Amended in Senate April 26, 2016

Amended in Senate March 28, 2016

Senate Bill No. 887

Introduced by Senator Pavley

(Coauthors: Senators Allen and De León)

(Coauthor: Assembly Member Wilk)

January 20, 2016

An act to add Chapter 6 (commencing with Section 42710) to Part 4 of Division 26 of the Health and Safety Code, and to amend Section 3236.5 of, and to add Sections 3133, 3134, 3135, 3136, 3137, 3138, 3139, 3140, 3141, 3142, 3143, and 3144 to, the Public Resources Code, relating to natural gas.

LEGISLATIVE COUNSEL’S DIGEST

SB 887, as amended, Pavley. Natural gas storage wells.

Under existing law, the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation regulates the drilling, operation, maintenance, and abandonment of oil and gas wells in the state. Existing law provides that a person who fails to comply with specific laws relating to the regulation of oil or gas operations is guilty of a misdemeanor.

This bill would require the division, before January 1, 2018, and annually thereafter, to inspect all natural gas storage wells serving or located in a natural gas storage facility and would prescribe standards for a natural gas storage well. This bill would require a natural gas storage well in existence on December 31, 2016, to be brought into compliance with the provisions of this bill by an unspecified date and the use of wells older than an unspecified age to be phased out by an unspecified date. This bill would prohibit the division from issuing a permit for a new natural gas storage well located within an unspecified distance of a sensitive receptor, as defined, and would require the division to order operators to cease the use of, and plug and abandon, an existing natural gas storage well that is within an unspecified distance of a sensitive receptor by an unspecified date. This bill would require, in the event of a loss of the integrity of a natural gas storage well, well casing, or cementing resulting in a significant, uncontrolled leak of natural gas, that preparations for the drilling of a relief well begin within 24 hours of the discovery of the leak. This bill would require the operator, in the event of a leak of any size from a natural gas storage well, to notify the division immediately and would require the division to post information about the leak on its Internet Web site, as prescribed. This bill would require the division to convene an independent panel of recognized experts to develop best practices for natural gas storage facilities and to review and incorporate the best practices developed by the panel into its regulations for natural gas storage wells, begin delete as end delete begin insert if end insert appropriate, and begin insert to the extent those practices are applicable, end insert for other wells under the division’s begin delete jurisdiction, as applicable. end delete begin insert jurisdiction. The bill would require the division to periodically, and whenever necessary, review advances in relevant technologies and best practices for natural gas storage facilities and, if appropriate, to incorporate changes in best practices into its regulations for natural gas storage wells and, to the extent those practices are applicable, for other wells under the division’s jurisdiction. end insert This bill would require the division, in consultation with the Office of Environmental Health Hazard Assessment, the State Department of Public Health, and the Department of Industrial Relations, to perform a risk assessment of natural gas storage wells and to report the findings of the risk assessment to the Legislature. This bill would require the State Air Resources Board, in consultation with any local air district and the division, to develop guidelines for a monitoring program that includes continuous monitoring of the ambient concentration of natural gas at sufficient locations throughout a natural gas storage facility or planned natural gas storage facility to identify natural gas leaks and the presence of natural gas emissions in the atmosphere. The bill would require an operator of a natural gas storage facility to develop and submit to the board a facility monitoring plan that satisfies the program requirements, and would require the board to review the plan and to either approve or disapprove the plan. This bill would require monitoring data to be provided to the board. This bill would require the division to post and make available on its Internet begin delete Website end delete begin insert Web site end insert all materials that are provided to the board or division in order to comply with the provisions added by this act. Because a violation of these requirements would be a crime, the bill would impose a state-mandated local program.

Existing law requires the operator of a well to file a written notice of intention to commence drilling with, and prohibits any drilling until approval is given by, the supervisor or district deputy. Under existing law, the notice is deemed approved if the supervisor or district deputy fails to respond to the notice in writing within 10 working days from receipt and is deemed canceled if operations have not commenced within one year of receipt. Existing law provides that these provisions also apply to the deepening or redrilling of the well, any operation involving the plugging of the well, or any operations permanently altering in any manner the casing of the well.

This bill would require certain materials, relating to wells serving or located in a natural gas storage facility, to be submitted by the operator and approved at the supervisor’s discretion before approval of the notice. This bill would provide that the public has a right to review the locations of all new natural gas storage wells or existing wells converting to natural gas storage wells before the approval of the notice.

Existing law requires the owner or operator of any well to keep, or cause to be kept, a careful and accurate log, core record, and history of the drilling of the well.

This bill would require the well history to include all operations, injection, production, and emplacement of any materials into a natural gas storage well, and to be disclosed to the division by the operator, as specified.

