BILL ANALYSIS �
SB 1054
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2011-2012 Regular Session
BILL NO: SB 1054
AUTHOR: Pavley
AMENDED: April 17, 2012
FISCAL: Yes HEARING DATE: April 23, 2012
URGENCY: No CONSULTANT: Peter Cowan
SUBJECT : Oil and Gas Well Operation: NOtices
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) Authorizes the supervisor to publish any publications,
reports, maps, or other printed matter relating to oil and
gas, for which there may be public demand. (�3109).
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. Provides
that if the supervisor fails to give a written response
within 10 days, that failure is considered approval of the
specified activity. (�3203).
4) Requires the owner or operator of any oil and gas well to
keep, or cause to be kept, a careful and accurate log, core
record, and history of the drilling of the well which must
periodically be reported to DOGGR. (�3210 et seq.).
5) Under the federal Safe Drinking Water Act (SDWA) requires
the US Environmental Protection Agency (EPA) to set minimum
federal requirements for all below ground injection
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processes, but excludes natural gas storage and hydraulic
fracturing injections (unless they contain diesel fuels).
6) Requires that a mineral rights owner provide notice to a
surface rights owner prior to first entry into the property
or extraction of any mineral. (Civil
Code �848).
This bill :
1) Extends from 10 to 15 days the period of time that the
supervisor has to reply to the notice filed by a well owner
to commence well drilling, or other specified well
activities, before the failure to reply is deemed approval.
2) Defines "hydraulic fracturing" as a well stimulation
treatment that typically includes the pressurized injection
of water and other materials into an underground geologic
formation in order to create or propagate fractures in the
formation, thereby or with the intent of causing or
improving the production of oil or gas from a well.
3) Requires that at least 20 days prior to drilling and 30
days prior to hydraulic fracturing operations an owner or
operator must provide notice to every surface property
owner whose residence or property line is within 300 feet
of the well-head or above any underground waters suitable
for irrigation or domestic purposes the well is reasonably
anticipated to pierce; to every municipal government in
which those surface owners are located; to every water
supplier who uses any underground water to pierce. The
notice must include: a) the location of the well; b) the
identification number of the well; c) a description of the
drilling or hydraulic fracturing activity that is
understandable to a layperson; d) the time period that the
drilling or hydraulic fracturing activity will take place;
e) instructions on how to obtain additional information on
the status of the drilling activity; f) contact information
for the district deputy supervisor; and g) instruction on
how to obtain additional information from DOGGR.
4) Requires that the well owner provide DOGGR a complete list
of all recipients of the notice pursuant to #3 above, and
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to alert all recipients if the activities do not occur in
the time period proposed.
5) Requires that in addition to the requirements of #3 above,
prior to hydraulic fracturing a well owner or operator
provide notice to DOGGR and every surface owner whose
property line is within 300 feet of the subsurface portion
of a horizontal well.
6) Requires that the well owner or operator add the actual
time period of the hydraulic fracturing to the well
drilling history.
7) Requires DOGGR, beginning January 1, 2014, to submit an
annual report to the Legislature describing compliance with
this section. The report must include the total number of
notices issued and the number of wells with notices.
8) Provides that a well owner or operator that provides notice
pursuant to #3 above is deemed in compliance with existing
law #6 above.
COMMENTS :
1) Purpose of Bill . According to the author "SB 1054 asks oil
and gas well owners and operators to provide advance notice
of drilling and hydraulic fracturing operations of any well
to the nearby property owners and occupants. As is the
case with any significant development project, neighboring
residents and owners should be aware in advance that a well
is to be drilled or hydraulically fractured."
2) Background on 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 hold 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
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to the surface. Depending on the type of well and the
target rock formation being fractured, the quantity and
constituent chemicals and proppants will vary. According
to the 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) Fracking 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.
4) Local impacts of drilling operations . Oil well drilling,
completion, and hydraulic fracturing may have significant
impacts on air quality, land subsidence, and water quality.
