Bill Text: CA AB2716 | 2023-2024 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Oil and gas: low-production wells: Baldwin Hills Conservancy: Equitable Community Repair and Reinvestment Account.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Enrolled) 2024-09-13 - Enrolled and presented to the Governor at 4 p.m. [AB2716 Detail]

Download: California-2023-AB2716-Amended.html

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Amended  IN  Assembly  March 21, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill

No. 2716

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Introduced by Assembly Member Bryan
(Coauthor: Senator Stern)

February 14, 2024

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An act to amend Section 3206 of 3008 of, and to add Section 3206.1.5 to, the Public Resources Code, relating to oil and gas.

LEGISLATIVE COUNSEL'S DIGEST

AB 2716, as amended, Bryan. Idle wells. Oil and gas: low-production wells: sensitive receptors.

Existing law establishes the Geologic Energy Management Division in the Department of Conservation, under the direction of the State Oil and Gas Supervisor, who is required to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells, as provided. Existing law requires the operator of a well to file a written notice of intention to commence drilling with, and prohibits any drilling until approval is given by, the supervisor or district deputy. Existing law requires the operator of any idle well well, as defined, to either (1) no later than May 1 of each year, for each idle well that was an idle well at any time in the last calendar year, file with the supervisor an annual fee according to a specified schedule of fees based on the length of time a well has been idle, or (2) file a plan with the supervisor to provide for the management and elimination of all long-term idle wells. A violation of these or other laws regulating oil and gas operations, as provided, is a crime.

Existing law generally prohibits the division from approving any notice of intention within a health protection zone, defined as an area within 3,200 feet of a sensitive receptor, as provided. These provisions related to health protection zones are the subject of a referendum on Chapter 365 of the Statutes of 2022 to appear on the November 5, 2024, statewide general election ballot.

This bill would make nonsubstantive changes to that provision. require the division, on or before July 1, 2025, to identify all low-production wells that are located within 3,200 feet of a sensitive receptor, and determine the length of time each of those wells has continuously been a low-production well, as provided. The bill would define a low-production well for these purposes as an oil or gas well that produces, on average, fewer than 15 barrels of oil a day during any period of 12 consecutive months, or a natural gas well whose maximum daily average gas production does not exceed 60,000 cubic feet of gas, per day, during any period of 12 consecutive months. The bill would include specified idle wells within the definition of a low-production well and exclude a natural gas storage well, a dedicated injection well, an active observation well, and a fully plugged and abandoned well from the definition of a low-production well, as provided. The bill would require the division, on or before July 1, 2026, to notify the owners of wells identified as low-production wells, as provided.

The bill would prohibit, commencing July 1, 2026, a well located within 3,200 feet of a sensitive receptor from being a low-production well for more than 24 months. Upon a violation of that prohibition, the bill would require the supervisor to charge an administrative penalty of $10,000 per day to a low-production well owner, until the low-production well is plugged and abandoned, as provided. The bill would require the division to waive this penalty on a low-production well when the owner submits a request for a notice of intention to plug and abandon the well, as provided. Because a violation of these requirements would be a crime, the bill would impose a state-mandated local program.

Existing law establishes and requires the division to administer and manage the Oil and Gas Environmental Remediation Account in the Oil, Gas, and Geothermal Administrative Fund. Existing law requires moneys in the account to be used, upon appropriation by the Legislature, to plug and abandon oil and gas wells, decommission attendant facilities, or otherwise remediate sites that the supervisor determines could pose a danger to life, health, water quality, wildlife, or natural resources, as specified.

This bill would require the above-described administrative penalties for operating low-production wells to be deposited into the Oil and Gas Environmental Remediation Account.

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.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NOYES  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 3008 of the Public Resources Code is amended to read:

3008.

 (a) “Well” means any oil or gas well or well for the discovery of oil or gas; any well on lands producing or reasonably presumed to contain oil or gas; any well drilled for the purpose of injecting fluids or gas for stimulating oil or gas recovery, repressuring or pressure maintenance of oil or gas reservoirs, or disposing of waste fluids from an oil or gas field; any well used to inject or withdraw gas from an underground storage facility; or any well drilled within or adjacent to an oil or gas pool for the purpose of obtaining water to be used in production stimulation or repressuring operations.

(b) “Prospect well” or “exploratory well” means any well drilled to extend a field or explore a new, potentially productive reservoir.

(c) “Active observation well” means a well being used for the sole purpose of gathering reservoir data, such as pressure or temperature in a reservoir being currently produced or injected by the operator. For a well to be an active observation well, the operator shall demonstrate to the division’s satisfaction that the well fulfills a need for gathering reservoir data, and the operator shall provide the division with a summary report of the type of data collected at least annually or as requested by the division.

(d) “Idle well” means any well that for a period of 24 consecutive months has not either produced oil or natural gas, produced water to be used in production stimulation, or been used for enhanced oil recovery, reservoir pressure management, or injection. For the purpose of determining whether a well is an idle well, production or injection is subject to verification by the division. An idle well continues to be an idle well until it has been properly abandoned in accordance with Section 3208 or it has been shown to the division’s satisfaction that, since the well became an idle well, the well has for a continuous six-month period either maintained production of oil or natural gas, maintained production of water used in production stimulation, or been used for enhanced oil recovery, reservoir pressure management, or injection. An idle well does not include an active observation well.

(e) “Long-term idle well” means any well that has been an idle well for eight or more years.