Under existing law, a person who violates certain statutes or regulations relating to oil and gas well operations is subject to a civil penalty not to exceed $25,000 for each violation. Existing law provides that the unreasonable waste of natural gas by act, omission, sufferance, or insistence is opposed to the public interest and is unlawful.

This bill would provide that a violation of the prohibition against the unreasonable waste of natural gas is subject to the civil penalty not to exceed $25,000 for each violation.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares as follows:

(a) Public transparency regarding regulations and regulatory
activity to protect public health and welfare and natural resources
is essential.

(b) Safe operation of gas storage wells and associated piping
and equipment is essential in order to provide for public,
environmental, and occupational health and welfare, and includes
a proactive approach to potential problems.

(c) On October 23, 2015, a significant, uncontrolled leak from
a natural gas storage well that was originally drilled over 60 years
ago was discovered in the Aliso Canyon natural gas storage facility
located in the County of Los Angeles. Initial efforts to stop the
leak failed.

(d) The Division of Oil, Gas, and Geothermal Resources in the
Department of Conservation responded swiftly to the leak,
including by issuing two orders that, among other things, require
the use of relief wells. The division worked around the clock
overseeing efforts to stop the leak.

(e) It was several days before the community was notified of
the leak, although numerous residents started reporting odor
concerns almost immediately. The leaking well is up the hill and
approximately one and one-quarter miles away from the nearest
home. Other natural gas storage wells serving this facility are
located closer to homes.

(f) The Governor declared a state of emergency on January 6,
2016, in order to facilitate the ongoing state response and efforts
to stop the leak.

(g) On February 18, 2016, the Division of Oil, Gas, and
Geothermal Resources in the Department of Conservation certified
that the Aliso Canyon leak had been stopped. Reports estimate
almost 100,000 metric tons of the potent greenhouse gas methane
was emitted to the atmosphere. Community health concerns
continue postleak with over 150 complaints reported to the County
of Los Angeles.

(h) The standards for natural gas storage wells need to be
improved in order to reflect 21st century technology, recognize
that these facilities may be in locations near population centers,
and ensure a disaster like the Aliso Canyon leak does not happen
again.

SEC. 2.  

Chapter 6 (commencing with Section 42710) is added
to Part 4 of Division 26 of the Health and Safety Code, to read:

 

Chapter  6. Natural Gas Storage Facility Monitoring

 

42710.  

(a) The state board, in consultation with any local air
district and the Division of Oil, Gas, and Geothermal Resources
in the Department of Conservation, shall develop a natural gas
storage facility monitoring program that includes continuous
monitoring of the ambient concentration of natural gas at sufficient
locations throughout a natural gas storage facility or planned
natural gas storage facility to identify natural gas leaks and the
presence of natural gas emissions in the atmosphere. The
continuous monitoring program may be supplemented by daily
leak detection measurements.

(b) The program shall include guidelines for the continuous
monitoring which shall include, at minimum, optical gas imaging
and accurate quantitative monitoring of natural gas concentrations.
The program shall include protocols for both stationary and mobile
monitoring, as well as fixed and temporary monitoring locations.

(c) An operator of a natural gas storage facility shall develop
and submit to the state board a facility monitoring plan that satisfies
program requirements pursuant to subdivision (a). The state board
shall review the plan and may approve or disapprove the plan.

(d) Monitoring data shall be provided to the state board. All
materials provided to comply with this section shall be posted and
available to the public on the Internet Web site of the Division of
Oil, Gas, and Geothermal Resources.

SEC. 3.  

Section 3133 is added to the Public Resources Code,
to read:

3133.  

(a) As used in this article, “natural gas storage well”
means an active or idle natural gas storage well serving or located
in a natural gas storage facility.

(b) Before January 1, 2018, and annually thereafter, the division
shall inspect all natural gas storage wells.

(c) A natural gas storage well in existence on December 31,
2016, shall be brought into compliance with this article by ____.
The use of a natural gas storage well older than ____ shall be
phased out by ____.

SEC. 4.  

Section 3134 is added to the Public Resources Code,
to read:

3134.  

A natural gas storage well shall meet all of the following
standards:

(a) The well shall have an automatic downhole shutoff system,
including, but not limited to, surface-controlled subsurface safety
valves, deployed in order to limit leaks associated with a loss of
the integrity of a well, well casing, or cementing. The shutoff
system shall be tested and the results of the test shall be reported
to the division no less than annually.

