CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1328

Author:(Holden)

As Amended Ver:September 6, 2019

Majority vote

SUMMARY:

Requires the Division of Oil, Gas, and Geothermal Resources (DOGGR), in consultation with the State Air Resources Board (ARB), to study idle, idle-deserted, and abandoned oil and gas wells in California to better understand their emissions of air pollutants, including, but not limited to, greenhouse gases (GHG), toxic air contaminants, and volatile organic compounds; makes stipulations regarding the scope and execution of that study; and increases the time permitted between announcing the intent to abandon a well and cancellation of that announcement from 12 to 24 months.

The Senate Amendments:

1. Deletes the provisions requiring, until January 1, 2027, the operator of an oil and gas well that is being plugged and abandoned, including pursuant to an idle well management plan or required by DOGGR's testing regulations, to conduct specified testing and the Supervisor for any action ordered by the Supervisor to abandon a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility to conduct specified testing and instead: the amendments require DOGGR, in consultation with ARB to study idle, idle-deserted, and abandoned wells in California to better understand their emissions of air pollutants, including, but not limited to, GHGs, toxic air contaminants, and volatile organic compounds.
2. Requires DOGGR to work with the independent experts, oil and gas operators, and nongovernmental organizations to identify a stratified random sample of wells, and set of pollutants to be measured, from which measurement data can be used to extrapolate to the total number of idle, idle-deserted, and abandoned wells in the state.
3. Limits the total cost of the study to a maximum of one million dollars.
4. Increases the time permitted between announcing the intent to abandon a well and cancellation of that announcement from 12 to 24 months

COMMENTS:

According to a February 2018 report of the Los Angeles County Department of Public Health (LA DPH), "In some neighborhoods, such as South Los Angeles, residences are located only several feet away from the boundary of a drilling site and as close as 60 feet from an active oil well. LA DPH has responded to residents' health complaints of headaches, nausea, vomiting, respiratory irritation, and eye, nose, and throat irritation. LA DPH's health investigation revealed insufficient regulatory oversight and inadequate mitigation measures to reduce exposures and associated impacts. LA DPH also found that while South Coast Air Quality Management District has imposed some monitoring requirements, the current monitoring activities for oil and gas operations can be sporadic. As part of implementation of AB 617 (Cristina Garcia), Chapter 136, Statutes of 2017, ARB has developed a Study of Neighborhood Air Near Petroleum Sources (SNAPS) to better characterize air quality in communities near oil and gas operation. In September 2018, ARB selected four communities for the SNAPS program, two in Kern County and two in Los Angeles County, however, the study will not focus on idle wells. On January, 1, 2018, ARB began implementing the Oil & Gas Production, Processing, and Storage regulation to require methane detection and leak elimination on a facility basis.

Methane is a short-lived climate pollutant. In the first two decades after its release, methane is 84 times more potent than carbon dioxide. Scientists at the consulting firm GHD Services Inc., the University of Cincinnati, and Washington State University measured methane emissions at 138 abandoned wells. Out of over 100 plugged wells, just one was emitting methane, and only at a low level. By contrast, 40% of the unplugged wells were leaking methane, and the average leak rate was over 100 times higher than the single leaking plugged well. Overall, average emissions of unplugged wells were 5,000 times higher than plugged wells. This bill will institute basic monitoring requirements for wells being plugged and abandoned to better understand the air quality and GHG emission reduction benefits of plugging and abandoning idle wells. If California's stock of idle wells are representative of the findings of the study mentioned above, this could be a significant source of emissions.

According to the Author:

Pursuant to recent legislation AB 2729 (Williams), Chapter 272, Statutes of 2016, and SB 724 (Lara), Chapter 652, Statutes of 2017, California is embarking on an ambitious effort to reduce the number of non-operating idle and abandoned oil and gas wells in the state. This effort involves new standards that require operators to create plans to reduce the number of these wells under their control. In addition, DOGGR is remediating abandoned and hazardous oil and gas wells, wells that no owner can be identified. In addition, ARB passed a regulation in March 2017 to improve management of oil and gas production sites in California. This regulation requires quarterly inspection of active and idle oil and gas production sites.

The plugging and abandonment process for wells must be done with precision, in accordance with new standards established by DOGGR. This means that crews are onsite preparing and performing well plugging and remediation upwards of weeks to months to complete. Currently there exist no requirements for operators or DOGGR to test for emissions of greenhouse gases and other air pollutants from wells being remediated.

Some peer-reviewed research is available on the amount of emissions from idle and abandoned wells, but current research is limited at best – meaning California is unable to accurately quantify the public health, air quality and climate benefits from its remediation actions. Furthermore, the state continues to lack data on the types and locations of wells that represent the most emissions and thus prioritize these wells to be plugged first.

Arguments in Support:

Environmental Defense Fund, in support of this bill, states idle and abandoned wells can and do leak, and when they do it can result in emissions that contribute to climate change and endanger the public health. AB 1328 addresses this need by requiring the submission of testing data conducted on idle and abandoned wells for publication on the DOGGR's website.

Arguments in Opposition:

None received

FISCAL COMMENTS:

According to the Senate Appropriations Committee:

1. DOGGR estimates one-time costs of up to $1 million (Oil and Gas Administrative Fund) to complete the study.
2. ARB estimates costs of $188,000 annually (Oil, Gas, and Geothermal Administrative Fund) to research and design the study, help select the contractor, work with operators and air districts and other technical advisors, provide regular feedback to the contractor, facilitate peer review, and review drafts of the study results.
3. The Department of Justice estimates costs of $37,000 in 2019-20 and $74,000 in 2020-21 due to an increase in litigation when DOGGR implements regulations to comply with this bill.

