On May 3, 2012, the California Department of Conservation (Department), in conjunction with the Division of Oil, Gas, and Geothermal Resources (DOGGR), released the Oil and Gas Issues Road Map (the Road Map), a working document outlining its plan to review state oversight of various oil and gas issues. In what amounts to a “to-do list” of short-term Department priorities, the Road Map sets forth an ambitious agenda for establishing rules to govern the use of hydraulic fracturing (fracking) to stimulate oil and gas extraction from California wells and simultaneously overhaul existing, decades-old regulations applicable to underground injection methods of oil and gas extraction, including those that involve the use of cyclic steam, carbon dioxide and waste gas. The Road Map focuses on areas within the jurisdiction of the Department and DOGGR and does not address related issues such as air quality impacts and regulation.
Key Elements of the Road Map
The Road Map identifies two broad categories of oil and gas issues — regulatory issues and issues relating to program implementation — that the Department intends to address over the coming months. Key elements of the Road Map’s plan include:
1. Fracking. The Road Map provides for a series of workshops on fracking culminating in draft regulations scheduled for release in the summer or fall of 2012. These workshops are intended to elicit information on current fracking practices in California in order to allow the Department to propose regulations that would (i) specify the steps required to ensure production well integrity, (ii) specify well integrity testing, (iii) ensure resource protection and (iv) detail reporting requirements. These new rules would expand on existing regulations, which provide protection for well casings, hydrocarbon-bearing geologic formations, and groundwater supplies. Proposed regulations will be subject to review and comment pursuant to Administrative Procedure Act (APA) rulemaking procedures.
According to the Road Map, the Department will also begin to request that all operators report their fracking activities on FracFocus.org, a nationally recognized clearinghouse sponsored by the Groundwater Protection Council and the Interstate Oil and Gas Compact Commission. Moreover, the Road Map notes that the Department will seek to commission an independent study to identify actual fracking impacts to California including any risks to public health, safety and the environment.
2. Underground Injection Control Program. The Department intends to conduct a comprehensive review of current regulations governing underground injection wells to address deficiencies in Department oversight of production wells identified in an audit conducted by the United States Environmental Protection Agency (EPA) and to identify any changes necessary to respond to modern developments in engineering and production practices. This assessment is intended to serve as the basis for updating existing regulations, most of which are more than 30 years old, in order to keep pace with evolving trends in oil and gas production.
3. Cyclic Steam. DOGGR will examine regulations for well construction and operation in cyclic steam conditions to determine how rules should be modified to account for the different conditions and forces exerted on these types of production wells and on subsurface geology. Specifically, the Road Map directs DOGGR to identify the distinctions and similarities between cyclic steam production and underground injection operations, how depth of formation impacts the ability of operators to manage safe and efficient production, and whether existing well casing requirements can meet cyclic steam injection challenges.
4. Carbon Dioxide.1 The Department plans to obtain the expertise necessary to ensure that projects involving carbon dioxide (CO2) injection receive appropriate review by professionals with competency in subsurface CO2 dynamics.
5. Waste Gas.2 The Department plans to evaluate the degree to which waste gas can be practically and safely disposed of, whether current rules permit injection of fluid blends that bear little resemblance to fluids that typically emerge from California’s oil and gas fields, whether different standards for different oil and gas fields are necessary given that “sour gas” (a subset of waste gas) is not uniformly present across California, and whether existing staffing levels are sufficient for fluid disposal oversight.
Program Implementation Issues
6. Worker Safety. DOGGR intends to supply staff with appropriate protective gear and review safety and injury-prevention training requirements to ensure consistency with worker safety rules and the demands of oil field operations.
7. CalWIMS. DOGGR plans to finalize the Department’s California Well Information Management System (CalWIMS) so that well information is accessible to all districts and a platform is available to pursue electronic permitting, inspection and data retrieval.
8. E-Reporting. DOGGR will evaluate efficiencies that could arise from allowing electronic permitting and reporting separate from CalWIMS for both DOGGR and industry operators.
9. Information and Technology Sharing. The Department will evaluate the value of added analytical capability derived from three-dimensional subsurface geology modeling relative to the Department’s oversight responsibilities; identify the required software, hardware, and staff training requirements necessary to implement three-dimensional subsurface geology modeling technology; and initiate discussion with industry regarding partnerships to fund technology updates as well as possible sources of data for subsurface geology analysis.
The workshops discussed above have been planned to present a general overview of oil and gas production in California, communicate existing well-construction requirements and the various protections that current rules and the Road Map will provide, and discuss the technical, non-policy aspects of fracking operations. Thereafter, the Department will provide an opportunity for public comment and prepare draft regulations for circulation to interested and affected parties.
|Bakersfield||May 16||7:00 to 9:00 p.m.||Kern County Board of Supervisors Chambers, First Floor, 1115 Truxtun Ave., Bakersfield, CA 93301|
|Ventura||May 30||7:00 to 9:00 p.m.||Ventura County Board of Supervisors Chambers, 800 S. Victoria Ave., Ventura, CA 93009|
|Culver City||June 12||7:00 to 9:00 p.m.||City Council Chambers, 9770 Culver Boulevard, Culver City, CA 90232|
|Long Beach||June 13||TBD||TBD|
|Santa Maria||July 11||TBD||TBD|
When viewed in light of recent action taken by California legislators,4 the release of this Road Map reflects a significant commitment by the state to bring oil and gas production more tightly within California’s regulatory control. If new rules regarding fracking and other changes to existing regulations are adopted as scheduled, the Road Map may just be the first step. At a minimum, oil and gas producers and operators will want to keep an eye on the implementation of the Road Map.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:Rothman-Rick
1 The Road Map attempts to differentiate between CO2 capture and storage (CCS) and the use of CO2 as an enhanced oil recovery (EOR) method. According to the Road Map, pursuant to its Underground Injection Control Program, the Department will assert its authority to oversee the use of CO2 as an EOR tool. The Road Map concedes that the Department has no current authority over CCS wells, but directs the Department to determine the statutory changes necessary should California seek EPA state-level authority over CCS wells.
2 The Road map acknowledges that Department’s statutory authority to permit and regulate waste gas is ambiguous. However, pending legislation (SB 711) will clarify the Department’s authority over waste gas injection operations should the legislation become law.
3 Please check the Department Web page regularly for updates regarding workshop times and locations at http://www.conservation.ca.gov/dog/general_information/Pages/HFWorkshop.aspx.
4 On May 9, 2012, the California Assembly Subcommittee on Resources and Transportation approved Governor Jerry Brown’s request to increase the size of DOGGR by 18 positions on the condition that regulators draft and finalize fracking regulations by 2014.
This article was originally published by Bingham McCutchen LLP.