BILL ANALYSIS �
AB 972
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2011-2012 Regular Session
BILL NO: AB 972
AUTHOR: Butler
AMENDED: June 28, 2012
FISCAL: Yes HEARING DATE: July 2, 2012
URGENCY: No CONSULTANT: Peter Cowan
SUBJECT : Oil and gas: hydraulic fracturing moratorium
SUMMARY :
Existing law :
1) Establishes the Division of Oil, Gas, and Geothermal
Resources (DOGGR) within California's Department of
Conservation and grants its Supervisor (supervisor) broad
authority over activities related to the recovery of oil and
gas. (Public Resources Code �3106).
2) Under the federal Safe Drinking Water Act (SDWA) requires the
US Environmental Protection Agency (US EPA) to set minimum
federal requirements for all below-ground injection
processes, but excludes natural gas storage and hydraulic
fracturing injections (unless they contain diesel fuels).
3) Requires the operator of any well before commencing various
specified well activities that permanently alter the well
casing, including the initial drilling of the well, to
provide to DOGGR written notice of intention and wait for
approval of the supervisor before commencing. If the
supervisor fails to give a written response within 10 days,
that failure is considered approval of the specified
activity. (�3203).
This bill :
1) Defines "hydraulic fracturing" to mean a well stimulation
treatment used in completing a well that typically involves
the pressurized injection of hydraulic fracturing fluid and
proppant from the well into an underground geologic formation
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in order to fracture the formation, thereby causing or
enhancing, or intending to cause or enhance the production of
oil or gas from a well.
2) Provides synonyms for "hydraulic fracturing" and defines
related terms including "hydraulic fracturing fluid," "base
fluid," and "proppants."
3) Requires an operator before commencing well drilling to
indicate in its written notice of intention to commence
drilling if a hydraulic fracturing treatment will be used or
is planned to be used in completing the well.
4) Requires that DOGGR not approve a notice of intention to
commence drilling for any well where hydraulic fracturing
treatment will be used until regulations governing hydraulic
fracturing are adopted by DOGGR and are in effect.
5) Requires that the hydraulic fracturing treatment regulations
be comprehensive and ensure the integrity of the well and
well casings are maintained, before the moratorium is lifted.
COMMENTS :
1) Purpose of Bill . According to the author, a moratorium on
hydraulic fracturing would protect human health, below ground
water supplies, and the environment from risks that may be
posed by hydraulic fracturing until DOGGR adopts regulations
that account for any additional risk.
2) Hydraulic fracturing . Hydraulic fracturing, or "fracking" is
a well treatment for increasing oil or gas (hydrocarbon)
recovery. As the name implies, the hydraulic fluid is pumped
at immense pressure into a well where it escapes through
perforations in the well lining and causes the surrounding
rock to fracture. The "fracturing fluid" is comprised
primarily of water with a small fraction of other chemicals
as well as a proppant such as sand that holds fractures open
after they've been created. These cracks or fractures allow
oil and natural gas to flow more freely into the well where
they are pumped to the surface. Depending on the type of
well and the target rock formation being fractured, the
quantity and constituents chemicals and proppants will vary.
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According to the US EPA, as much as two to five million
gallons of water are used to conduct the hydraulic fracturing
treatment.
Typically conducted after the initial well drilling or when a
well is reworked, hydraulic fracturing is common practice in
both vertical wells where the bore goes straight down into
the target rock layer and in horizontal bores where the well
turns and runs horizontally though the target rock strata for
as much as several thousand feet. Recent advances in the use
of hydraulic fracturing and horizontal drilling have made
shale gas recovery and coal bed methane recovery much more
economical. As a result, areas such as Pennsylvania, Texas,
and Wyoming have seen dramatic increases in well applications
and the use of hydraulic fracturing.
3) Use in California . Currently DOGGR does not track hydraulic
fracturing activities, thus the full extent of its use is
unknown. However, according to oil and gas industry experts,
hydraulic fracturing has been used in California for several
decades. Wells in Kern, Ventura, Santa Barbara and Los
Angeles Counties, and potentially other counties have been
hydraulically fractured. Industry reports suggest that
hydraulic fracturing will most likely increase statewide.
The Monterey shale formation, which stretches from Northern
to Southern California, is receiving increasing attention.
Several oil companies have purchased leases covering several
hundreds of thousands of acres to drill the Monterey shale.
According to industry experts and a 2008 Society of Petroleum
Engineers (SPE) article, hydraulic fracturing has potential
to increase output from many Northern California gas
reservoirs including gas sands. If these investments produce
positive returns, the state could see a proliferation of
hydraulic fracturing operations in the near future. However,
at least one drilling location in Monterey County has already
generated significant community concern and opposition.