VOTES:

ASM NATURAL RESOURCES: 8-3-0

YES: Friedman, Chau, Eggman, Cristina Garcia, Limón, McCarty, Muratsuchi, Mark Stone

NO: Flora, Mathis, Melendez

ASM APPROPRIATIONS: 12-5-1

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Eduardo Garcia, Petrie-Norris, Quirk, Robert Rivas

NO: Bigelow, Brough, Diep, Fong, Obernolte

ABS, ABST OR NV: Maienschein

ASSEMBLY FLOOR: 47-24-9

YES: Aguiar-Curry, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Cervantes, Chau, Chiu, Chu, Eggman, Friedman, Gabriel, Cristina Garcia, Gloria, Gonzalez, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, McCarty, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Reyes, Luz Rivas, Robert Rivas, Blanca Rubio, Santiago, Smith, Mark Stone, Ting, Weber, Wicks, Wood, Rendon

NO: Bigelow, Brough, Chen, Choi, Cunningham, Dahle, Diep, Flora, Fong, Frazier, Gallagher, Gipson, Grayson, Kiley, Lackey, Mathis, Mayes, Melendez, Obernolte, Patterson, Ramos, Salas, Voepel, Waldron

ABS, ABST OR NV: Arambula, Cooley, Cooper, Daly, Eduardo Garcia, Gray, Maienschein, Medina, Rodriguez

SENATE FLOOR: 33-4-3

YES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dahle, Dodd, Durazo, Glazer, Lena Gonzalez, Hertzberg, Hill, Hueso, Hurtado, Jackson, Leyva, McGuire, Mitchell, Monning, Pan, Portantino, Roth, Rubio, Skinner, Stern, Umberg, Wieckowski, Wiener, Wilk

NO: Jones, Morrell, Nielsen, Stone

ABS, ABST OR NV: Galgiani, Grove, Moorlach

UPDATED:

VERSION: September 6, 2019

CONSULTANT: Michael Jarred / NAT. RES. / (916) 319-2092 FN: 0002242

 THIRD READING  

Bill No: AB 1328

Author: Holden (D)

Amended: 9/6/19 in Senate

Vote: 21

SENATE NATURAL RES. & WATER COMMITTEE: 7-1, 6/25/19

AYES: Stern, Allen, Caballero, Hertzberg, Hueso, Jackson, Monning

NOES: Jones

NO VOTE RECORDED: Borgeas

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 7-0, 7/3/19

AYES: Allen, Bates, Dahle, Hill, Skinner, Stern, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 6-1, 8/30/19

AYES: Portantino, Bates, Bradford, Durazo, Hill, Wieckowski

NOES: Jones

ASSEMBLY FLOOR: 47-24, 5/23/19 - See last page for vote

SUBJECT: Oil and gas: notice of intention to abandon well: study of fugitive emissions from idle, idle-deserted, and abandoned wells

SOURCE: Environmental Defense Fund

DIGEST:

This bill standardizes the valid period for notices of intention approved by the Division of Oil, Gas, and Geothermal Resources to two years, and requires a study of the emissions from idle, idle-deserted and abandoned wells to be conducted and reported on or by January 1, 2023.

Senate Floor Amendments of 9/6/19 specify chemical species to measure in the emissions.

ANALYSIS:

Existing law:

1. Establishes the Division of Oil, Gas, and Geothermal Resources (division) in the Department of Conservation (department). The division is the state’s oil and gas well regulator. The State Oil and Gas Supervisor (supervisor) leads the division.
   1. The supervisor has broad authority to supervise the drilling, operation, maintenance, and abandonment of the state’s oil and gas wells, among other things, so as to prevent, as far as possible, damage to life, health, property, and natural resources, and certain other detrimental impacts. (Public Resources Code (PRC) §3106)
2. Requires the operator of any oil or gas well, before commencing the work of drilling the well, to file, as specified, a written notice of intention to commence drilling. Drilling shall not commence until the notice is approved. If operations have not commenced within 24 months of receipt of the notice, the notice shall be deemed canceled, the notice shall not be extended, and the cancellation shall be noted in the division’s records. (PRC §3203)
   1. However, for well abandonment operations, the written notice of intention is valid for a term of one year only. (PRC §3229)
3. Defines an idle well as an oil and gas well that has not been used for two years or more and has not yet been properly plugged and abandoned to the division’s satisfaction, as specified, and defines an idle-deserted well as an idle well where no party responsible for the oil or gas well can be found. (PRC §3008, §3251)
4. Establishes the Air Resources Board (ARB) as the air pollution control agency in California and requires ARB, among other things, to control emissions from a wide array of mobile sources and coordinate, encourage, and review the efforts of all levels of government as they affect air quality. (Health and Safety Code (HSC) §39500 et seq.)
5. Requires ARB to implement a comprehensive strategy to reduce emissions of short-lived climate pollutants to achieve a reduction in methane by 40%, among other pollutants. (HSC §39730 et seq.)
6. Requires ARB to establish Community Emissions Reductions Programs for the purposes of reducing emissions of toxic air contaminants and criteria air pollutants, as specified. (HSC §44391.2)

This bill standardizes the valid period for notices of intention approved by the division, and requires a study of the emissions from idle, idle-deserted and abandoned wells to be conducted and reported on or by January 1, 2023. Specifically, this bill:

