BILL ANALYSIS �
SB 1139
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Date of Hearing: August 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1139 (Rubio) - As Amended: August 7, 2012
Policy Committee: Natural
ResourcesVote:8-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires the Division of Oil, Gas and Geothermal
Resources (DOGGR) to regulate carbon dioxide (CO2) well
injection for enhanced oil recovery (EOR). Specifically, this
bill:
1)Requires the Air Resources Board, by January 1, 2016, working
in consultation with the California Public Utilities
Commission (CPUC) and the California Energy Commission (CEC),
to adopt a quantification methodology for carbon capture and
storage projects.
2)Requires DOGGR, following ARB's adoption of the methodology
described above, to regulate injection of CO2 for EOR for a
project seeking to demonstrate simultaneous geologic
sequestration of greenhouse gases.
3)Requires DOGGR and ARB to use a coordinated and comprehensive
regulatory approach, which includes both entities overseeing
short-term and long-term monitoring and verification of
greenhouse gas sequestration following an EOR operation.
4)Adds a pipeline used to transport CO2 to the types of
pipelines regulated by the State Fire Marshall.
5)States that pore space that can be possessed and used for
storage of greenhouse gases is included in the definition of
free space in land.
FISCAL EFFECT
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1)Significant one-time costs to ARB, likely involving the work
of five staff members and totaling over $1 million, 2011-12
through 2015-16, to develop and adopt the quantification
methodology required by this bill (Air Pollution Control Fund
(APCF)).
2)Potential significant annual costs to ARB, beginning in
2015-16, to oversee monitoring and verification efforts
related to EOR projects (APCF). Actual annual costs will
depend upon the number of EOR projects requiring monitoring
and verification, but likely will range in the hundreds of
thousands of dollars, at least.
3)Minor, absorbable costs to DOGGR to develop regulations for
EOR (Oil, Gas and Geothermal Administrative Fund (OGGAF).
4)Potential significant annual costs to DOGGR, beginning in
2015-16, to oversee monitoring and verification efforts
related to EOR project (OGGAF). Actual annual costs will
depend upon the number of EOR projects requiring monitoring
and verification, but likely will range in the hundreds of
thousands of dollars, at least.
5)Negligible costs to the State Fire Marshall, which reports it
already regulates CO2 pipelines under its general pipeline
authority.
(This bill provides no fee authority to allow ARB, DOGGR or the
State Fire Marshall to recover the costs of implementing the
requirements of the bill.)
COMMENTS
1)Rationale. In the bill's extensive and lengthy findings and
declarations, the author asserts numerous environmental and
economic benefits of EOR using greenhouse gas sequestration
and the existence of legal and regulatory gaps that impede
deployment of EOR in California. The author intends this bill
fill those legal and regulatory gaps so that EOR may occur in
this state.
2)Background. Many of the state's crude oil deposits have been
exploited so that the natural pressure in the ground is
insufficient to force remaining oil from the ground. Enhanced
oil recovery can help drillers to access this "stranded oil"
SB 1139
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by using gases to push additional oil to a production
wellbore. CO2 is one of the gases that can be used in EOR.
Recently, interest in using CO2 for EOR has increased because
CO2 from industrial sources, such as energy production, may be
pumped into the ground to extract oil and sealed and left
there. Doing so prevents the CO2 from entering the
atmosphere, thereby allowing a CO2 producing facility to meet
its obligation under the state's greenhouse gas emissions
laws. However, there are no state laws, regulations or
protocols governing the use of CO2 for EOR.
3) Support. This bill is supported by the Environmental
Defense Fund, the California Council of Laborers, the
California State Pipe Trades Council and a long list of
industry and commercial organizations.
4) There is no opposition formally registered against this
bill.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081