Amended in Assembly August 20, 2014

Amended in Assembly August 4, 2014

Amended in Assembly June 9, 2014

Amended in Senate April 21, 2014

Senate Bill No. 1281

Introduced by Senator Pavley

February 21, 2014

An act to amend Section 3227 of, and to add Sections 3226.3, 3226.5, and 3226.7 to, the Public Resources Code, relating to oil and gas.

LEGISLATIVE COUNSEL’S DIGEST

SB 1281, as amended, Pavley. Oil and gas production: water use: reporting.

Under existing law, the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation regulates the drilling, operation, maintenance, stimulation, and abandonment of oil and gas wells in the state. Existing law requires the owner of any well to file with the State Oil and Gas Supervisor a monthly statement that provides certain information relating to the well, including what disposition was made of the water produced from each field. Existing law provides that a person who fails to comply with specific laws relating to the regulation of oil or gas operations, including failing to furnish a report or record, is guilty of a misdemeanor.

This bill would declare that it is the policy of the state that oil and gas field exploration, development, and production shall use, or treat and use, water produced begin delete though end delete begin insert through end insert oil field activities and other recycled water to the extent feasible. The bill would require, in the event, and duration, of a declared state of emergency because of a drought, new oil and gas field, exploration, development, and production, as defined, to use recycled water. The bill would prohibit the use of water from a groundwater basin or subbasin designated as high priority if the use would compromise existing use for domestic or irrigation purposes. The bill would require the statement to the supervisor to include the source and volume of any water reported, including water used to generate or make up the composition of any injected fluid or gas, as provided, and would require that information to be reported on a quarterly basis. The bill would also require the statement to include additional information, including the treatment of water and the use of treated or recycled water in oil and gas field activities, as provided, and would require that information to be reported on a quarterly basis. The bill would require the division, among other things, to use a standardized form or format to facilitate reporting and to use noncustom software, as feasible, to implement online reporting by the operator of specified information. Because a violation of the bill’s reporting requirements by an owner or operator would be a crime, the bill would impose a state-mandated local program.

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 all of the
following:

(a) Existing state policy promotes the use of recycled water in
industry where feasible.

(b) Water of previously unsuitable quality may now be used or
treated and used in some oil and gas industry processes due to
technological advancement.

(c) Information facilitating an analysis of the water used or
produced by each well would improve understanding of water use
in the state’s oil and gas fields.

(d) In the event of extreme water scarcity, untreated high-quality
water should not be used for new oil and gas exploration,
development, or production. According to the Department of Water
Resources, groundwater resources throughout the state are at
historically low levels.

SEC. 2.  

Section 3226.3 is added to the Public Resources Code,
to read:

3226.3.  

The division shall annually provide to the State Water
Resources Control Board and the California regional water quality
control boards an inventory of all unlined oil and gas field sumps.

SEC. 3.  

Section 3226.5 is added to the Public Resources Code,
to read:

3226.5.  

It is the policy of the state that oil and gas field
exploration, development, and production shall use, or treat and
use, water produced through oil field activities and other recycled
water to the extent feasible. The use and reuse of water initially
unsuitable for domestic or irrigation purposes is encouraged.

SEC. 4.  

Section 3226.7 is added to the Public Resources Code,
to read:

3226.7.  

(a) In the event, and for the duration, of a declared
state of emergency, pursuant to Article 13 (commencing with
Section 8625) of Chapter 7 of Division 1 of Title 2 of the
Government Code, because of a drought, new oil and gas field
exploration, development, and production shall use recycled water,
as defined in subdivision (n) of Section 13050 of the Water Code.
Recycled water includes water that is produced from a well used
to produce oil, gas, or both, begin insert and end insert that has been begin delete separated end delete begin insert treated
by separating the water end insert from the oil, gas, or begin delete both, and that has
been treated. end delete begin insert both. end insert

(b) New oil and gas field exploration, development, and
production shall not use water obtained from a groundwater basin
or subbasin identified as being of high priority pursuant to Sections
10933 and 12924 of the Water Code if this use would compromise
existing use for domestic or irrigation purposes pursuant to state
policy established in Section 106 of the Water Code.