1. Extends the time period to commence abandonment operations from one year to 24 months before the notice of intention is deemed canceled.
2. Requires the division, in consultation with the ARB, to initiate a study to be conducted by independent experts, with specified experience, of fugitive emissions from idle, idle-deserted, and abandoned wells in the state. These emissions can contribute to climate change or endanger public and occupational health and safety, as specified. Chemical species to measure for include greenhouse gases, toxic air contaminants and volatile organic compounds.
   1. The division shall seek input from experts on fugitive emissions, oil and gas well operators and people with relevant experience in nongovernmental organization.
   2. The study shall be limited to a total of no more than 500 wells, utilize existing practices and methods, as defined, to allow data collection without disruption to the well site, limit surface disturbance, and limit the cost to $1 million.
      1. The division shall work with independent experts, oil and gas operators, and nongovernmental organizations to identify a stratified random sample of wells, as described, and set of pollutants to measure. The study design shall allow extrapolation to all idle, idle-deserted, and abandoned wells in the state.
         1. A well that is selected for measurement that is scheduled to be plugged, abandoned or reabandoned shall be tested using a designated screening method or an alternative methodology, if available, prior to plugging, abandonment or reabandonment operations start. If the well is emitting hydrocarbons in specified quantities, additional testing shall be performed, as specified, to measure the emissions flow rate and the amount of total and speciated hydrocarbons.
         2. Oil and gas operators with wells selected for sampling will make reasonable efforts to permit access to the wells by the division and independent experts, and will not interfere with the measurements, as specified.
   3. The division shall minimize disruption and costs to the operators, as specified.
   4. On or before January 1, 2022, the department shall post all results of testing conducted on the department’s internet website in a machine-readable format, with interim reporting provided, as available, on or before January 1, 2021, as specified.
   5. On or before July 1, 2022, the independent experts contracted to undertake the study shall complete a written document that includes an executive summary of the findings, a description of the results, the findings, and an estimate of hydrocarbon emissions from the state’s idle, idle-deserted, and abandoned wells. Before public release pursuant to subdivision (e), the written document shall be provided for peer review and comments, to the operators whose wells were included in the sample, and to a group of independent experts and nongovernmental organizations selected by the division.
   6. On or before January 1, 2023, the division shall make the results of the study, as per the written document required pursuant to subdivision (d), available on its internet website.
3. Makes appropriate motivating and relevant legislative findings.
4. Establishes a state-mandated local program and provides for no reimbursement for specified reasons.

Background

Recent reform efforts at the division. In the last few years, the department and the division have made a concerted effort through department-sponsored bills to revise and update several outdated elements of state law governing certain requirements imposed upon operators of oil and gas wells and related infrastructure. This is one aspect of the division’s “Renewal Plan,” originally released in October 2015. These bills include:

1. AB 2729 (Williams, Chapter 272, Statutes of 2016) substantially revised idle well requirements, and required individual indemnity bonds for oil and gas wells – or a blanket bond for multiple wells, as specified – remain in place so long as the well is not properly plugged and abandoned. AB 2729 increased well bond amounts too.
2. AB 2756 (Thurmond, Chapter 274, Statutes of 2016) substantially enhanced the division’s penalty and investigative authority and allowed penalties to be spent on environmentally beneficial projects, among other things.
3. SB 724 (Lara, Chapter 652, Statutes of 2017) substantially revised the division’s processes for addressing hazardous and deserted wells and facilities, and temporarily increased the annual cap on expenditures for plugging and abandoning wells such as these to $3 million.

The state’s idle and sealed wells. The exact number of oil and gas wells ever drilled in California is uncertain, but on the order of 250,000, of which approximately 90,000 are still in use or capable of being used. Of these, approximately 30,000 oil and gas wells in California are categorized as idle, of which almost half have not produced oil or gas in at least 15 years. There appears to be at least some progress in reducing the number of idle wells: according to the division, last year 1,234 idle wells were permanently sealed (plugged and abandoned).

Modern plugging and abandonment involves permanently sealing the well with a cement plug to isolate the oil- and gas-bearing geologic formation from water. However, many of the state’s oil and gas fields have been in production for decades. Older wells in those fields may well have not been plugged and abandoned to modern standards which came into effect in the 1970s. These older wells may be plugged by or buried with whatever materials were available (e.g. reportedly tree stumps, telephone poles, or logs in some instances). If a well is not properly plugged and abandoned, it may provide a path for oil, gas, or other contaminants to migrate through the well and into drinking water or to the surface. For example, in September 2014, two abandoned wells in a residential neighborhood of Los Angeles were found to be leaking. At least one of the wells had been originally drilled over 100 years earlier. The division re-plugged and abandoned those wells at a cost of over $1 million each.

Updated regulations to improve maintenance of idle wells became effective on April 1, 2019. These regulations specify far more rigorous testing requirements that better protect public safety and the environment from the potential threats posed by idle wells. The regulations require idle wells to be tested and, if necessary, repaired, or permanently sealed. The division is also in the process of starting to update well construction standards and factors affecting the integrity of abandonment are under discussion.

Potential for leaking wells. In the last several years, scrutiny has increased of the potential for gas-phase emissions from oil and gas wells. The South Coast Air Quality Management District, for example, through its Rule 1148.2 requires reporting of certain chemicals and activities associated with oil and gas wells. In addition in May 2017, the California Air Resources Board approved its regulations for monitoring and repairing methane leaks associated with oil and gas production, and related activities. (see Title 17, California Code of Regulations, §95665 et seq.)

In 1986, the division had a study conducted examining the presence of hazardous gas concentrations emitted from soil in certain oil and gas fields in urban areas deemed to be at highest risk of a gas buildup and possible explosion. In only one location was a high concentration of natural gas associated with petroleum found and that was in an area in Los Angeles known for its seeps. Emissions from oil and gas wells are one of the sources of methane under investigation in the State’s methane research program (AB 1496, Thurmond, Chapter 604, Statutes of 2015).

