BILL ANALYSIS Ó
SB 248
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Date of Hearing: August 19, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 248
(Pavley) - As Amended August 17, 2015
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill requires the Division of Oil, Gas, and Geothermal
Resources (DOGGR) to update and revise its regulations, develop
a data management system, and enhance required reporting.
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Specifically, this bill:
1)Requires the Oil and Gas Supervisor to establish an inspection
program for all regulatory activities, as specified, to be
available to the public and included in the Supervisor's
annual report. Defines enhanced oil recovery as specified.
2)Adds data requirements and timelines for the Oil and Gas Data
Management System developed pursuant to the Budget Act of
2015.
3)Requires DOGGR to update its injection well regulations,
except those currently under review, by January 1, 2018,
through a public process with independent expert and
stakeholder input. Requires DOGGR to review its regulations
and rules at least every 10 years and update as necessary.
4)Requires injection wells, in existence as of December 31,
2017, to be brought into compliance with the 2018 regulations
by January 1, 2020.
5)Requires out-of-compliance injection wells subject to April
2015 emergency regulations to meet the compliance schedule or
cease operations.
6)Requires DOGGR to develop additional safeguards to protect
groundwater in shallow depths or wells as specified.
7)Requires the chemical composition of injection fluid and
produced water to be characterized and reported in the well
history and monthly statements, as specified.
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8)By January 1, 2017, prohibits the use of injection chemicals,
unless DOGGR has complete information about specified
properties and potential groundwater impacts. Requires the
DOGGR to consult with the Office of Environmental Health
Hazard Assessment (OEHHA) to develop a list of chemicals and
impacts, and post the list on its internet website.
9)Modifies the definition of "oil sump" and prohibits disposal
of water or wastewater associated with oil or gas exploration,
development or production into oil sumps beginning July 1,
2017.
FISCAL EFFECT:
1)Increased annual cost of approximately $850,000 (Oil, Gas, and
Geothermal Fund) for DOGGR to increase inspection activities,
update regulations, increase compliance, and provide
information to the public.
2)Unknown, potential losses of fee revenue (Oil, Gas, and
Geothermal Fund) resulting from ceased operations of
noncompliant wells.
COMMENTS:
1)Purpose. According to the author, "Numerous new stories and
editorials across the state cite the need for reform at the
Division of Oil, Gas and Geophysical Resources (DOGGR) and its
programs, particularly the injection well program. This bill
backstops the Administration's promised reforms and adds
appropriate statutory requirements to protect the state's
groundwater. This bill achieves this in part by directly
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responding to the recent independent science study on fracking
and closing reporting loopholes that have previously resulted
in significant data gaps concerning oil and gas operations.
With SB 248 DOGGR will have the information it needs to assess
risks to and protect groundwater."
2)Background. There are approximately 90,000 active oil and gas
wells in the state. These wells are primarily: 1) oil and
gas production wells, 2) injection wells used to enhance oil
recovery by a variety of methods, 3) oil field wastewater
disposal injection wells, and 4) gas storage wells.
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.
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.
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
state's oil production depends upon EOR. In contrast,
hydraulic fracturing and other well stimulation treatments
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were responsible for about 25% of the state's oil production
according to a recent report.
3)Division of Oil, Gas, and Geothermal Resources. DOGGR in the
Department of Conservation is the state's oil and gas
regulator and is headed by the oil and gas supervisor. The
supervisor is generally charged with overseeing the drilling,
operation, maintenance, and abandonment of wells, tanks, and
other facilities used in oil and gas regulation to prevent
damage to life, health, property, and natural resources.
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.
DOGGR 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 have revealed long-standing mismanagement of the
UIC program by the division.
In 2011, an audit of the DOGGR 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 DOGGR.
4)State budget action. The 2015-16 state budget provided DOGGR
with 23 new permanent positions to address deficiencies in the
Underground Injection Control (UIC) program. In addition, it
included the following reforms:
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a) Requires State Water Resources Control Board (SWRCB)
concurrence on any proposed aquifer exemptions prior to
submittal to U.S. EPA.
b) Includes enhanced reporting requirements to the
Legislature on corrective actions. a
c) Requires, by January 1, 2018, the Secretary of CalEPA
and the Secretary of the Natural Resources Agency to
appoint an independent review panel to evaluate the
regulatory performance of the DOGGR's administration of the
UIC program, which will make recommendations on how to
improve the effectiveness of the program and consider
transferring the program to the SWRCB.
5)SB 4 Science Study. On July 9, the SB 4 (Pavley, 2013),
Chapter 313, Statutes of 2013, independent scientific study
volume II and III on well stimulation in California was
released. The study contains many conclusions about well
stimulation and about oil and gas production in California
more generally. SB 248 seeks to address the data gaps
identified by the study that prevent a full assessment of oil
and gas operations and risks to groundwater.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081
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