On February 16, 2011, in reply to an inquiry from Senator
Pavley the DOGGR supervisor acknowledged that DOGGR had no
reliable information on the extent of hydraulic fracturing
activities in California and has imposed no reporting or
permitting requirements on the practice despite the clear
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regulatory authority to do so. Recently the Western States
Petroleum Association (WSPA), based upon voluntary reporting
by its members, reported that at least 628 new and existing
oil and gas wells were hydraulically fractured in California
in 2011, of approximately 2,300 new wells drilled that year
and more than 50,000 existing wells. Counties where wells
have been hydraulically fractured include Kern, Ventura,
Santa Barbara, Los Angeles, and Monterey.
4) Current regulation . The below-ground injection of most
chemicals is subject to the minimum regulations of SDWA and
are permitted through the underground injection control
program to ensure that "Injection well owners and operators
may not site, construct, operate, maintain, convert, plug,
abandon, or conduct any other injection activity that
endangers underground source of drinking water."
The federal Energy Policy Act of 2005 modified SDWA to
exclude "the underground injection of fluids or propping
agents (other than diesel fuels) pursuant to hydraulic
fracturing operations related to oil, gas, or geothermal
production activities" from the definition of "underground
injection." Nonetheless a congressional investigation found
that between 2005 and 2009 26,466 gallons of hydraulic
fracturing fluids containing diesel were injected into
California wells, yet no underground injection permits had
been sought or granted for this activity, in apparent
violation of SDWA.
5) Risks to below-ground aquifers . The risk to freshwater
aquifers is difficult to estimate without information about
the depth of local aquifers and the hydrocarbon bearing
strata. In some cases the strata being fractured is several
thousand feet below freshwater aquifers, in others the target
strata are located closer to usable aquifers. In fields that
are heavily developed, if the cap rock separating the
hydrocarbons from the aquifer is heavily perforated by wells,
the likelihood of fracturing fluid migration to the aquifer
may be increased.
A more likely contamination scenario is a well failure,
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either in the well casing or due to inadequate cementing.
DOGGR does have a regulatory program that governs well casing
construction. Despite regulations, well failures still occur.
A 2000 SPE article regarding an oil field in Kern County
explained that "the well failure rate, although lower than
that experienced in the 1980s, is still economically
significant at 2 to 6% of active wells per year."
Furthermore, a recent area of review evaluated by DOGGR in
Southern California found that 20 of 228 wells needed
remediation. As it does not track the practice DOGGR has
limited information on the extent to which hydraulic
fracturing increases the risk of well failure. Several
aspects of the fracturing procedure could contribute to well
casing corrosion and failure, the use of abrasive proppants
such as sand and chemicals that have desirable effects in the
target rock formations may contribute to increased corrosion
rates. Furthermore, by its nature, hydraulic fracturing
requires the use of extreme pressures that cause rock to
fracture; these pressures could reveal and exacerbate
weaknesses in the casing.
6) Support if amended position . Several groups expressed a
"support if amended" position. In general they support a
moratorium, but would suggest amendments that would expand
the scope of the moratorium and require additional health and
environmental analysis before the moratorium is lifted.
7) Opposition concerns . According to opponents, AB 972
unnecessarily prohibits increased use of hydraulic fracturing
which they contend has no reported incidents of harm to the
environment or public health. Opponents express concern that
a moratorium will increase business costs and hamper economic
activity.
8) Outstanding issues . The committee should consider what
constitutes "comprehensive" hydraulic fracturing regulations.
The bill requires that the regulations ensure that they
address well and well casing integrity. However, additional
concerns regarding hydraulic fracturing have been raised
regarding the disclosure of chemicals used during the
process, the sources, amounts, and quality of water used
during the process, the disposition of water and hydraulic
fracturing fluid waste that are produced from the process,
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the prevalence of radioactive materials in those produced
fluids, the effects on air quality, and risks posed to water
quality. If the committee believes a moratorium is
appropriate, it would be appropriate for these issues to be
addressed in the regulations as well.
9) Related legislation . SB 1054 (Pavley) requires advance
disclosure to neighbors of hydraulic fracturing activities,
among other related provisions, and failed on the Senate
floor May 30, 2012 (17-18) and May 31, 2012 (18-15).
AB 591 (Wieckowski) requires disclosure of hydraulic
fracturing and fracking fluid chemical composition to DOGGR
after operations have occurred, among other related
provisions, and is currently with the Senate Appropriations
Committee.
SOURCE : Assemblymember Butler
SUPPORT : Councilmember Paul Koretz, City of Los Angeles
Supervisor Mark Ridley-Thomas, Board of
Supervisors
County of Los Angeles
OPPOSITION : California Chamber of Commerce
California Construction Trucking Association
California Independent Oil Marketers Association
California Manufacturers & Technology Association
California Small Business Alliance
Coalition of Energy Users
Friends for Saving California Jobs
Independent Oil Producers Agency
Kern County Taxpayers Association
Western States Petroleum Association