The uncertainty in “top-down” methane emissions inventories can be high – on the order of 50% based upon ambient measurements. There are highly likely to be additional sources of methane emissions that are not being quantified. Methane (i.e. natural gas, likely to be a significant component of gas leaked from an oil and gas well) is a short-lived climate pollutant.

Recent research by a consulting firm, the University of Cincinnati, and Washington State University measured methane emissions at 138 abandoned wells. Of the over 100 plugged wells, just one had a small methane leak. Of the unplugged (in other words – idle) wells, a much higher fraction (40%) was leaking methane. The leak rate was much higher too: on average the emissions rate from unplugged wells was a factor of 5,000 higher than for plugged wells.

While well construction and regulation and geology vary from state-to-state, these recent results suggest that idle, idle-deserted, and abandoned wells may be one of the sources of methane to the California atmosphere that is not well-known.

Comments

Data! Given the uncertainty in the state’s methane inventory, the significant impact of atmospheric methane concentrations on global climate change, the plausible theory that poorly abandoned wells or idle wells in this state may be responsible for significant fugitive methane emissions, and other efforts underway to identify methane emission hot spots, obtaining observational data sufficient to characterize emissions from idle, idle-deserted, and abandoned oil and gas wells may well be long overdue.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee (for a previous version of the bill):

• The division estimates one-time costs of up to $1 million (Oil and Gas Administrative Fund) to complete the study.
• ARB estimates costs of $188,000 annually (Oil, Gas, and Geothermal Administrative Fund) to research and design the study, help select the contractor, work with operators and air districts and other technical advisors, provide regular feedback to the contractor, facilitate peer review, and review drafts of the study results.
• The Department of Justice estimates costs of $37,000 in 2019-20 and $74,000 in 2020-21 due to an increase in litigation when the division implements regulations to comply with this bill.

SUPPORT: (Verified 8/27/19)

Environmental Defense Fund (source)

California League of Conservation Voters

Clean Water Action

Coalition for Clean Air

Environmental Working Group

Grassroots Coalition

Natural Resources Defense Council

Sierra Club California

OPPOSITION: (Verified 8/27/19)

None received

ARGUMENTS IN SUPPORT: According to the author, “[p]ursuant to recent legislation AB 2729 (Williams), Chapter 272, Statutes of 2016, and SB 724 (Lara), Chapter 652, Statutes of 2017, California is embarking on an ambitious effort to reduce the number of non-operating idle and abandoned oil and gas wells in the state. This effort involves new standards that require operators to create plans to reduce the number of these wells under their control. In addition, DOGGR is remediating abandoned and hazardous oil and gas wells, wells that no owner can be identified [for]. In addition, ARB passed a regulation in March 2017 to improve management of oil and gas production sites in California. This regulation requires quarterly inspection of active and idle oil and gas production sites.

“Currently there exist no requirements for operators or DOGGR to test for emissions of greenhouse gases and other air pollutants from wells being remediated.

“Some peer-reviewed research is available on the amount of emissions from idle and abandoned wells, but current research is limited at best – meaning California is unable to accurately quantify the public health, air quality and climate benefits from remediation actions. Furthermore, the state continues to lack data on the types and locations of wells that represent the most emissions and thus prioritize these wells to be plugged first.

“AB 1328 would make potential emissions data from idle wells publically available – creating a body of information that is important to knowing the size and scope of emissions from idle and deserted wells. Information collected under AB 1328 can be used to create a better understanding of the emissions from California’s oil and gas wells.”

ASSEMBLY FLOOR: 47-24, 5/23/19

AYES: Aguiar-Curry, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Cervantes, Chau, Chiu, Chu, Eggman, Friedman, Gabriel, Cristina Garcia, Gloria, Gonzalez, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, McCarty, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Reyes, Luz Rivas, Robert Rivas, Blanca Rubio, Santiago, Smith, Mark Stone, Ting, Weber, Wicks, Wood, Rendon

NOES: Bigelow, Brough, Chen, Choi, Cunningham, Dahle, Diep, Flora, Fong, Frazier, Gallagher, Gipson, Grayson, Kiley, Lackey, Mathis, Mayes, Melendez, Obernolte, Patterson, Ramos, Salas, Voepel, Waldron

NO VOTE RECORDED: Arambula, Cooley, Cooper, Daly, Eduardo Garcia, Gray, Maienschein, Medina, Rodriguez

Prepared by: Katharine Moore / N.R. & W. / (916) 651-4116

9/9/19 18:28:10

**** END ****

 THIRD READING  

Bill No: AB 1328

Author: Holden (D)

Amended: 7/5/19 in Senate

Vote: 21

SENATE NATURAL RES. & WATER COMMITTEE: 7-1, 6/25/19

AYES: Stern, Allen, Caballero, Hertzberg, Hueso, Jackson, Monning

NOES: Jones

NO VOTE RECORDED: Borgeas

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 7-0, 7/3/19

AYES: Allen, Bates, Dahle, Hill, Skinner, Stern, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 6-1, 8/30/19

AYES: Portantino, Bates, Bradford, Durazo, Hill, Wieckowski

NOES: Jones

ASSEMBLY FLOOR: 47-24, 5/23/19 - See last page for vote

SUBJECT: Oil and gas: notice of intention to abandon well: study of fugitive emissions from idle, idle-deserted, and abandoned wells

SOURCE: Environmental Defense Fund

DIGEST:

This bill standardizes the valid period for notices of intention approved by the Division of Oil, Gas, and Geothermal Resources to two years, and requires a study of the emissions from idle, idle-deserted and abandoned wells to be conducted and reported on or by January 1, 2023.