Providing notice before a drilling or hydraulic fracturing
operation may provide surface right interests an
opportunity to collect baseline information for assessing
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these and other impacts. Air quality can be negatively
impacted by heavy diesel equipment used on site for the
drilling and hydraulic fracturing as well as the on-going
operations of the well.
Land subsidence occurs in some oil fields as a result of
reductions in pressure as oil and gas are withdrawn thus
causing the hydrocarbon layer to compress. Various factors
affect the severity of subsidence, in particular the local
geology and rate of extraction. One of the most dramatic
examples of extraction induced subsidence was the
Wilmington field in Long Beach which sank as much as 30
feet in some places before it could be slowed by
reinjection of water in the late 1950's. Subsidence remains
prevalent in other fields within California, though to a
lesser extent, and it is unknown how hydraulic fracturing
may affect the rate or nature of the subsidence.
The risk to fresh water aquifers is more difficult assess.
In some cases the strata being fractured is several
thousand feet below fresh water 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 are heavily
perforated by wells the likelihood of fracturing fluid
migration to the aquifer may be increased. Another, more
likely, contamination scenario is a well failure, 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.
5) Regulation of fracking . 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,
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abandon, or conduct any other injection activity that
endangers underground sources 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".
In comments made to the Senate Budget Subcommittee No. 2 on
Resources, Environmental Protection, Energy and
Transportation and the Assembly Budget Subcommittee No. 3
on Resources and Transportation DOGGR has indicated that
while it believes it has the necessary authority to adopt
regulations regarding the use of hydraulic fracturing, it
has no regulation specific to the practice. Nor does DOGGR
have plans to adopt any regulations. Instead DOGGR is
planning to convene a panel of experts and initiate a
scientific study and conduct a listening tour prior to
determining the necessity of any rulemaking. Since the
hearings, DOGGR also released a letter requesting operators
to voluntarily report fracking activity to a third-party
disclosure website.
6) Outstanding issues . In addition to requiring well owners
and operators to provide notice to all surface property
owners within 300 feet of the well head and the belowground
extent of the well, SB 1054 requires those who own surface
rights above any aquifer that the well pierces receive
notice. In some cases this latter requirement could result
in the notification of thousands of property owners who may
or may not utilize below ground water and may live miles
away from the drilling activity. It may be more
appropriate that rather than providing notice to every
individual owner overlying an aquifer, notice is posted on
the DOGGR website and provided to the appropriate Regional
Water Quality Control Board.
The notice restriction to 300 feet from the well head could
result in wells being placed just far enough from the
property line to avoid notice. It may be appropriate to
require notice from the property line rather than the well
head, unless the well is drilled significantly further
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(i.e., 2,500 feet) from the property line.
7) Support concerns . According to supporters "The drilling of
fracking of a well is a significant development project and
fracking process involves the use of heavy equipment,
chemicals, copious amounts of water, and often accompanying
noise, light, and dust. It is fair and reasonable that a
neighbor to such a project be notified in advance that it
is to occur."
8) Opposition concerns . According to opponents, the
requirements of SB 1054 are onerous and duplicative and
note "It is the structure and integrity of a well that
effectively provides protection to the public safety and
the environment, not the burdensome disclosure requirements
in �SB 1054]. This critical part of oil and gas operations
is already heavily regulated."
9) Related legislation : 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 Rules Committee.
AB 1966 (Ma) requires mineral rights owners to provide
advance notice and other information to surface property
owners, and will be heard by the Assembly Natural Resources
Committee May 7, 2012.
SOURCE : Environmental Working Group
SUPPORT : California Coastal Protection Network
California League of Conservation Voters
Clean Water Action
Earthworks
Environment California
Environmental Working Group
League of Women Voters of California
Natural Resources Defense Fund
Planning and Conservation League
Sierra Club California
Union of Concerned Scientists
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OPPOSITION : California Manufacturers and Technology
Association
Western States Petroleum Association
California Chamber of Commerce