Bill Text: CA SB545 | 2015-2016 | Regular Session | Introduced

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

---

Bill Title: Oil and gas operations.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2016-02-01 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB545 Detail]

Download: California-2015-SB545-Introduced.html

---

BILL NUMBER: SB 545	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Jackson

                        FEBRUARY 26, 2015

   An act to amend Sections 3008, 3106, 3203, and 3234 of, to add
Section 3215.5 to, to repeal Section 3451 of, and to repeal and add
Section 3450 of, the Public Resources Code, relating to oil and gas.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 545, as introduced, Jackson. Oil and gas operations.
   (1) Under existing law, the Division of Oil, Gas, and Geothermal
Resources in the Department of Conservation regulates the drilling,
operation, maintenance, and abandonment of oil and gas wells in the
state. Existing law requires the State Oil and Gas Supervisor to
supervise the drilling, operation, maintenance, and abandonment of
wells and the operation, maintenance, and removal or abandonment of
tanks and facilities related to oil and gas production within an oil
and gas field, so as to prevent damage to life, health, property, and
natural resources, as provided; to permit owners and operators of
wells to utilize all known methods and practices to increase the
ultimate recovery of hydrocarbons; and to perform the supervisor's
duties in a manner that encourages the wise development of oil and
gas resources to best meet oil and gas needs in this state.
   This bill would no longer require the supervisor to perform his or
her duties in that manner. The bill would instead require the
supervisor to authorize the exploration and production of
hydrocarbons, including, among other things, the drilling, operation,
maintenance, and abandonment of wells, and the use of enhanced oil
recovery methods, as defined, and authorize the supervisor to allow
an owner or operator of a well to utilize all known methods and
practices to increase the ultimate recovery of hydrocarbons if the
supervisor finds that those methods and practices are consistent with
existing law.
   (2) 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. Under existing law, the notice is deemed approved if the
supervisor or district deputy fails to respond to the notice in
writing within 10 working days from receipt and is deemed canceled if
operations have not commenced within one year of receipt.
   This bill would require an owner or operator of a well to file an
application for approval to commence drilling, containing specified
information, and would prohibit any drilling until written approval
is given by the supervisor or the district deputy containing
specified findings. The bill would authorize the supervisor, upon
request, to grant a one-year extension if operations have not
commenced within one year of the approval.
   (3) The Permit Streamlining Act requires any public agency that is
the lead agency for a development project to approve or disapprove
of a project, as specified. Under that act, if the lead agency or
responsible agency is required to provide public notice of the
development project or to hold a public hearing on the development
project, or both, and the agency has not provided the public notice
or held the hearing, or both, at least 60 days prior to the
expirations of specified time periods, the applicant may file an
action to compel the agency to provide the public notice or hold the
hearing, or both, as specified.
   This bill would require the supervisor to perform his or her
duties in conformance with that act.
   (4) Existing law generally provides that well records filed by
owners or operators with the supervisor are public records. However,
existing law authorizes the supervisor, upon written request of an
owner or operator, to maintain well records of exploratory wells, or
other wells if the supervisor determines that there are extenuating
circumstances, as confidential information. Under existing law, the
confidential period for an onshore or offshore well is up to 2 or 5
years, respectively, from the cessation of drilling operations, as
defined. Existing law authorizes the supervisor to extend the period
of confidentiality of a well for 6 months upon written request
documenting extenuating circumstances and requires that the total
period of confidentiality, including all extensions, for onshore and
offshore wells not exceed 4 or 7 years, respectively, from the
cessation of drilling operations.
   This bill would limit the authorization to maintain the
confidentiality of well records to exploratory wells and only if the
owner or operator includes specified information in the written
request. The bill would deem both the request for, and the granting
of, confidential well status to be public records and would require
that information to be accessible on the division's Internet Web
site. The bill would require all well records of a confidential well,
as defined, to be posted on the division's Internet Web site once
the confidential well period has ended. The bill would require that
the confidential period for an offshore well not exceed 3 years from
the cessation of drilling operations and would authorize the
supervisor to extend the period of confidentiality for confidential
wells for only 6 months, upon receiving a written request documenting
extenuating circumstances.
   (5) Existing law requires an owner or operator of a well to keep a
log, core record, and history of the drilling of wells to be
provided to the district deputy within 60 days after the date of
cessation of drilling, rework, or abandonment operations or the date
of suspension of operation. 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 in addition require an owner or operator of a well
to report specified information to the applicable regional water
quality control board within 5 days of any loss of well and well
casing integrity. Because a violation of this requirement would be a
crime, the bill would impose a state-mandated local program.
   (6) Existing law recognizes the Conservation Committee of the
California Oil and Gas Producers and authorizes it or any other
committee of oil producers to make voluntary recommendations to the
supervisor regarding, among other things, maximum efficient rates of
production, as defined, if specified conditions are satisfied.
   This bill would instead authorize any committee of oil producers
to make recommendations to the supervisor regarding oil and gas
exploration and production, as specified, and would require the
division to post any recommendations received by the supervisor on
the division's Internet Web site.
   (7) 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.  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,
and the data is gathered at least once every three years.
   (d) "Idle well" means any well that has not produced oil or
natural gas or has not been used for injection for six consecutive
months of continuous operation during the last five or more years. An
idle well does not include an active observation well.
   (e) "Long-term idle well" means any well that has not produced oil
or natural gas or has not been used for injection for six
consecutive months of continuous operation during the last 10 or more
years. A long-term idle well does not include an active observation
well. 
   (f) "Enhanced oil recovery method" means the process of obtaining
stranded oil, not recovered from an oil reservoir, by utilizing
certain extraction processes, including, but not limited to, thermal
recovery, gas injection, chemical injection, and water flooding.
 