ANALYSIS:

Existing law:

1. Establishes the Division of Oil, Gas, and Geothermal Resources (division) in the Department of Conservation (department). The division is the state’s oil and gas well regulator. The State Oil and Gas Supervisor (supervisor) leads the division.
   1. The supervisor has broad authority to supervise the drilling, operation, maintenance, and abandonment of the state’s oil and gas wells, among other things, so as to prevent, as far as possible, damage to life, health, property, and natural resources, and certain other detrimental impacts. (Public Resources Code (PRC) §3106)
2. Requires the operator of any oil or gas well, before commencing the work of drilling the well, to file, as specified, a written notice of intention to commence drilling. Drilling shall not commence until the notice is approved. If operations have not commenced within 24 months of receipt of the notice, the notice shall be deemed canceled, the notice shall not be extended, and the cancellation shall be noted in the division’s records. (PRC §3203)
   1. However, for well abandonment operations, the written notice of intention is valid for a term of one year only. (PRC §3229)
3. Defines an idle well as an oil and gas well that has not been used for two years or more and has not yet been properly plugged and abandoned to the division’s satisfaction, as specified, and defines an idle-deserted well as an idle well where no party responsible for the oil or gas well can be found. (PRC §3008, §3251)
4. Establishes the Air Resources Board (ARB) as the air pollution control agency in California and requires ARB, among other things, to control emissions from a wide array of mobile sources and coordinate, encourage, and review the efforts of all levels of government as they affect air quality. (Health and Safety Code (HSC) §39500 et seq.)
5. Requires ARB to implement a comprehensive strategy to reduce emissions of short-lived climate pollutants to achieve a reduction in methane by 40%, among other pollutants. (HSC §39730 et seq.)
6. Requires ARB to establish Community Emissions Reductions Programs for the purposes of reducing emissions of toxic air contaminants and criteria air pollutants, as specified. (HSC §44391.2)

This bill standardizes the valid period for notices of intention approved by the division, and requires a study of the emissions from idle, idle-deserted and abandoned wells to be conducted and reported on or by January 1, 2023. Specifically, this bill:

1. Extends the time period to commence abandonment operations from one year to 24 months before the notice of intention is deemed canceled.
2. Requires the division, in consultation with the ARB, to initiate a study to be conducted by independent experts, with specified experience, of fugitive emissions from idle, idle-deserted, and abandoned wells in the state. These emissions can contribute to climate change or endanger public and occupational health and safety, as specified.
   1. The division shall seek input from experts on fugitive emissions, oil and gas well operators and people with relevant experience in nongovernmental organization.
   2. The study shall be limited to a total of no more than 500 wells, utilize existing practices and methods, as defined, to allow data collection without disruption to the well site, limit surface disturbance, and limit the cost to $1 million.
      1. The division shall work with independent experts, oil and gas operators, and nongovernmental organizations to identify a stratified random sample of wells, as described, and set of pollutants to measure. The study design shall allow extrapolation to all idle, idle-deserted, and abandoned wells in the state.
         1. A well that is selected for measurement that is scheduled to be plugged, abandoned or reabandoned shall be tested using a designated screening method or an alternative methodology, if available, prior to plugging, abandonment or reabandonment operations start. If the well is emitting hydrocarbons in specified quantities, additional testing shall be performed, as specified, to measure the emissions flow rate and the amount of total and speciated hydrocarbons.
         2. Oil and gas operators with wells selected for sampling will make reasonable efforts to permit access to the wells by the division and independent experts, and will not interfere with the measurements, as specified.
   3. The division shall minimize disruption and costs to the operators, as specified.
   4. On or before January 1, 2022, the department shall post all results of testing conducted on the department’s internet website in a machine-readable format, with interim reporting provided, as available, on or before January 1, 2021, as specified.
   5. On or before July 1, 2022, the independent experts contracted to undertake the study shall complete a written document that includes an executive summary of the findings, a description of the results, the findings, and an estimate of hydrocarbon emissions from the state’s idle, idle-deserted, and abandoned wells. Before public release pursuant to subdivision (e), the written document shall be provided for peer review and comments, to the operators whose wells were included in the sample, and to a group of independent experts and nongovernmental organizations selected by the division.
   6. On or before January 1, 2023, the division shall make the results of the study, as per the written document required pursuant to subdivision (d), available on its internet website.
3. Makes appropriate motivating and relevant legislative findings.
4. Establishes a state-mandated local program and provides for no reimbursement for specified reasons.

Background

Recent reform efforts at the division. In the last few years, the department and the division have made a concerted effort through department-sponsored bills to revise and update several outdated elements of state law governing certain requirements imposed upon operators of oil and gas wells and related infrastructure. This is one aspect of the division’s “Renewal Plan,” originally released in October 2015. These bills include:

1. AB 2729 (Williams, Chapter 272, Statutes of 2016) substantially revised idle well requirements, and required individual indemnity bonds for oil and gas wells – or a blanket bond for multiple wells, as specified – remain in place so long as the well is not properly plugged and abandoned. AB 2729 increased well bond amounts too.
2. AB 2756 (Thurmond, Chapter 274, Statutes of 2016) substantially enhanced the division’s penalty and investigative authority and allowed penalties to be spent on environmentally beneficial projects, among other things.
3. SB 724 (Lara, Chapter 652, Statutes of 2017) substantially revised the division’s processes for addressing hazardous and deserted wells and facilities, and temporarily increased the annual cap on expenditures for plugging and abandoning wells such as these to $3 million.

