BILL ANALYSIS Ó
SENATE COMMITTEE ON NATURAL RESOURCES AND WATER
Senator Fran Pavley, Chair
2015 - 2016 Regular
Bill No: SB 248 Hearing Date: April 14,
2015
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|Author: |Pavley | | |
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|Version: |April 6, 2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Katharine Moore |
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Subject: Oil and gas
BACKGROUND AND EXISTING LAW
1.There are approximately 90,000 active oil and gas wells in the
state. These wells are primarily oil and gas production
wells, injection wells used to enhance oil recovery by a
variety of methods, oil field wastewater disposal injection
wells and gas storage wells, among others. About half of the
state's active oil and gas wells are injection wells of which
about 1,500 are waste disposal wells. As of 2013, California
was the third ranked oil producing state by volume and also a
significant producer of natural gas.
2.Primary oil and gas production is when the oil and gas
reservoir has sufficient internal pressure that the oil/gas
can be produced using only pumping or other artificial lift
method. Secondary and tertiary oil and gas production methods,
collectively known as Enhanced Oil Recovery (EOR) methods,
typically involve the addition of pressure and/or heat via
injection well to the hydrocarbon reservoir in order to
promote hydrocarbon production. Primary and EOR-assisted
production are used both on and offshore.
3.Many of California's principal oil and gas fields have been in
production for several decades. As these fields age and
become depleted, EOR often must be used to continue
production. In many fields the crude oil is very heavy and
also must be produced using EOR. Approximately 60% of the
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state's oil production depends upon EOR. In contrast,
hydraulic fracturing and other well stimulation treatments
were responsible for about 25% of the state's oil production
according to a recent report.
4.The Division of Oil, Gas, and Geothermal Resources (division)
in the Department of Conservation is the state's oil and gas
regulator. Existing law requires the state's oil and gas
supervisor to produce a public annual report containing
information about the state's oil and gas production and other
related material, as specified.
5.The division sought and received "primacy" to operate the
class II underground injection control (UIC) program from the
US Environmental Protection Agency (US EPA) in the early
1980s. The class II UIC program is for oil and gas injection
wells. These include wells used for EOR and waste disposal.
Recent revelations (see comments) have revealed long-standing
mismanagement of the UIC program by the division.
6.In 2011, an audit of the division's UIC program was completed
by a US EPA contractor. One of the numerous issues raised by
the audit was the need to improve the number and type of
inspections by the division. This is not a problem unique to
California - a recent report from the US General Accounting
Office on the UIC program of several states, including
California, also highlighted the need to systematically
improve inspection practices.
7.Existing law requires an owner or operator of a well to keep
and at specified times file with the division, a careful and
accurate log, core record, and history of the drilling of the
well. Existing law and regulation specify what information
must be provided.
8.Existing law also requires monthly reporting to the division
of certain oil and gas production, and water source,
production, use and disposition information.
9.It has long been known that disposal of large amounts of waste
in deep injection wells is, in some instances, associated with
an increase in seismic activity. In recent years, the boom in
hydraulic fracturing of oil and gas wells has led to
significant increases in oil and gas wastewater in need of
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disposal. Scientists have reported significant overall
increases in seismic activity, particularly in areas with
little previous activity, and attributed it to increased use
of injection wells for waste disposal. While most of these
earthquakes have been relatively minor, a 2011 magnitude 5.6
earthquake in Oklahoma was attributed to waste disposal well
injections.
PROPOSED LAW
This bill would require the division to review and update its
regulations, data management practices and enhance required
reporting. Specifically, this bill would:
Require complete reporting of all activities conducted
on an oil and gas well,
Require injection well regulations to be updated,
including the development of "best management practices"
for injection wells through a public process with
independent expert and stakeholder input,
Require injection well regulations be specific to each
kind of injection well, as specified, including "full and
complete characterization and reporting, including
monitoring" of the well,
Require existing injection wells to be brought into
compliance with the new regulations,
Require the reporting of the chemical composition of
produced water and any fluids injected into an injection
well,
Require public participation in the injection well
review process,
Require the development of an inspection protocol and
schedule with reporting on the inspection results,
Enhance waste disposal injection well reporting,
Require the development and implementation of a new data
management system to improve data handling and ensure ready
public access to the division's data and actions, as
specified, and
Add an ongoing requirement that the division review and
update its regulations and other requirements at least once
every 10 years, as specified, among other provisions.
