SB 724: Oil and gas: wells and production facilities.

(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 supervisors duties in a manner that encourages the wise development of oil and gas resources to best meet oil and gas needs in this state. Under existing law, a person who fails to comply with an order issued under these provisions and other requirements relating to the regulation of oil or gas operations is guilty of a misdemeanor.

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 extend the time period to commence operations from one year to 24 months before the notice is deemed canceled, would prohibit the notice from being extended, and would require the cancellation to be noted in the divisions records.

(2)Existing law requires the operator of any idle well to either file with the supervisor a certain annual fee or file a plan with the supervisor to provide for the management and elimination of all long-term idle wells, as specified.

This bill would, if the operator has eliminated more wells than required in the prior 2 years under the plan, authorize the supervisor to deduct from the new requirement in the plan the net total of long-term idle wells eliminated in excess of those previously required.

(3)Existing law establishes the Hazardous and Idle-Deserted Well Abatement Fund in the State Treasury. Existing law directs fee moneys collected from operators of idle wells to be deposited in the fund. The moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning attendant production facilities, or both, at a well of a feepaying operator.

This bill would instead provide that the moneys in the fund are continuously appropriated to the department for expenditure to mitigate a hazardous or potentially hazardous condition, by well plugging and abandonment, decommissioning production facilities, or both, at a well of a feepaying operator. Because the bill would expand the purposes for which moneys in a continuously appropriated fund may be used by no longer limiting those uses to attendant production facilities, it would make an appropriation.

(4)Existing law authorizes a city or county to request from the supervisor a list of those wells within its jurisdiction that have not continuously produced oil or natural gas, or have not been utilized continuously for injection purposes for a 6-month period during any consecutive 10-year period prior to or after January 1, 1991.

This bill instead would authorize a city or county to request from the supervisor a list of all idle wells, as defined, within its jurisdiction.

(5)Existing law authorizes the supervisor or district deputy to order the plugging and abandonment of a well that has been deserted whether or not any damage is occurring or threatened by reason of that deserted well.

This bill would additionally authorize the supervisor or district deputy to order the decommissioning of a production facility that has been deserted. Because a violation of an order issued under these provisions would be a crime, the bill would impose a state-mandated local program.

(6)Existing law authorizes the supervisor to order certain operations to be carried out on any property in the vicinity of which, or on which, is located any well that the supervisor determines to be either a hazardous or idle-deserted well, as specified. Existing law prohibits the division from expending, commencing with the 201516 fiscal year, more than $1,000,000 in any one fiscal year for these purposes related to hazardous or idle-deserted wells. The Administrative Procedure Act governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law.

This bill would expand this authorization to allow the supervisor to order or undertake certain operations, as applicable, to be carried out on any property in the vicinity of which, or on which, is located any well or facility that the supervisor determines to be a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility, as defined. The bill would temporarily raise the cap on spending for these purposes from $1,000,000 to $3,000,000 in any one fiscal year, for the 201819 fiscal year to the 202122 fiscal year, inclusive. The bill would require these moneys to be used exclusively for plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities and would prohibit the moneys from being used for nonwell or nonproduction facility-related activities and payments. The bill would require the division to develop criteria for determining the priority of plugging and abandoning hazardous or idle-deserted wells and decommissioning hazardous or deserted facilities to be remediated pursuant to these provisions, and would exempt the development of those criteria from the Administrative Procedure Act.

This bill would require the department to report on October 1, 2020, to the Legislature on the estimated number of hazardous wells, idle-deserted wells, deserted facilities, and hazardous facilities remaining, the estimated costs of abandoning or decommissioning those wells and facilities, and a timeline for future well abandonment and decommissioning of facilities with a specific schedule of goals, and, as part of that report, provide recommendations to the Legislature for improving and optimizing the involvement of local agencies in the process of plugging and abandoning wells and decommissioning facilities. The bill would require the department to provide the Legislature with an update to this report on October 1, 2023, containing specified information.

(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.