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SB-465 Oil and gas conservation.(2017-2018)

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Date Published: 05/22/2017 09:00 PM
SB465:v96#DOCUMENT

Amended  IN  Senate  May 22, 2017
Amended  IN  Senate  May 01, 2017
Amended  IN  Senate  March 20, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 465


Introduced by Senator Jackson
(Coauthor: Senator Stern)

February 16, 2017


An act to amend Sections 3008 and 3106 of, to add Section 3113 to, to repeal Section 3106.5 of, and to repeal Article 8 (commencing with Section 3450) of Chapter 1 of Division 3 of, the Public Resources Code, relating to oil and gas.


LEGISLATIVE COUNSEL'S DIGEST


SB 465, as amended, Jackson. Oil and gas conservation.
(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 instead require that the supervisor perform his or her duties in a manner so as to encourage the intelligent, safe, and efficient development of oil and gas resources. The bill would require the supervisor to regulate instead of supervise the drilling, operation, maintenance, and abandonment of wells and the operation, maintenance, and removal or abandonment of tanks and facilities attendant to oil and gas production, as provided.
(2) Existing law defines, among other things, “active observation well,” “idle well,” and “long-term idle well” for the purposes of provisions relating to the regulation of oil and gas.
This bill would narrow the definitions of “idle well” and “long-term idle well” by excluding active observation wells from those definitions.

(3)Existing law authorizes the supervisor, acting with the approval of the director, to annually expend, from the amount appropriated to the division, up to $10,000 to support activities at the West Kern Oil Museum.

This bill would repeal that provision.

(4)

(3) Existing law recognizes the Conservation Committee of 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 repeal those provisions and instead would require the supervisor to establish the Standing Advisory Council on Oil and Gas Extraction, composed of specified members. The bill would authorize the supervisor to request the council to provide recommendations to support decisions on the regulation of oil and gas development.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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, enhanced oil recovery, or reservoir pressure management, or been used for 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, enhanced oil recovery, or reservoir pressure management, or been used for 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.

SEC. 2.

 Section 3106 of the Public Resources Code is amended to read:

3106.
 (a) The supervisor shall regulate the drilling, operation, 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 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; and damage to underground and surface waters suitable for irrigation or domestic purposes by the infiltration of, or the addition of, detrimental substances.
(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. 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, or other means for the reduction of viscosity of the hydrocarbons, the supplying of additional motive force, or the 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) The supervisor shall administer this division so as to encourage the intelligent, safe, and efficient development of oil and gas resources.

SEC. 3.Section 3106.5 of the Public Resources Code is repealed.

SEC. 4.SEC. 3.

 Section 3113 is added to the Public Resources Code, to read:

3113.
 (a) (1) The supervisor shall establish the Standing Advisory Council on Oil and Gas Extraction. The supervisor may request that the Standing Advisory Council on Oil and Gas Extraction provide recommendations to support decisions on the regulation of oil and gas development.
(2) Copies of all the recommendations shall be promptly delivered to the supervisor and shall be made available to the public by posting the recommendations on the division’s Internet Web site within 60 days of their receipt.
(3) The Standing Advisory Council on Oil and Gas Extraction shall make available to the supervisor its records, files, minutes, reports, and other data pertaining to the recommendations.
(b) The Standing Advisory Council on Oil and Gas Extraction shall be composed as follows:
(1) Six members appointed by the Conservation Committee of California Oil and Gas Producers. Each of the division’s districts shall be represented by at least one member appointed by the Conservation Committee of California Oil and Gas Producers.
(2) Two members, appointed by the supervisor, with demonstrated expertise in the air quality impacts of oil and gas production and related activities.
(3) Two members, appointed by the supervisor, with demonstrated expertise in the water quality impacts of oil and gas production and related activities.
(4) (A) Two members, appointed by the supervisor, with demonstrated experience in environmental justice issues. The environmental justice members shall be representatives from communities in the state with the most significant exposure to oil production related impacts including, but not limited to, communities with minority populations or low-income populations, or both.
(B) For purposes of this section, “environmental justice” has the same meaning as defined in subdivision (e) of Section 65040.12 of the Government Code.
(5) Four or more members, appointed by the supervisor, who are experienced research scientists in engineering, geology, chemistry, or other fields relevant to oil and gas production and related activities.
(c) Any recommendations from members of the Standing Advisory Council on Oil and Gas Extraction do not have to be derived from a consensus of all council members and individual council members are not precluded from commenting on proposed regulations independent of the council. Paragraphs (2) and (3) of subdivision (a) apply to those recommendations.

SEC. 5.SEC. 4.

 Article 8 (commencing with Section 3450) of Chapter 1 of Division 3 of the Public Resources Code is repealed.