   (g) "Confidential well" means an exploratory well with records
that the division maintains as confidential information in accordance
with Section 3234. 
  SEC. 2.  Section 3106 of the Public Resources Code is amended to
read:
   3106.  (a) The supervisor shall  so supervise 
 authorize  the  exploration and production of
hyrdrocarbons, including  drilling,  stimulation, the use of
enhanced oil recovery methods and well completion techniques, 
operation,  re   working,  maintenance, and
abandonment of wells and the operation, maintenance, and removal or
abandonment of tanks and facilities attendant to oil and gas
production, including pipelines not subject to regulation pursuant to
Chapter 5.5 (commencing with Section 51010) of Part 1 of Division 1
of Title 5 of the Government Code that are within an oil and gas
 field, so   field. These activities shall be
authorized in a manner   so  as to prevent, as far as
possible, damage to life, health, property, and natural resources;
damage to underground oil and gas deposits from infiltrating water
and other causes; loss of oil, gas, or reservoir  energy,
  energy;  and damage to underground and surface
 waters suitable for irrigation or domestic purposes by the
infiltration of, or the addition of, detrimental substances.
  waters. 
   (b) The supervisor  shall also supervise the drilling,
operation, maintenance, and abandonment of wells so as to permit the
owners or operators of the wells to utilize all methods and practices
known to the oil industry for the purpose of increasing the ultimate
recovery of underground hydrocarbons and which, in the opinion of
the supervisor, are suitable for this purpose in each proposed case.
    may allow an owner or operator of a well to
utilize all methods and practices known to the oil industry to
increase the ultimate recovery of underground hydrocarbons if the
supervisor finds that those methods and practices are consistent
  with this division.  To further the elimination of
waste by increasing the recovery of underground hydrocarbons, it is
hereby declared as a policy of this state that the grant in an oil
and gas lease or contract to a lessee or operator of the right or
power, in substance, to explore for and remove all hydrocarbons from
any lands in the state, in the absence of an express provision to the
contrary contained in the lease or contract, is deemed to allow the
lessee or contractor, or the lessee's or contractor's successors or
assigns, to do what a prudent operator using reasonable diligence
would do, having in mind the best interests of the lessor, lessee,
and the state in producing and removing hydrocarbons, including, but
not limited to, the injection of air, gas, water, or other fluids
into the productive strata, the application of  pressure heat
  pressure, heat,  or other means for the
reduction of viscosity of the hydrocarbons, the supplying of
additional motive force, or the  creating  
creation  of enlarged or new channels for the underground
movement of hydrocarbons into production wells, when these methods or
processes employed have been approved by the supervisor, except that
nothing contained in this section imposes a legal duty upon the
lessee or contractor, or the lessee's or contractor's successors or
assigns, to conduct these operations.
   (c) The supervisor may require an operator to implement a
monitoring program, designed to detect releases to the soil and
water, including both groundwater and surface water, for aboveground
oil production tanks and facilities. 
   (d) To best meet oil and gas needs in this state, the supervisor
shall administer this division so as to encourage the wise
development of oil and gas resources.  
   (d) The supervisor shall administer this division in conformance
with Chapter 4.5 (commencing with Section 65920) of Division 1 of
Title 7 of the Government Code. 
  SEC. 3.  Section 3203 of the Public Resources Code is amended to
read:
   3203.  (a) The operator of any well, before commencing the work of
drilling the well, shall file with the supervisor or the district
deputy a written  notice of intention  
application for approval  to commence drilling.  The
application shall detail all the methods and practices expected to be
used for the well, including, but not limited to, well stimulation
treatments and enhanced oil recovery methods. The application shall
also demonstrate that the drilling and any method utilized will pose