(b) Proactive evaluation of the integrity of the well, well casing,
and cementing across the entire length of the well shall be
conducted to thoroughly, quantitatively, and accurately assess their
condition. These assessments shall be performed using the best
available technology. Based upon these assessments, the risks
posed by erosion, corrosion, aging, scaling, cracking, and any other
process that may produce natural gas leaks shall be determined.
A natural gas storage well that has lost integrity or that is at risk
of an imminent loss of integrity shall be immediately repaired
before returning to service. A natural gas storage well at high risk
of a loss of integrity shall be evaluated pursuant to the measures
in this subdivision at least annually.

(c) Natural gas injection and production shall be through tubing
only and isolated from contact with the well casing.

(d) Annular pressure and production or injection flow rate shall
be continuously monitored.

SEC. 5.  

Section 3135 is added to the Public Resources Code,
to read:

3135.  

(a) For the purposes of this section, “sensitive receptor”
includes, but is not limited to, a school, hospital, and residential
housing.

(b) In addition to the requirements of Section 3134, a natural
gas storage well that is within 10,000 feet of a sensitive receptor
shall meet both of the following requirements:

(1) Have continuous monitoring of natural gas concentrations
to identify natural gas leaks at the wellhead.

(2) Be evaluated pursuant to the measures in subdivision (b) of
Section 3134 at least annually.

(c) The division shall not issue a permit for a new natural gas
storage well located within ____ feet of a sensitive receptor, and
the division shall order operators to cease the use of, and plug and
abandon, an existing natural gas storage well within _____ feet of
a sensitive receptor by ____.

SEC. 6.  

Section 3136 is added to the Public Resources Code,
to read:

3136.  

(a) The operator of a natural gas storage well shall
submit for the supervisor’s approval the following materials:

(1) A regular maintenance program for the well and the portion
of the facility within the division’s jurisdiction. The maintenance
program shall include training for site personnel and proactive
replacement of equipment at risk of failure to ensure safe operation.

(2) Design and operating conditions and parameters for the well
and the portion of the facility within the division’s jurisdiction.

(3) An inspection, leak detection, and monitoring program for
the well and the portion of the facility within the division’s
jurisdiction that includes monitoring of natural gas concentrations
pursuant to Chapter 6 (commencing with Section 42710) of Part
4 of Division 26 of the Health and Safety Code. Ambient natural
gas monitoring sufficient to include monitoring of a new or
reworked well shall be in operation before a new well is drilled or
a well is reworked.

(4) A site-specific risk management plan to identify and plan
for mitigation of all hazards and potential hazards associated with
natural gas storage well operation. The risk management plan shall
provide for regular review and revision, as needed, to ensure the
plan appropriately reflects current conditions. The risk management
plan shall include, but is not limited to, all of the following:

(A) A natural gas leak prevention and response program that
addresses the full range of natural gas leaks possible at the facility
with specific response plans that provide for immediate control of
the leak. The prevention and response program shall include, but
is not limited to, all of the following:

(i) A protocol for public notice of the leak to the community by
the operator.

(ii) Prepositioning and identification of materials and personnel
necessary to respond to leaks. This shall include materials,
including equipment to capture leaked gas, to respond to the leak
itself as well as to protect public health.

(iii) A training program to ensure site personnel are prepared
to respond to a leak.

(B) A plan for corrosion monitoring and evaluation.

(C) A schedule for regular well and reservoir integrity
assessments.

(D) An assessment of the risks associated with the natural gas
storage well and its operation.

(E) Planned risk mitigation efforts.

(b) All of the materials described in subdivision (a) shall be
approved by the supervisor, at his or her discretion, and in the
possession of the division before the supervisor or district deputy
approves a notice required pursuant to Section 3203.

(c) All of the materials described in subdivision (a) shall be
reported to the division annually. The operator shall not deviate
from the programs, plans, and other conditions and protocols
contained in the materials without prior written approval by the
supervisor.

SEC. 7.  

Section 3137 is added to the Public Resources Code,
to read:

3137.  

The public has a right to review the location of a natural
gas storage well or conversion of an existing well to a natural gas
storage well before the approval of any notice required pursuant
to Section 3203.

SEC. 8.  

Section 3138 is added to the Public Resources Code,
to read:

3138.  

In the event of a loss of the integrity of a natural gas
storage well, well casing, or cementing resulting in a significant,
uncontrolled leak of natural gas, preparations for the drilling of a
relief well shall begin within 24 hours of the discovery of the leak
regardless of any other activities undertaken to stop the leak.

SEC. 9.  

Section 3139 is added to the Public Resources Code,
to read:

3139.  

In the event of a leak of any size from a natural gas
storage well, the operator shall notify the division immediately.
Within 24 hours of notification, the division shall post information
about the leak on its Internet Web site and provide regular updates
to the public until the leak is stopped.