(f) “Low-production well” means an oil or gas well that produces, on average, fewer than 15 barrels of oil a day during any period of 12 consecutive months, or a natural gas well whose maximum daily average gas production does not exceed 60,000 cubic feet of gas, per day, during any period of 12 consecutive months. A low-production well includes an idle well that produces oil, gas, or oil and gas for up to a continuous six-month period, but does not meet the criteria to be reclassified from idle status. A low-production well does not include a natural gas storage well, a dedicated injection well, an active observation well, or a fully plugged and abandoned well.

SEC. 2.

 Section 3206.1.5 is added to the Public Resources Code, immediately following Section 3206.1, to read:

3206.1.5.

 (a) On or before July 1, 2025, The division shall identify all low-production wells that are located within 3,200 feet of a sensitive receptor and determine the length of time those low-production wells have continuously been low-production wells. The division shall consider whether and for how long a well was shut-in for maintenance and subtract that from the calculation of the length of time a well meets the definition of a low-production well.

(b) On or before July 1, 2026, the division shall notify the owners of low-production wells identified in subdivision (a) of the prohibition on operating a low-production well for more than 24 months, as described in subdivision (c).

(c) Commencing July 1, 2026, a well located within 3,200 feet of a sensitive receptor shall not be a low-production well for more than 24 months.

(d) The supervisor shall charge an administrative penalty of ten thousand dollars ($10,000) per day to a low-production well owner in violation of subdivision (c) until the low-production well is plugged and abandoned pursuant to Section 3208. The low-production well site shall not be required to be remediated until oil and gas operations cease.

(e) The division shall waive the penalty in subdivision (d) on a low-production well when the owner submits a request for a notice of intention pursuant to Section 3203 to plug and abandon the well. If work to plug and abandon the well does not start before the notice of intention expires, the division shall resume assessing the penalty on the well owner.

(f) All funds collected pursuant to this section shall be deposited into the Oil and Gas Environmental Remediation Account.

(g) For purposes of this section, “sensitive receptor” has the same meaning as that term is defined in Section 3281, as that section read on January 1, 2023.

SEC. 3.

 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.

SECTION 1.Section 3206 of the Public Resources Code is amended to read:

3206.

(a)The operator of any idle well shall do either of the following:

(1)No later than May 1 of each year, for each idle well that was an idle well at any time in the last calendar year, file with the supervisor an annual fee equal to the sum of the following amounts:

(A)One hundred fifty dollars ($150) for each idle well that has been an idle well for three years or longer, but less than eight years.

(B)Three hundred dollars ($300) for each idle well that has been an idle well for eight years or longer, but less than 15 years.

(C)Seven hundred fifty dollars ($750) for each idle well that has been an idle well for 15 years or longer, but less than 20 years.

(D)One thousand five hundred dollars ($1,500) for each idle well that has been an idle well for 20 years or longer.

(2)File a plan with the supervisor to provide for the management and elimination of all long-term idle wells.

(A)For the purposes of the plan required by this paragraph, elimination of an idle well shall be accomplished when the well has been properly abandoned in accordance with Section 3208, or it has been shown to the division’s satisfaction that, since the well became an idle well, the well has maintained production of oil or gas or been used for injection for a continuous six-month period.

(B)A plan filed pursuant to this paragraph shall meet all of the following requirements and conditions:

(i)The plan shall specify the time period that it covers. The plan, and any renewal of the plan, shall cover a time period of no more than five years and shall be subject to approval by the supervisor who may prioritize the order in which idle wells are addressed.

(ii)The plan shall be reviewed for performance annually by the supervisor, and be subject to amendment by the supervisor, or by the operator with the approval of the supervisor.

(iii)The required rate of long-term idle well elimination shall be based upon the number of idle wells under the control of an operator on January 1 of each year, as specified in clause (iv). If the operator has eliminated more wells than required in the prior two years, the supervisor may deduct from the new requirement the net total of long-term idle wells eliminated in excess of those previously required. In addition, the supervisor may require additional well testing requirements as part of the plan.

(iv)Unless and until the operator has no long-term idle wells, the plan shall require that operators with 250 or fewer idle wells eliminate at least 4 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well; operators with 251 to 1,250, inclusive, idle wells eliminate at least 5 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well; and operators with more than 1,250 idle wells eliminate at least 6 percent of their long-term idle wells each year, and, in no case, less than one long-term idle well.

(v)An operator who fails to comply with the plan, as determined by the supervisor after the annual performance review, is not eligible to use the requirements of this paragraph, for purposes of compliance with this section, for any of its idle wells. That operator may not propose a new idle well plan for the next five years. An operator may appeal to the director pursuant to Article 6 (commencing with Section 3350) regarding the supervisor’s rejection of a plan and plan amendments and the supervisor’s determination of the operator’s failure to comply with a plan. If the supervisor’s determination that the operator failed to comply with the plan is not timely appealed, or if the director upholds the supervisor’s determination upon appeal, then the operator shall immediately file the fees required under paragraph (1) for each year that the operator failed to comply with the plan.

(b)All fees received under this section shall be deposited in the Hazardous and Idle-Deserted Well Abatement Fund, which is hereby created in the State Treasury. Notwithstanding Section 13340 of the Government Code, the moneys in the Hazardous and Idle-Deserted Well Abatement Fund are hereby continuously appropriated to the department for expenditure without regard to fiscal year, to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning the production facilities, or both, at a well of an operator subject to the requirements of this section.

(c)Failure to file, for any well, the fee required under this section shall be conclusive evidence of desertion of the well, permitting the supervisor to order the well abandoned pursuant to Section 3237.

(d)Nothing in this section prohibits a local agency from collecting a fee for regulation of wells.

(e)This section shall become operative on January 1, 2018.