Bill Text: CA AB3230 | 2019-2020 | Regular Session | Amended
Bill Title: Oil and gas: well stimulation treatments: cyclic steaming: surface expressions: civil penalties.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2020-03-17 - Re-referred to Com. on NAT. RES. [AB3230 Detail]
Download: California-2019-AB3230-Amended.html
|
Amended
IN
Assembly
March 16, 2020 |
CALIFORNIA LEGISLATURE—
2019–2020 REGULAR SESSION
Assembly Bill
No. 3230
| Introduced by Assembly |
February 21, 2020 |
An act to add Section 3242 to amend Sections 3108, 3157, and 3236.5 of, and to add Sections 3224.5 and 3270.7 to, the Public Resources Code, relating to oil and gas.
LEGISLATIVE COUNSEL'S DIGEST
AB 3230, as amended, Friedman.
Oil and gas: abandoned wells: hazard determination. well stimulation treatments: cyclic steaming: surface expressions: civil penalties.
Existing law requires establishes the Geologic Energy Management Division in the Department of Conservation, under the direction of the State Oil and Gas Supervisor Supervisor, who is required to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells, as provided. Existing law requires the supervisor, in cooperation with appropriate state and local agencies, to both (1) conduct a study of abandoned oil and gas wells located in those areas of the state with substantial potential for methane and other hazardous gas accumulations in order to determine the location, the extent of methane gas and other hazardous gas accumulations, and potential hazards from the abandoned wells, and (2) develop a strategy for extracting existing accumulations of methane gas and other hazardous gas from abandoned oil and gas wells in high-risk areas identified by the supervisor in order to protect the health and safety of the public.
Existing law requires that the supervisor, on or before the first day of October of each year, make public, for the benefit of all interested persons, a report in writing showing specified information, including the total amounts of oil and gas produced in each county in the state during the previous calendar year.
This bill would require the supervisor to include in the report an inventory of all surface expressions that have occurred in the previous calendar year, separated by low and high energy.
Existing law requires an operator proposing to perform a well stimulation treatment on a well to apply to the supervisor or a district deputy for a permit to perform the well stimulation treatment and
imposes other requirements and conditions on the use of well stimulation treatments. Existing law defines a well stimulation treatment as being any treatment of a well designed to enhance oil and gas production or recovery by increasing the permeability of the formation, including hydraulic fracturing treatments and acid well stimulation treatments. Existing law excludes from the definition of well stimulation treatments steam flooding, water flooding, or cyclic steaming. Under existing law, a person who fails to comply with this and other requirements relating to the regulation of oil or gas operations is guilty of a misdemeanor.
This bill would qualify the exclusion from the definition of well stimulation treatment for cyclic steaming to that cyclic steaming that does not exceed the fracture gradient. Because the bill would limit the exclusion for cyclic
steaming and thereby expand the scope of a crime, the bill would impose a state-mandated local program. The bill would require the division to review, evaluate, and update its regulations pertaining to cyclic steaming, by July 1, 2021, to include measures that ensure geologic and hydrologic isolation of the oil and gas formation during a cyclic steaming project, as specified. Upon the discovery of a surface expression leak from an oil and gas well, the bill would require the owner or operator of the oil and gas well to promptly notify the division of the jurisdiction in which the leak is located and require the division to post all relevant information regarding any surface expression reported to it and to promptly cooperate with all relevant state agencies on any surface expression leak. By imposing additional requirements on owners and operators of oil and gas wells, the violation of which would be a crime, the bill would impose a state-mandated local program.
Existing law provides that a person who violates certain requirements related to the regulation of oil and gas is subject to specified civil penalties. The civil penalty amount for a well stimulation violation, as defined, is not less than $10,000 per day per violation and not more than $25,000 per day per violation. The civil penalty amount for a major violation, as defined, is not less than $2,500 per violation and not more than $25,000 per violation.
This bill would make the maximum civil penalty for a well stimulation violation $50,000 per day per violation and make the maximum civil penalty for a major violation $50,000 per violation. The bill would authorize the supervisor to impose a greater civil penalty if the supervisor makes a written finding that a violation is a special circumstance that warrants a higher
penalty than what is otherwise allowable.
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.
This bill would require the Geologic
Energy Management Division to review the study and strategy and determine if any of the oil and gas wells identified continue to pose a hazard.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program:Bill Text
The people of the State of California do enact as follows:
SECTION 1.
(a) The Legislature finds and declares all of the following:(1) Surface expressions occur when oil, an oil and water fluid, or related material travel to the surface through subsurface cracks or fractures and are emitted from the surface. Surface expressions are associated with, and are likely caused by, injection operations.
(2) In 2011, a contractor
at the Midway-Sunset Oil Field was killed when he fell into a steaming surface expression that opened underneath him.
