SB 1147: Offshore oil and gas wells.

(1)Existing law requires a person engaging in the drilling, redrilling, or deepening, or in any operation permanently altering the casing, of one or more wells located in submerged lands under ocean waters within the jurisdiction of the state to file with the State Oil and Gas Supervisor a blanket indemnity bond for a specified amount to cover all of the operators operations in any of those wells. Existing law requires a person who operates one or more of those wells to provide an additional amount of security acceptable to the supervisor covering the full costs of plugging and abandoning all of the operators wells. Existing law requires the supervisor to determine the additional amount of the security required of each operator based on his or her determination of the reasonable costs of that plugging and abandonment.

This bill would require the supervisor to provide the operator with an opportunity to submit a cost estimate for his or her consideration before he or she determines the requisite additional amount of the security.

This bill would require the supervisor, before July 1, 2020, to evaluate and estimate the costs associated with the decommissioning of offshore oil and gas wells under its jurisdiction and, if necessary, to develop a schedule to increase the bond amounts or other financial surety provided by an operator of an offshore oil or gas well to ensure sufficient moneys are available to the state to decommission the well if no other entity is responsible for those decommissioning costs.

(2)Existing law vests with the State Lands Commission control over certain public lands. Existing law requires certain executed oil and gas leases to include specified provisions, including terms, conditions, and provisions that will protect the interests of the state with reference to securing the payment to the state of the proper amount or value of production. Existing law authorizes, with respect to oil, gas, and mineral leases, the assignment, transfer, or sublet as to all or any part of certain leased or permitted lands, as prescribed, subject to approval by the commission, to any person, association of persons, or corporation, who at the time of the proposed assignment, transfer, or sublease, possesses certain qualifications.

This bill would require those assigned, transferred, or sublet oil and gas leases to also include the specified provisions included in those executed oil and gas leases. The bill would require the commission to seek additional infrastructure bonding or other financial assurance, as feasible, under its jurisdiction when lease terms are negotiated or renegotiated for offshore oil and gas leases.