Amended  IN  Assembly  April 10, 2024
Amended  IN  Assembly  March 21, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 2716

Introduced by Assembly Member Bryan
(Coauthor: Senator Stern)

February 14, 2024

An act to amend Section 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. 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, 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 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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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 Notwithstanding Section 3206, on or before July 1, 2025, The 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.