(3) Recent updates to the Geologic Energy Management Division’s underground injection control program regulations explicitly ban surface expressions as of April 1, 2019, and require certain steps to be taken should a surface expression occur (Sections 1724.11 and 1724.12 of Title 14 of the California Code of Regulations).
(4) In the summer of 2019, a fluid spill stemming from multiple surface expressions at the Cymric Oil Field located in the County of Kern resulted in one of the largest oil spills in state history.
(5) These surface expressions ultimately resulted in the release of almost 1.3 million gallons of an oil and water mixture from multiple locations into a dry streambed in a canyon at the
oil field prior to August 1, 2019.
(6) There have been numerous other surface expressions in other oil fields that have occurred after they were banned by the Geologic Energy Management Division.
(7) Cyclic steaming, termed as a “huff-and-puff” operation, recovers heavy oil by injecting steam into a well at a high temperature (approximately 572 to 644 degrees Fahrenheit) for an extended period of time, typically weeks to months. The reservoir is subjected to high pressure and temperature over a long period of time to liquefy extra heavy oil so that it can be pumped out of the well.
(8) Currently, the Geologic Energy Management Division has imposed a moratorium on new permits for high-pressure cyclic steaming that break the rock formation and allow oil production pending review of the practice by the division and
outside experts. According to the Geologic Energy Management Division, the practice of cyclic steaming above fracture pressure is correlated with surface expressions observed in the summer and fall of 2019 in the Cymric and Midway-Sunset Oil Fields.
(b) It is therefore the intent of the Legislature to ensure oil and gas operations correlated with surface expressions are appropriately regulated to eliminate surface expressions to protect workers, wildlife, and natural resources. It is the further intent of the Legislature to ensure the State Oil and Gas Supervisor has sufficient penalty authority necessary to deter risky behavior by operators.
SEC. 2.
Section 3108 of the Public Resources Code is amended to read:3108.
On or before the first day of October of each year the supervisor shall make public, for the benefit of all interested persons, a report in writing showing:(a) The total amounts of oil and gas produced in each county in the state during the previous calendar year.
(b) The total cost of the division for the previous fiscal year.
(c) The total amount delinquent and uncollected from any assessments or charges levied pursuant to this chapter.
(d) An inventory of all surface
expressions that have occurred in the previous calendar year, separated by low and high energy.
The report shall also include such other
(e) Other information as the supervisor deems advisable.
SEC. 3.
Section 3157 of the Public Resources Code is amended to read:3157.
(a) For purposes of this article, “well stimulation treatment” means any treatment of a well designed to enhance oil and gas production or recovery by increasing the permeability of the formation. Well stimulation treatments include, but are not limited to, hydraulic fracturing treatments and acid well stimulation treatments.(b) Well stimulation treatments do not include steam flooding, water flooding, or cyclic steaming that does not exceed the fracture gradient and do not include routine well cleanout work, routine well maintenance, routine removal of formation damage due to drilling, bottom hole pressure surveys, or routine activities that do not affect
the integrity of the well or the formation.
SEC. 4.
Section 3224.5 is added to the Public Resources Code, to read:3224.5.
By July 1, 2021, the division shall review, evaluate, and update its regulations pertaining to cyclic steaming. The update shall include measures that ensure geologic and hydrologic isolation of the oil and gas formation during a cyclic steaming project that, at a minimum, includes all of the following:(a) Appropriate geological data on the injection zone and confining zone, including lithologic description, geological name, thickness, and depth.
(b) Required modeling or other analysis, approved by the division, that will effectively estimate the axial dimensional stimulation area. The operator shall submit the axial dimensional stimulation area and information supporting the modeling or analysis
to the division.
(c) The cyclic steaming area analysis shall include identification and review of all well bores located completely or partially within a distance from the axial dimensional stimulation area determined by the division to ensure the geologic and hydrologic isolation of the oil and gas formation during and following cyclic steaming. The division may allow modification of the review area based on modeling and analysis provided by the operator that demonstrates geologic and hydrologic isolation of the oil and gas formation during a cyclic steaming project.
(d) The cyclic steaming area analysis shall include a review of all geologic features, including known faults, whether active or inactive, within a distance determined by the division to ensure the geologic and hydrologic isolation of the oil and gas formation during a cyclic steaming project. For all these geologic
features, the operator shall provide both of the following to the division:
(1) An evaluation of whether the geologic feature may act as a migration pathway for injected fluids or displaced formation fluids.
(2) An assessment of the risk that the cyclic steaming project will communicate with the geologic feature.
(e) Continuous pressure monitoring of cyclic steam injection.
(f) Protocols to immediately cease injection if the pressure exceeds the maximum authorized by the division.