no threat to the public health and   safety.  Drilling
shall not commence until  written  approval is given by the
supervisor or the district  deputy. If the supervisor or the
district deputy fails to give the operator written response to the
notice within 10 working days from the date of receipt, that failure
shall be considered as an approval of the notice and the notice, for
the purposes and intents of this chapter, shall be deemed a written
report of the supervisor.   deputy, finding that the
project is consistent with Section 3106 and that the public health
and safety and the environment will not be harmed.  If
operations have not commenced within one year of  receipt of
the notice, the notice   approval of the application,
the approval  shall be deemed  canceled.  
canceled, unless the applicant makes a written request for an
extension with a reason for the extension. The supervisor may grant a
one-year extension of the approval   in writing.  The
 notice   application  shall contain the
pertinent data the supervisor requires on printed forms supplied by
the division or on other forms acceptable to the supervisor. The
supervisor may require other pertinent information to supplement the
 notice.   application. 
   (b) After the completion of any well, this section also 
applies   applies,  as far as may be, to the
deepening or redrilling of the well, any operation involving the
plugging of the well, or any operations permanently altering in any
manner the casing of the well. The number or designation of any well,
and the number or designation specified for any well in  a
notice   an application  filed as required by this
section, shall not be changed without first obtaining a written
 consent   approval  of the supervisor.
   (c) If an operator has failed to comply with an order of the
supervisor, the supervisor may deny approval of proposed well
operations until the operator brings its existing well operations
into compliance with the order. If an operator has failed to pay a
civil penalty, remedy a violation that it is required to remedy to
the satisfaction of the supervisor pursuant to an order issued under
Section 3236.5, or to pay any charges assessed under Article 7
(commencing with Section 3400), the supervisor may deny approval to
the operator's proposed well operations until the operator pays the
civil penalty, remedies the violation to the satisfaction of the
supervisor, or pays the charges assessed under Article 7 (commencing
with Section 3400).
  SEC. 4.  Section 3215.5 is added to the Public Resources Code, to
read:
   3215.5.  For any well, regardless of the operation or activity
taking place, if there is any loss of well and well casing integrity,
that loss and any resultant action or remedial work shall be
reported by the operator to the applicable regional water quality
control board with five days of the event.
  SEC. 5.  Section 3234 of the Public Resources Code is amended to
read:
   3234.  (a) (1) Except as otherwise provided in this section, all
 of  the well records, including production reports, of any
owner or operator  which   that  are filed
pursuant to this chapter are public records for purposes of the
California Public Records Act (Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code).
   (2) Those records are public records when filed with the division
unless the owner or operator requests, in writing, that the division
maintain the well records of onshore exploratory wells or offshore
exploratory wells as confidential information.  The records
of other wells may be maintained as confidential information if,
based upon information in a written request of the owner or operator,
the supervisor determines there are extenuating circumstances.
  The owner or operator shall give a detailed
explanation and rationale for keeping the records of the exploratory
well confidential and the supervisor shall respond in writing as to
whether the confidential well status has been granted. Both the
request for, and the granting of, confidential well status are public
records, and shall be made accessible on the division's Internet Web
site. For onshore wells, the confidential period shall not
exceed two years from the cessation of drilling operations as defined
in subdivision (e). For offshore wells, the confidential period
shall not exceed  five   three  years from
the cessation of drilling operations as specified in subdivision (e).