SEC. 10.  

Section 3140 is added to the Public Resources Code,
to read:

3140.  

(a) The division shall convene an independent panel of
recognized experts to develop best practices for natural gas storage
facilities. The panel shall consider at least all of the following:

(1) The proximity of a natural gas storage facility and wells to
populations of people.

(2) The age or condition at which a well should be plugged and
abandoned, and what standards the plugging and abandonment
should meet.

(3) The range of proactive methods to assess the integrity of a
well, well casing, and cementing, and identifying the best available
technology for these assessments.

(4) A thorough analysis of the risks associated with the
conversion of a well for use as a natural gas storage well.

(5) Natural gas storage well operating, maintenance, and
monitoring standards.

(b) Upon completion of the panel’s work pursuant to subdivision
(a), the division shall review and incorporate best practices
developed by the panel into its regulations for natural gas storage
wells, begin delete as end delete begin insert if end insert appropriate, begin delete and end delete begin insert and, to the extent those practices are
applicable, end insert for other wells under the division’s begin delete jurisdiction, as
applicable. end delete begin insert jurisdiction. end insert

begin insert

(c) The division shall periodically, and whenever necessary,
review advances in relevant technologies and best practices for
natural gas storage facilities and, if appropriate, shall incorporate
changes in best practices into its regulations for natural gas
storage wells and, to the extent those practices are applicable, for
other wells under the division’s jurisdiction.

end insert

SEC. 11.  

Section 3141 is added to the Public Resources Code,
to read:

3141.  

(a) The division, in consultation with the Office of
Environmental Health Hazard Assessment, the State Department
of Public Health, and the Department of Industrial Relations, shall
perform a risk assessment of natural gas storage wells. The risk
assessment shall include, but is not limited to, all of the following
information:

(1) The age and construction of a well.

(2) The service history and operating conditions of the well.

(3) The potential impact of a leak on public, occupational, and
environmental health, safety, and welfare.

(b) The risk assessment shall be subjected to peer review by
independent experts.

(c) The findings of the risk assessment shall be reported to the
Legislature in accordance with Section 9795 of the Government
Code.

SEC. 12.  

Section 3142 is added to the Public Resources Code,
to read:

3142.  

To ensure that the division has all the records it needs
to evaluate natural gas storage wells, the well history maintained
pursuant to Section 3213 shall include all operations, injection,
production, and emplacement of any materials into the well. The
operator shall disclose the well history to the division for each
operation, injection, production, and emplacement of any material
into the well.

SEC. 13.  

Section 3143 is added to the Public Resources Code,
to read:

3143.  

All materials provided to the division to comply with
Section 3133 to 3142, inclusive, shall be posted and available to
the public on the Internet Web site of the division.

SEC. 14.  

Section 3144 is added to the Public Resources Code,
to read:

3144.  

A member of the public may bring suit for writ of
mandate against the division for failure to enforce Sections 3133
to 3143, inclusive.

SEC. 15.  

Section 3236.5 of the Public Resources Code is
amended to read:

3236.5.  

(a) A person who violates this chapter or a regulation
implementing this chapter is subject to a civil penalty not to exceed
twenty-five thousand dollars ($25,000) for each violation. A person
who commits a violation of Article 3 (commencing with Section
3150) or Section 3300 is subject to a civil penalty of not less than
ten thousand dollars ($10,000) and not to exceed twenty-five
thousand dollars ($25,000) per day per violation. An act of God
and an act of vandalism beyond the reasonable control of the
operator shall not be considered a violation. The civil penalty shall
be imposed by an order of the supervisor pursuant to Section 3225
upon a determination that a violation has been committed by the
person charged. The imposition of a civil penalty under this section
shall be in addition to any other penalty provided by law for the
violation. When establishing the amount of the civil penalty
pursuant to this section, the supervisor shall consider, in addition
to other relevant circumstances, all of the following:

(1) The extent of harm caused by the violation.

(2) The persistence of the violation.

(3) The pervasiveness of the violation.

(4) The number of prior violations by the same violator.

(b) An order of the supervisor imposing a civil penalty shall be
reviewable pursuant to Article 6 (commencing with Section 3350).
When the order of the supervisor has become final and the penalty
has not been paid, the supervisor may apply to the appropriate
superior court for an order directing payment of the civil penalty.
The supervisor may also seek from the court an order directing
that production from the well or use of the production facility that
is the subject of the civil penalty order be discontinued until the
violation has been remedied to the satisfaction of the supervisor
and the civil penalty has been paid.

(c) Any amount collected under this section shall be deposited
in the Oil, Gas, and Geothermal Administrative Fund.

SEC. 16.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.