(g) Required contingency plans to cope with well failures so as to prevent migration of fluids to the surface.
(h) Other protective measures
determined by the division as reducing the possibility of surface expressions, including, but not limited to, well spacing, pressure, and temperature limitations included in all notices of intention.
SEC. 5.
Section 3236.5 of the Public Resources Code is amended to read:3236.5.
(a) A person who violates this chapter or a regulation implementing this chapter is, at the supervisor’s discretion, subject to a civil penalty as described in subdivision (b) for each violation. An act of God and an act of vandalism beyond the reasonable control of the operator shall not be considered a violation. The civil penalty shall be imposed by an order of the supervisor pursuant to Section 3225 upon a determination that a violation has been committed by the person charged. The imposition of a civil penalty under this section shall be in addition to any other penalty provided by law for the violation. When establishing the amount of the civil penalty pursuant to this section, the supervisor shall consider, in addition to other relevant circumstances, all of the following:(1) The extent of harm caused by the violation.
(2) The persistence of the violation.
(3) The pervasiveness of the violation.
(4) The number of prior violations by the same violator.
(5) The degree of culpability of the violator.
(6) Any economic benefit to the violator resulting from the violation.
(7) The violator’s ability to pay the civil penalty amount, as determined based on information publicly available to the division.
(8) The supervisor’s prosecution costs.
(b) (1) (A) For purposes of this section, a “well stimulation violation” is a violation of Article 3 (commencing with Section 3150) or the regulations implementing that article.
(B) The civil penalty amount for a well stimulation violation shall be not less than ten thousand dollars ($10,000) per day per violation and not more than twenty-five thousand dollars ($25,000) fifty thousand dollars ($50,000) per day per violation.
(2) (A) For purposes of this section, a “major violation” is a violation that is not a well stimulation violation and that is one or more of the
following:
(i) A violation that results in harm to persons or property or presents a significant threat to human health or the environment. environment, including wildlife.
(ii) A knowing, willful, or intentional violation.
(iii) A chronic violation or one that is committed by a recalcitrant violator. In determining whether a violation is chronic or a violator is recalcitrant, the supervisor shall consider whether there is evidence indicating that the violator has engaged in a pattern of neglect or disregard with respect to applicable requirements.
(iv) A violation
where the violator derived significant economic benefit, either by significantly reduced costs or a significant competitive advantage.
(B) The civil penalty amount for a major violation shall be not less than two thousand five hundred dollars ($2,500) per violation and not more than twenty-five thousand dollars ($25,000) fifty thousand dollars ($50,000) per violation.
(3) (A) For purposes of this section, a “minor violation” is a violation that is neither a well stimulation violation nor a major violation.
(B) The civil penalty amount for a minor violation shall be not more than two thousand five hundred
dollars ($2,500) per violation.
(4) At the supervisor’s discretion, each day a major or minor violation continues or is not cured may be treated as a separate violation.
(5) If the supervisor makes a written finding that a violation is a special circumstance that warrants a higher penalty than what is allowable under this section, the supervisor may impose a greater civil penalty.
(c) An order of the supervisor imposing a civil penalty shall be reviewable pursuant to Article 6 (commencing with Section 3350). When the order of the supervisor has become final and the penalty has not been paid, the supervisor may apply to the appropriate superior court for an order directing payment of the civil penalty. The
supervisor may also seek from the court an order directing that production from the well or use of the production facility that is the subject of the civil penalty order be discontinued until the violation has been remedied to the satisfaction of the supervisor and the civil penalty has been paid.
(d) The supervisor may allow a supplemental environmental project in lieu of a portion of the civil penalty amount. The supplemental environmental project may not be more than 50 percent of the total civil penalty amount. Any amount collected under this section that is not allocated for a supplemental environmental project shall be deposited in the Oil and Gas Environmental Remediation Account, established pursuant to Section 3261.
(e) “Supplemental environmental project” means an environmentally beneficial project that a person, subject to an order of the supervisor imposing a civil
penalty, voluntarily agrees to undertake in settlement of the action and to offset a portion of a civil penalty.
SEC. 6.
Section 3270.7 is added to the Public Resources Code, to read:3270.7.
(a) Upon the discovery of a surface expression leak from an oil and gas well, the owner or operator of the oil and gas well shall promptly notify the division of the jurisdiction in which the leak is located.(b) The division shall promptly cooperate with all relevant state agencies on any surface expression leak.
(c) The division shall post all relevant information on its internet website, regarding any surface expression reported pursuant to this section.
SEC. 7.
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.The division shall review the study conducted pursuant to Section 3240 and the strategy developed pursuant to Section 3241 and determine if any of the oil and gas wells identified continue to pose a hazard.