The state’s idle and sealed wells. The exact number of oil and gas wells ever drilled in California is uncertain, but on the order of 250,000, of which approximately 90,000 are still in use or capable of being used. Of these, approximately 30,000 oil and gas wells in California are categorized as idle, of which almost half have not produced oil or gas in at least 15 years. There appears to be at least some progress in reducing the number of idle wells: according to the division, last year 1,234 idle wells were permanently sealed (plugged and abandoned).

Modern plugging and abandonment involves permanently sealing the well with a cement plug to isolate the oil- and gas-bearing geologic formation from water. However, many of the state’s oil and gas fields have been in production for decades. Older wells in those fields may well have not been plugged and abandoned to modern standards which came into effect in the 1970s. These older wells may be plugged by or buried with whatever materials were available (e.g. reportedly tree stumps, telephone poles, or logs in some instances). If a well is not properly plugged and abandoned, it may provide a path for oil, gas, or other contaminants to migrate through the well and into drinking water or to the surface. For example, in September 2014, two abandoned wells in a residential neighborhood of Los Angeles were found to be leaking. At least one of the wells had been originally drilled over 100 years earlier. The division re-plugged and abandoned those wells at a cost of over $1 million each.

Updated regulations to improve maintenance of idle wells became effective on April 1, 2019. These regulations specify far more rigorous testing requirements that better protect public safety and the environment from the potential threats posed by idle wells. The regulations require idle wells to be tested and, if necessary, repaired, or permanently sealed. The division is also in the process of starting to update well construction standards and factors affecting the integrity of abandonment are under discussion.

Potential for leaking wells. In the last several years, scrutiny has increased of the potential for gas-phase emissions from oil and gas wells. The South Coast Air Quality Management District, for example, through its Rule 1148.2 requires reporting of certain chemicals and activities associated with oil and gas wells. In addition in May 2017, the California Air Resources Board approved its regulations for monitoring and repairing methane leaks associated with oil and gas production, and related activities. (see Title 17, California Code of Regulations, §95665 et seq.)

In 1986, the division had a study conducted examining the presence of hazardous gas concentrations emitted from soil in certain oil and gas fields in urban areas deemed to be at highest risk of a gas buildup and possible explosion. In only one location was a high concentration of natural gas associated with petroleum found and that was in an area in Los Angeles known for its seeps. Emissions from oil and gas wells are one of the sources of methane under investigation in the State’s methane research program (AB 1496, Thurmond, Chapter 604, Statutes of 2015).

The uncertainty in “top-down” methane emissions inventories can be high – on the order of 50% based upon ambient measurements. There are highly likely to be additional sources of methane emissions that are not being quantified. Methane (i.e. natural gas, likely to be a significant component of gas leaked from an oil and gas well) is a short-lived climate pollutant.

Recent research by a consulting firm, the University of Cincinnati, and Washington State University measured methane emissions at 138 abandoned wells. Of the over 100 plugged wells, just one had a small methane leak. Of the unplugged (in other words – idle) wells, a much higher fraction (40%) was leaking methane. The leak rate was much higher too: on average the emissions rate from unplugged wells was a factor of 5,000 higher than for plugged wells.

While well construction and regulation and geology vary from state-to-state, these recent results suggest that idle, idle-deserted, and abandoned wells may be one of the sources of methane to the California atmosphere that is not well-known.

Comments

Data! Given the uncertainty in the state’s methane inventory, the significant impact of atmospheric methane concentrations on global climate change, the plausible theory that poorly abandoned wells or idle wells in this state may be responsible for significant fugitive methane emissions, and other efforts underway to identify methane emission hot spots, obtaining observational data sufficient to characterize emissions from idle, idle-deserted, and abandoned oil and gas wells may well be long overdue.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee:

• The division estimates one-time costs of up to $1 million (Oil and Gas Administrative Fund) to complete the study.
• ARB estimates costs of $188,000 annually (Oil, Gas, and Geothermal Administrative Fund) to research and design the study, help select the contractor, work with operators and air districts and other technical advisors, provide regular feedback to the contractor, facilitate peer review, and review drafts of the study results.
• The Department of Justice estimates costs of $37,000 in 2019-20 and $74,000 in 2020-21 due to an increase in litigation when the division implements regulations to comply with this bill.

SUPPORT: (Verified 8/27/19)

Environmental Defense Fund (source)

California League of Conservation Voters

Clean Water Action

Coalition for Clean Air

Environmental Working Group

Grassroots Coalition

Natural Resources Defense Council

Sierra Club California

OPPOSITION: (Verified 8/27/19)

None received

ARGUMENTS IN SUPPORT: According to the author, “[p]ursuant to recent legislation AB 2729 (Williams), Chapter 272, Statutes of 2016, and SB 724 (Lara), Chapter 652, Statutes of 2017, California is embarking on an ambitious effort to reduce the number of non-operating idle and abandoned oil and gas wells in the state. This effort involves new standards that require operators to create plans to reduce the number of these wells under their control. In addition, DOGGR is remediating abandoned and hazardous oil and gas wells, wells that no owner can be identified [for]. In addition, ARB passed a regulation in March 2017 to improve management of oil and gas production sites in California. This regulation requires quarterly inspection of active and idle oil and gas production sites.

“Currently there exist no requirements for operators or DOGGR to test for emissions of greenhouse gases and other air pollutants from wells being remediated.

“Some peer-reviewed research is available on the amount of emissions from idle and abandoned wells, but current research is limited at best – meaning California is unable to accurately quantify the public health, air quality and climate benefits from remediation actions. Furthermore, the state continues to lack data on the types and locations of wells that represent the most emissions and thus prioritize these wells to be plugged first.

