BILL ANALYSIS �
SB 1281
Page 1
Date of Hearing: June 23, 2014
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
SB 1281 (Pavley) - As Amended: June 9, 2014
SENATE VOTE : 27-3
SUBJECT : Oil and gas production: water use: reporting
SUMMARY : Requires the Division of Oil, Gas, and Geothermal
Resources (DOGGR) to collect information regarding unlined oil
and gas field sumps. In the event, and for the duration, of a
declared state of emergency because of a drought, requires new
oil and gas field exploration, development, and production to
use recycled water.
EXISTING LAW :
1)Regulates, under DOGGR in the Department of Conservation, the
drilling, operation, maintenance, stimulation, and abandonment
of oil and gas wells in the state.
2)Requires the owner of an oil and gas well to file with DOGGR a
monthly statement that provides certain information related to
the well, including what disposition was made of the water
produced from each field.
3)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 .
1)Makes the following findings and declarations:
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
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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.
2)Requires DOGGR to 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.
3)Declares that it is the policy of the state that oil and gas
field exploration, development, and production use, or treat
and use, water produced through oil field activities and other
recycled water to the extent feasible. Encourages the use and
reuse of water initially unsuitable for drinking or irrigation
purposes.
4)In the event, and for the duration, of a declared state of
emergency because of a drought, requires new oil and gas
field exploration, development, and production to use recycled
water.
5)Prohibits new oil and gas field exploration, development, and
production from using water obtained from a groundwater basin
that is not managed in accordance with the State Water Plan.
6)For the monthly statement an owner of a well is required to
file with DOGGR, requires additional information on water used
during oil and gas field activities.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)One-time costs of up to $1.3 and $2.9 million from the Oil,
Gas, and Geothermal Administrative Fund (Fund) over a period
of one to two years for the expansion of the oil and gas well
information reporting system for additional required
information.
2)Ongoing costs of $125,000 from the Fund for the management of
the expanded data.
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COMMENTS :
1)Author's Statement .
California is suffering from one of the worst droughts
in the state's recorded history. There is continuing
and significant public concern about the amount of
water used in oil and gas field exploration,
development and production. Much of California's oil
and gas production is located in arid parts of the
Central Valley and where existing
groundwater-particularly groundwater suitable for
drinking or irrigation purposes-may be depleted or
under threat of depletion.
The oil and gas industry has a ready supply of water
generated by oil and gas production. On average
state-wide, roughly eight barrels of "produced water"
of varying quality are produced for every barrel of
crude oil. Produced water may be used in lieu of
fresh water for at least some oil and gas field
processes. These include, for example, enhanced oil
recovery operations such as waterflooding. If needed,
existing technology is capable of treating produced
water to make it suitable for use in oil and gas field
operations.
Current required water use reporting to the Division
of Oil, Gas and Geothermal Resources (DOGGR) does not
provide sufficient information to understand the
sources and uses of water in the oil and gas fields.
It is existing state policy that recycled water, as
defined, be used where feasible.
SB 1281 seeks to clarify the use of water in the
state's oil and gas fields.
2)Recycled Water . There are significant amounts of water
co-located with the state's oil and gas fields. The quality
of this water can vary considerably from potentially suitable
for irrigation to extremely salty. Oil/water separators are
used in the oil production process. At least some of the
water used in certain enhanced oil recovery operations is
likely to return to the surface as produced water.
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In the event of extreme water scarcity, it may be appropriate
that new oil and gas exploration, development, and production
use recycled water, given the widespread availability of
produced water to the oil and gas industry. There is also
indication that new advancements are being made throughout the
country to recapture, treat, recycle, and reuse water involved
in oil and gas production.
A report from the California Environmental Resources
Evaluation System (CERES) highlighted groundwater depletion in
some of the principal areas of oil and gas production in
California. Specifically, the report looked at Kern County,
which pumped about three-quarters of California's oil from
over 40,000 conventional oil wells in 2010. Kern County also
has an active agricultural sector with over 800,000 acres of
irrigated farmland. Although the county meets demand through
surface and groundwater sources, its strong reliance on
groundwater pumping over the last several decades has resulted
in substantial groundwater declines. In fact, the credit
rating firm Moody's recently identified the Kern County Water
Agency as being at risk of a credit rating downgrade,
reflecting this region's vulnerability to growing water supply
challenges. Although the oil and agricultural industries have
coexisted for many years in Kern County, elevated water use
for hydraulic fracturing in the context of massive drought
could alter this course. The CERES states that there are
growing concerns that the agriculture section will find it
more lucrative to sell their water for oil exploration than
growing crops.
Limited information is available, but it appears that the oil
and gas industry already provides treated produced water of
suitable quality for irrigation to at least one water
district. Additionally, the oil and gas industry apparently
uses produced water as a feedstock for enhanced oil recovery
operations.
3)Unlined Sumps . According to the Central Valley Regional Water
Board (CVRWB), produced water, which accounts for about 95% of
the fluids produced during oil well production (the other 5%
is oil), was historically disposed of by discharge to dry
stream channels or unlined surface impoundments (sumps). A
sump is a surface impoundment or excavated depression used to
separate crude oil, water, and solids in oil fields. CVRWB is
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in the process of reviewing unlined sumps in its jurisdiction.
It has asked DOGGR for an inventory, which has been at least
partially complied with. Many of the sumps are covered by
out-of-date waste discharge requirement (WDR) permits, and
CVRWB is working to bring these up-to-date, where needed.
This bill will require DOGGR to collect information on unlined
sumps, which would help CVRWB revise these old WDR permits.
REGISTERED SUPPORT / OPPOSITION :
Support
California League of Conservation Voters
Clean Water Action
Citizens for Responsible Oil & Gas
Earthworks
Environmental Working Group
League of Women Voters of California
Los Padres ForestWatch
Mainstreet Moms
Mount Shasta Bioregional Ecology Center
Natural Resources Defense Council
South Monterey County Rural Coalition
The Wildlands Conservancy
Opposition
California Independent Petroleum Association
Western States Petroleum Association
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092