on February 18, 2016. During
the four months the well leaked, there were numerous attempts
to control it. All attempts to stop the leak from the top of
the well failed. A relief well was finally able to stop the
natural gas leak by plugging the leaking well at its base.
According to a recent study, the leak at Aliso Canyon was the
largest natural gas leak recorded in the United States,
doubling the methane emission rate of the entire Los Angeles
basin. Methane is a potent greenhouse gas with a global
warming potential more than 80 times as powerful as carbon
dioxide.
The South Coast Air Quality Management District has received
thousands of complaints regarding the odor. Complaints by
residents suggest that mercaptans, which are odorants required
to be added to natural gas, have been present in Porter Ranch
at varying levels since the gas leak started. Some people
may experience adverse health effects to the strong odors of
mercaptans, such as nausea and headaches. In mid-November,
the Los Angeles County Department of Public Health, citing
public health concerns associated with the use of odorants in
the natural gas, ordered SoCal Gas to provide temporary
housing relocation assistance to affected residents. Over
5,000 Porter Ranch households were relocated due to the leak.
Now that the leak has been stopped, residents are returning
home regulators are investigating the cause of the leak, and a
comprehensive safety review of the other 114 wells at the
field has begun.
2)Natural Gas Storage Facilities. Natural gas providers inject
natural gas into large underground reservoirs for storage
before later withdrawing the gas for sale during peak load
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periods. These underground reservoirs often contained oil or
gas that has already been extracted. Natural gas providers
utilize these facilities to reduce the cost of procurement and
to maintain adequate supply of natural gas during peak times.
While the California Public Utilities Commission (CPUC)
regulates natural gas providers, natural gas transmission
lines, and the permitting of natural gas storage facilities,
it is DOGGR that regulates the wells that natural gas is
injected into and withdrawn from. Gas storage injection wells
are the only type of injection wells in DOGGR's UIC program
that are not part of the primacy agreement with US EPA.
DOGGR's UIC program regulates fourteen active gas storage
facilities in 12 separate fields across the state to ensure
well construction and integrity, appropriateness of the
injection site, and zonal isolation of the injections. Each
natural gas storage facility may contain dozens of active gas
storage wells. Many of these natural gas storage wells are
near residential development, similar to the Aliso Canyon
Natural Gas Storage Facility. Some natural gas storage
facilities have been in operation since the 1940s and
approximately half of the active wells are over 40 years old.
Many of the older wells were not built to today's well
construction standards and lack the best technology available
to operate safely.
3)DOGGR's UIC Problems. In 1974, the Safe Drinking Water Act
gave the US EPA the authority and responsibility to control
underground injection to protect underground drinking water
sources. In 1982, a primacy agreement was signed that allowed
DOGGR to implement the US EPA's UIC program for oil and gas
wells in California. DOGGR's handling of the portion of the
UIC program delegated to it by the US EPA has come under
criticism in recent years. A 2011 US EPA audit of DOGGR's UIC
program implementation concluded that DOGGR was misclassifying
underground sources of drinking water and doing an
insufficient job monitoring the UIC program. In June 2014, it
was discovered that DOGGR was approving injection wells in
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nonexempt aquifers. This included injections into aquifers
that were not properly exempted, but also included injections
into aquifers that were never exempt. California
Environmental Protection Agency's (CalEPA) review found that
DOGGR's district offices were approving projects without
review from DOGGR and were making errors identifying the
injectable zone of exempt aquifers. This included
misidentifying the borders and depth of the aquifer and
allowing expansion of productive limits over time beyond
boundaries established in the Primacy Application.
Last year SB 83 (Committee on Budget and Fiscal Review),
Chapter 24, Statutes of 2015, required the Secretary for
Environmental Protection and the Secretary of NRA to appoint
an independent review panel (Panel), on or before January 1,
2018. The Panel will evaluate the regulatory performance of
DOGGR's administration of the UIC program and to make
recommendations on how to improve the effectiveness of the
program. The recommendations the Panel can make include:
requests for additional resources; needed statutory or
regulatory changes; proposals for program reorganization; and,
whether to transfer the UIC program to the State Water
Resources Control Board. In October 2015, DOGGR released a
plan titled "Renewal Plan For Oil and Gas Regulation" which
was intended to address concerns over its handling of the UIC
program and its regulation of oil and gas in general. The
plan called for the review of all injection projects and the
review and updating of all UIC regulations. Many of those
regulations had not been changed in decades. Concerns have
been raised that DOGGR has not required enough inspections,
maintenance, or upgrades for older natural gas storage wells
to prevent leaks. DOGGR indicates they were already in the
process of updating their gas storage regulations when the
leak occurred.
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4)State Actions. On January 6, 2016, the Governor issued a
proclamation of a state of emergency, which directed several
state agencies to act in response to the Aliso Canyon gas
leak. These actions included all of the following:
a) Direction to DOGGR to continue prohibiting all
injections into the Aliso Canyon;
b) Direction to CPUC and California Energy Commission (CEC)
to reduce the pressure of the facility by withdrawing gas;
c) Directing California Air Resources Board (ARB) to
require real-time monitoring of emissions;
d) Direction to the Office of Environmental Health Hazard
Assessment to review public health concerns, ensure energy
and natural gas reliability;
e) Direction to DOGGR to promulgate emergency regulations
to require new safety and reliability measures for
underground natural gas storage facilities; and,
f) Direction to DOGGR, CPUC, ARB, and CEC to assess the
long-term viability of natural gas storage facilities.
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DOGGR established emergency regulations to improve the
regulation of gas storage wells. The regulations include the
requirement that within six months after the regulations
become effective, the operator of a gas storage facility to
submit a Risk Management Plan to DOGGR to assess the integrity
and risk associated with their gas storage project.
5)Independent Science Study. This bill is very similar to a
requirement for an independent science study in SB 4 (Pavley),
Chapter 313, Statutes of 2013, which looked at the risks and
hazards well stimulation treatments posed to natural resources
and public, occupational, and environmental health and safety.
The Governor has directed DOGGR, CPUC, ARB, and CEC to assess
the long-term viability of natural gas storage facilities and
operators are being required by DOGGR to do a risk management
plan. However, there is value in an independent scientific
review of natural gas storage in the state. The independent
science study on well stimulation raised important questions
and issues, and the Governor's office formed a SB 4
interagency working group to respond to the study's findings
and recommendations. The study required by this bill could
also help inform how the state regulates natural gas storage
facilities.
6)Technical Amendments. This bill asks the science study to
identify the proximity of natural gas storage facilities to
population centers, but does not define the term. There are
other technical issues with the bill as well. The author and
committee may wish to consider amending the bill to use
residential development instead of population centers and
correct technical issues.
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7)Related Legislation.
SB 380 (Pavley) imposes an immediate moratorium on natural gas
injection and a restriction on natural gas production at the
Aliso Canyon storage facility until certain conditions are met.
The bill is awaiting a hearing in the Assembly Appropriations
Committee.
SB 887 (Pavley) revises requirements for natural gas storage
facilities. This bill will be heard on March 29 in the Senate
Natural Resources and Water Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
Environmental Defense Fund
Opposition
AB 1905
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None on file
Analysis Prepared by:Michael Jarred / NAT. RES. / (916) 319-2092