“AB 1328 would make potential emissions data from idle wells publically available – creating a body of information that is important to knowing the size and scope of emissions from idle and deserted wells. Information collected under AB 1328 can be used to create a better understanding of the emissions from California’s oil and gas wells.”

ASSEMBLY FLOOR: 47-24, 5/23/19

AYES: Aguiar-Curry, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Burke, Calderon, Carrillo, Cervantes, Chau, Chiu, Chu, Eggman, Friedman, Gabriel, Cristina Garcia, Gloria, Gonzalez, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, McCarty, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Reyes, Luz Rivas, Robert Rivas, Blanca Rubio, Santiago, Smith, Mark Stone, Ting, Weber, Wicks, Wood, Rendon

NOES: Bigelow, Brough, Chen, Choi, Cunningham, Dahle, Diep, Flora, Fong, Frazier, Gallagher, Gipson, Grayson, Kiley, Lackey, Mathis, Mayes, Melendez, Obernolte, Patterson, Ramos, Salas, Voepel, Waldron

NO VOTE RECORDED: Arambula, Cooley, Cooper, Daly, Eduardo Garcia, Gray, Maienschein, Medina, Rodriguez

Prepared by: Katharine Moore / N.R. & W. / (916) 651-4116

9/1/19 10:04:13

**** END ****

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 1328 (Holden) - Oil and gas: notice of intention to abandon well: study of fugitive emissions from idle, idle-deserted, and abandoned wells

Bill Summary:

This bill would require the Division of Oil, Gas, and Geothermal Resources (DOGGR), in consultation with the California Air Resources Board (ARB), to study idle, idle-deserted, and abandoned wells in California to better understand their emissions; make stipulations regarding the scope and execution of that study; and increase the time permitted between announcing the intent to abandon a well and cancellation of that announcement from 12 to 24 months.

Fiscal Impact:

• DOGGR estimates one-time costs of up to $1 million (Oil and Gas Administrative Fund) to complete the study.
• ARB estimates costs of $188,000 annually (Oil, Gas, and Geothermal Administrative Fund) to research and design the study, help select the contractor, work with operators and air districts and other technical advisors, provide regular feedback to the contractor, facilitate peer review, and review drafts of the study results.
• The Department of Justice estimates costs of $37,000 in 2019-20 and $74,000 in 2020-21 due to an increase in litigation when DOGGR implements regulations to comply with this bill.

Background:

Idle and plugged wells in California. As the fourth largest producer of oil in the nation, California is home to approximately 250,000 oil and gas wells. This figure includes approximately 30,000 idle wells, many of which have been idle for over fifteen years and are at risk for desertion. Costs associated with plugging and abandoning of deserted wells and decommissioning the deserted facilities attendant to oil and gas production can be significant. For example, DOGGR plugged and abandoned two wells in the Echo Park neighborhood of Los Angeles at a cost of over $1 million. Deserted and orphaned wells represent a liability to the state, and it is important that DOGGR better understand the scope of that liability and steps that could be taken to mitigate that liability from escalating even further.

Even among wells that have been plugged, wells plugged prior to 1953 are not considered effective by industry standards. Prior to 1950, wells either were orphaned or plugged and abandoned with very little cement. Plugging was focused on protecting the oil reservoirs from rain infiltration rather than to confine oil, gas and water in the strata in which they are found and prevent them from escaping into other strata. Of the wells with drilling dates in the regulatory data, 30% are listed as having been drilled prior to the use of cement in well plugging.

With a total of over 245,000 wells in the state database, and considering the lack of monitoring prior to 1950, some estimates predict there are over 80,000 improperly plugged and unplugged wells in California.

Environmental impacts of improperly plugged wells. Studies by Kang et al. 2014, Kang et al 2016, Boothroyd et al 2016, and Townsend-Small et al. 2016 have all measured methane emissions from abandoned wells. Both properly plugged and improperly abandoned wells have been shown to leak methane and other VOCs to the atmosphere as well as into the surrounding groundwater, soil, and surface waters. Leaks were shown to begin just 10 years after operators plugged the wells.

In a 2014 report, the U.S. Geological Service warned the California State Water Resources Control Board that the integrity of abandoned wells is a serious threat to groundwater sources, stating, “Even a small percentage of compromised well bores could correspond to a large number of transport pathways.”

Proposed Law:

This bill:

1. Makes findings and declarations regarding the concerns and goals California has regarding idle wells, specifically their impacts on air pollution.
   
2. Tasks DOGGR, in consultation with ARB, to study idle, idle-deserted, and abandoned wells in California to better understand their emissions.
   
3. Makes specifications regarding the above study, including:
   
   1. The permitted scope of the study, including maximum number of wells (500), cost of the study, and qualifications of experts to be consulted.
      
   2. A requirement that DOGGR minimize costs and interruptions to well operations in the course of the study.
      
   3. That all testing results be posted on the Department of Conservation’s website, followed by an executive summary written by the independent experts who conduct the study.
      
4. States that if, in the course of the above study, a leaking well is found it will be further measured, as specified, before being plugged.
   
5. Requires well operators make reasonable efforts to permit access to the wells for the study, and dictates that operators shall not take any actions within 72 hours before measurements being taken to alter the readings.
   
6. Increases the time between when a well abandonment is proposed to when that notice is deemed cancelled if not acted upon from 12 to 24 months.

Related Legislation:

AB 3146 (Holden, 2018) would have required operators and the division to test certain oil and gas wells for emissions, as specified. This bill failed passage on the Assembly floor.

AB 2729 (Williams, Chapter 272, Statutes of 2016) revised idle well requirements, and required individual indemnity bonds for oil and gas wells – or a blanket bond for multiple wells, as specified – remain in place so long as the well is not properly plugged and abandoned.