   (3) Well records maintained as confidential information by the
division shall be open to inspection by those persons who are
authorized by the owner or operator in writing. Confidential status
shall not apply to state officers charged with regulating well
operations, the director, or as provided in subdivision (c).
   (4) On receipt by the supervisor of a written request documenting
extenuating circumstances relating to a particular well, including a
well on an expired or terminated lease, the supervisor may extend the
period of confidentiality  , as set forth in paragraph (2),
 for  no more than  six months.  For onshore
wells, the total period of confidentiality, including all extensions,
shall not exceed four years from the cessation of drilling
operations as specified in subdivision (e), and for offshore wells
the total period of confidentiality, including all extensions, shall
not exceed seven years from the cessation of drilling operations as
specified in subdivision (e), unless the director approves a longer
period after a 30-day public notice and comment period. The director
shall initiate and conduct a public hearing on receipt of a written
complaint.  
   (5) Once the confidential well period has ended, all well records
shall be immediately posted on the division's Internet Web site.

   (b) Notwithstanding the provisions of subdivision (a) regarding
the period of confidentiality, the well records for onshore and
offshore wells shall become public records when the supervisor is
notified that the lease has expired or terminated.
   (c) Production reports filed pursuant to Section 3227 shall be
open to inspection by the State Board of Equalization or its duly
appointed representatives when making a survey pursuant to Section
1815 of the Revenue and Taxation Code or when valuing state-assessed
property pursuant to Section 755 of the Revenue and Taxation Code,
and by the assessor of the county in which a well referred to in
Section 3227 is located.
   (d) For the purposes of this section, "well records" does not
include either experimental logs and tests or interpretive data not
generally available to all operators, as defined by the supervisor by
regulation.
   (e) The cessation of drilling operations occurs on the date of
removal of drilling machinery from the well site.
  SEC. 6.  Section 3450 of the Public Resources Code is repealed.

   3450.  The Legislature takes notice of the existence of the
Conservation Committee of California Oil Producers and of the fact
that said committee for a number of years last past, in the interest
of the conservation of oil and gas, has made recommendations of
maximum efficient rates of production and for the intrapool
distribution of such maximum efficient rates of production with
respect to oil pools, capacity production from which pools would
result in a loss of ultimate production. The Legislature declares
that recommendations for such purpose are in the interest of the
conservation of the oil and gas resources of this State and that it
is lawful for said committee or any other committee of oil producers
to issue such recommendations as to any such oil pool and for
producers of oil to comply therewith or to agree to comply therewith,
provided:
   (a) Copies of all such recommendations shall be currently
delivered to the supervisor and shall be open to public inspection in
the office of the supervisor; and
   (b) Any such committee shall make available to the supervisor its
records, files, minutes, reports and other data pertaining to such
recommendations.
   The supervisor in his discretion may join in any such
recommendations or may express his disapproval thereof.
   The supervisor, in the absence of such recommendations by a
committee of oil producers with respect to any of such pools, or if
the supervisor deems any such recommendations to be insufficient or
incorrect, may issue recommendations with respect to any such pools
on said subject matter, and it shall be lawful for producers to
comply therewith or to agree to comply therewith. Neither a
disapproval by the supervisor nor a recommendation by him shall
constitute a basis for implying any obligation for producers of oil
to comply with such a disapproval or recommendation.
   Nothing herein contained shall be deemed to permit the production
of gas in violation of Articles 5 and 6 of Chapter 1 and Chapter 2 of
this division. 
  SEC. 7.  Section 3450 is added to the Public Resources Code, to
read:
   3450.  (a) The Conservation Committee of the California Oil and
Gas Producers or any other committee of oil producers may issue
recommendations to the supervisor relating to oil and gas exploration
and production, if both of the following are satisfied:
   (1) Copies of those recommendations are delivered to the
supervisor.
   (2) A committee issuing the recommendations makes available to the
supervisor its records, files, minutes, reports, and other data
pertaining to those recommendations.
   (b) The division shall post any recommendation received by the
supervisor pursuant to subdivision (a) on the division's Internet Web
site.
   (c) (1) The supervisor, in his or her discretion, may express his
or her disapproval of any recommendation received pursuant to
subdivision (a).
   (2) The supervisor, in the absence of a recommendation by a
committee of oil producers or if the supervisor deems a
recommendation to be insufficient or incorrect, may issue
recommendations relating to oil and gas exploration and production.
   (3) Oil producers may comply or agree to comply with the
supervisor's recommendation, but neither a disapproval by the
supervisor nor a recommendation by him or her shall constitute a
basis for implying an obligation for oil producers to comply with
that disapproval or recommendation.
   (d) Nothing in this section shall authorize the production of oil
or gas in violation of this division.
  SEC. 8.  Section 3451 of the Public Resources Code is repealed.

   3451.  "Maximum Efficient Rate," commonly referred to as "MER," is
defined as the highest daily rate of production which can be
sustained economically from a particular pool, from existing wells
and facilities, for a reasonable period without loss of economically
recoverable ultimate production of oil from such pool. 
  SEC. 9.  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.