ARGUMENTS IN SUPPORT
According to the author, "in the last few years, the division
and its operations have come under increasing scrutiny. About
five years ago, the division starting asking the Legislature for
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- and receiving - increased funding and personnel to revamp its
injection well program. The then-supervisor released a draft
plan to address deficiencies in that program. Many of these
problems were highlighted in the 2011 EPA audit of the injection
well program. It's now 4 years later, and I have a few more
draft plans released by the division. It's time for legislative
action to ensure there is a final plan that gets fully
implemented and the division's outdated regulations are revised
to reflect advances in oil and gas field technology."
"The state is in the fourth year of an extreme drought. We
recently found out that over 2,500 injection wells are injecting
oil and gas-related wastewater and other fluids into groundwater
that, in many instances, others are using for drinking and
irrigation water. The division knew about this issue for years,
and did little to resolve it. The division has only shut down a
handful of wells while it investigates, putting much needed
groundwater at risk. The division does not know all of the
materials and chemicals put into those wells. How can the
division fulfill its regulatory mission to protect the state's
groundwater, natural resources and public health and safety, if
it doesn't collect information about many oil and gas field
operations and depends on regulations it acknowledges are
out-of-date?"
The author continues, "SB 248 seeks to spur reform at the
division and specifically within its oil and gas injection well
program in order to provide regulatory accountability and public
transparency. The division has repeatedly promised to update
these regulations for over 5 years with little apparent
progress. My bill puts a statutory framework in place to
require the division to regularly review its practices."
ARGUMENTS IN OPPOSITION
None received.
COMMENTS
This bill is a work-in-progress . This bill seeks to address oil
and gas field practices that are, in many instances, poorly
defined in statute and regulation, despite being in widespread
use. According to the author's office, stakeholder discussions
and additional efforts, including the review of law and
regulations in other major oil and gas-producing states,
continue. This includes, for example, developing an appropriate
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definition of EOR. The completion of the independent science
study required by SB 4 (Pavley, c. 313, Statutes of 2013) later
this year may also inform the bill's language. The bill also
does not yet specify dates that many of the required actions
must be completed by. The committee may wish to direct staff to
continue working with the author's office, should the bill pass
the committee today.
March 10, 2015 joint hearing . Last month, the Senate Committees
on Natural Resources and water and Environmental Quality
convened a joint hearing on the implementation of the state's
UIC program. The hearing reviewed the division's
acknowledgement of over 2,500 injection wells that were
improperly permitted and are currently injecting fluids and oil
and gas wastewater into groundwater that may be or is of
sufficiently good quality to serve as a source of drinking and
irrigation water. The division, the water boards and the US EPA
have agreed upon a plan to assess these wells and bring them
into compliance or shut them down over the next two years. (In
the last week, the division has released proposed emergency
regulations to codify this plan.) Hearing materials also
document repeated assurances from the division, starting with
the FY 2010/11 budget, that injection well regulations would be
revised, and other discrepancies between the division's
regulations and permitting decisions by its staff. All of the
division's current injection well regulations are over 20 years
old, and, in some instances, injection wells are allowed to
operate at pressures exceeding that needed to fracture the
surrounding formation contrary to regulation. At the hearing,
the division also acknowledged the need to improve its data
management and handling practices.
Existing reporting loophole . When hydraulic fracturing of oil
and gas wells became of wide-spread concern, legislative
requests to the division for additional information revealed
that only certain records, such as core logs - which focus on
the geologic strata encountered while drilling - were required
to be reported. While requirements for well stimulation
treatment data reporting are now in place, this loophole remains
for other processes. For example, a recent white paper prepared
by the US Geological Survey in support of the development of
model groundwater monitoring criteria required by SB 4 states
that the chemicals used routinely in EOR are not reported.
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SB 4 Independent Science Study . The first volume of the study
was released in early January 2015. While focused on well
stimulation treatments, this study also described some of the
reporting needed to understand related oil and gas field
practices. For example, this included the need to have more
detailed information available on wastewater disposal injections
in order to investigate whether these injections are associated
with seismic activity in the state. Three later volumes are due
by July 2015, and a more thorough assessment of wastewater
disposal by injection wells is expected to be included.
Related legislation
SB 454 (Allen, 2015) This bill seeks to alter the aquifer
exemption process for the UIC program (in the Senate Rules
Committee)
SB 545 (Jackson, 2015) This bill would revise and update
division's authority and permitting practices, and reform the
handling of confidential wells (before the Senate Natural
Resources and Water Committee at this hearing)
AB 356 (Williams, 2015) This bill would provide for reform of
the UIC program with an emphasis on the role of the Water Boards
and require groundwater monitoring in the vicinity of UIC wells
(before the Assembly Natural Resources Committee)
SUPPORT
Association of California Water Agencies
OPPOSITION
None Received
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