(c) For purposes of this section, “new oil and gas field
exploration, development, and production” means any oil field
activity that requires the begin delete division to issue end delete begin insert division’s approval of end insert a
new permit or notice of intention pursuant to Section begin delete 3203. end delete begin insert 3203,
with the exception of any oil field activity in fields and pools that
produce revenue, money, and remittances payable to the State
Lands Commission that the State Lands Commission is required
to deposit in the General Fund pursuant to Section 6217. end insert

SEC. 5.  

Section 3227 of the Public Resources Code is amended
to read:

3227.  

(a) The owner of any well shall file with the supervisor,
on or before the last day of each month, for the last preceding
calendar month, a statement, in the form designated by the
supervisor, showing all of the following:

(1) The amount of oil and gas produced from each well during
the period indicated, together with the gravity of the oil, the amount
of water produced from each well, estimated in accordance with
methods approved by the supervisor, and the number of days during
which fluid was produced from each well.

(2) The number of wells drilling, producing, injecting, or idle,
that are owned or operated by the person.

(3) What disposition was made of the gas produced from each
field, including the names of persons, if any, to whom the gas was
delivered, and any other information regarding the gas and its
disposition that the supervisor may require.

(4) What disposition was made of water produced from each
field and the amount of fluid or gas injected into each well used
for enhanced recovery, underground storage of hydrocarbons, or
wastewater disposal, and any other information regarding those
wells that the supervisor may require.

(5) The source of water, and volume of any water, reported in
paragraph (4), including the water used to generate or make up the
composition of any injected fluid or gas. Water volumes shall be
reported by water source if more than one water source is used.
The volume of untreated water suitable for domestic or irrigation
purposes shall be reported. Commingled water shall be
proportionally assigned to individual wells, as appropriate.

(6) The treatment of water and the use of treated or recycled
water in oil and gas field activities, including, but not limited to,
exploration, development, and production.

(7) (A) The specific disposition of all water used in or generated
by oil and gas field activities, including water produced from each
well reported pursuant to paragraph (1). Water volumes shall be
reported by disposition method if more than one disposition method
is used. Commingled water shall be proportionally assigned to
individual wells, as appropriate.

(B) This information shall also include the temporary onsite
storage of water, as or if appropriate, and the ultimate specific use,
disposal method or method of recycling, or reuse of this water.

(b) Any operator that produces oil by the application of mining
or other unconventional techniques shall file a report with the
supervisor, on or before March 1 of each year, showing the amount
of oil produced by those techniques in the preceding calendar year.

(c) (1) Upon request and making a satisfactory showing
therefor, a longer filing period may be established by the supervisor
for any particular owner or operator.

(2) Notwithstanding subdivision (a), the owner of any well shall
file with the supervisor, on a quarterly basis, a statement containing
the information required to be reported pursuant to paragraphs (5),
(6), and (7) of subdivision (a) in the form designated by the
supervisor.

(d) The division shall use a standardized form or format to
facilitate reporting required pursuant to this section.

(e) The division shall use noncustom software, as feasible, to
implement online reporting by the operator of the information
required pursuant to paragraphs (5), (6), and (7) of subdivision
(a). This information may be reported separately from other
information required to be reported pursuant to this section.

(f) For purposes of this section, the following terms have the
following meanings:

(1) “Source of water” or “water source” means any of the
following:

(A) The well or wells, if commingled, from which the water
was produced or extracted.

(B) The water supplier, if purchased or obtained from a supplier.

(C) The point of diversion of surface water.

(2) “Specific disposition of all water” means the identification
of the ultimate specific use, disposal method or method of
recycling, or reuse of the water. This includes, but is not limited
to, the identification of any treatment or recycling method used,
injection of the water into specific injection or disposal well or
wells, if commingled, discharge of the water to surface water or
sumps, and sale or transfer of the water to a named entity.

(3) “Recycled water” has the same meaning as that term is
defined in subdivision (n) of Section 13050 of the Water Code.
Recycled water includes water that is produced from a well used
to produce oil, gas, or both, begin insert and end insert that has been begin delete separated end delete begin insert treated
by separating the water end insert from the oil, gas, or begin delete both, and that has
been treated. end delete begin insert both. end insert

SEC. 6.  

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.