SB 724 (Lara), Chapter 652, Statutes of 2017 revised DOGGR’s processes for addressing hazardous and deserted wells and facilities, and temporarily increased the annual cap on expenditures for plugging and abandoning wells to $3 million.

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Allen, Chair

2019 - 2020 Regular

Bill No: AB 1328

SUBJECT: Oil and gas: notice of intention to abandon well: study of fugitive emissions from idle, idle-deserted, and abandoned wells

DIGEST: This bill tasks the Division of Oil, Gas, and Geothermal Resources (DOGGR), in consultation with the State Air Resources Board (ARB), to study idle, idle-deserted, and abandoned wells in California to better understand their emissions; makes stipulations regarding the scope and execution of that study; and increases the time permitted between announcing the intent to abandon a well and cancellation of that announcement from 12 to 24 months.

ANALYSIS:

Existing law:

1. Establishes the Division of Oil, Gas, and Geothermal Resources (DOGGR) in the Department on Conservation as the state’s oil and gas well regulator, under the leadership of the State Oil and Gas Supervisor (supervisor). (Public Resources Code (PRC) §3000 et seq.)
   
2. Establishes the Air Resources Board (ARB) as the air pollution control agency in California and requires ARB, among other things, to control emissions from a wide array of mobile sources and coordinate, encourage, and review the efforts of all levels of government as they affect air quality. (Health and Safety Code (HSC) §39500 et seq.)
   
3. States that the supervisor shall supervise the drilling, operation, maintenance, and abandonment of wells 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. (PRC §3106)
   
4. Requires the operator of any idle well to (1) pay an annual fee which increases over the duration of the well being left idle, (2) file a plan to manage and eliminate long-term idle wells, and (3) develop and comply with the management plan. (PRC §3206)
   
5. Defines a properly abandoned well as one where it has been shown, to the satisfaction of the supervisor, that all proper steps have been taken to isolate all oil-bearing or gas-bearing strata encountered in the well, and to protect underground or surface water suitable for irrigation or farm or domestic purposes from the infiltration or addition of any detrimental substance and to prevent subsequent damage to life, health, property, and other resources. (PRC §3208)
   
6. Allows, in the case of deserted wells, for the supervisor to order the plugging and abandonment of a well whether or not damage is occurring or threatened. (PRC §3237)
   
7. Establishes greenhouse gas (GHG) emission standards for crude oil and natural gas facilities, which require regulated entities to take actions to limit intentional (vented) and unintentional (leaked or fugitive) emissions from equipment and operations. (17 CCR §95665 et seq.)
   
8. Requires ARB to implement a comprehensive strategy to reduce emissions of short-lived climate pollutants to achieve a reduction in methane by 40%, among other pollutants. (HSC §39730 et seq.)
   
9. Requires ARB to establish Community Emissions Reductions Programs for the purposes of reducing emissions of toxic air contaminants and criteria air pollutants, as specified. (HSC §44391.2)
   

This bill:

1. Makes findings and declarations regarding the concerns and goals California has regarding idle wells, specifically their impacts on air pollution.
   
2. Tasks DOGGR, in consultation with ARB, to study idle, idle-deserted, and abandoned wells in California to better understand their emissions.
   
3. Makes specifications regarding the above study, including:
   
   1. The permitted scope of the study, including maximum number of wells (500), cost of the study, and qualifications of experts to be consulted.
      
   2. A requirement that DOGGR minimize costs and interruptions to well operations in the course of the study.
      
   3. That all testing results be posted on the Department of Conservation’s website, followed by an executive summary written by the independent experts who conduct the study.
      
4. States that if, in the course of the above study, a leaking well is found it will be further measured, as specified, before being plugged.
   
5. Requires well operators make reasonable efforts to permit access to the wells for the study, and dictates that operators shall not take any actions within 72 hours before measurements being taken to alter the readings.
   
6. Increases the time between when a well abandonment is proposed to when that notice is deemed cancelled if not acted upon from 12 to 24 months.
   

Background

1. Idle and plugged wells in California. As the fourth largest producer of oil in the nation, California is home to approximately 250,000 oil and gas wells. This figure includes approximately 30,000 idle wells, many of which have been idle for over fifteen years and are at risk for desertion. Costs associated with plugging and abandoning of deserted wells and decommissioning the deserted facilities attendant to oil and gas production can be significant. For example, DOGGR plugged and abandoned two wells in the Echo Park neighborhood of Los Angeles at a cost of over $1 million. Deserted and orphaned wells represent a liability to the state, and it is important that DOGGR better understand the scope of that liability and steps that could be taken to mitigate that liability from escalating even further.
   
   Even among wells that have been plugged, wells plugged prior to 1953 are not considered effective by industry standards. Prior to 1950, wells either were orphaned or plugged and abandoned with very little cement. Plugging was focused on protecting the oil reservoirs from rain infiltration rather than to confine oil, gas and water in the strata in which they are found and prevent them from escaping into other strata. Of the wells with drilling dates in the regulatory data, 30% are listed as having been drilled prior to the use of cement in well plugging.

With a total of over 245,000 wells in the state database, and considering the lack of monitoring prior to 1950, some estimates predict there are over 80,000 improperly plugged and unplugged wells in California.

1. Environmental impacts of improperly plugged wells. Studies by Kang et al. 2014, Kang et al 2016, Boothroyd et al 2016, and Townsend-Small et al. 2016 have all measured methane emissions from abandoned wells. Both properly plugged and improperly abandoned wells have been shown to leak methane and other VOCs to the atmosphere as well as into the surrounding groundwater, soil, and surface waters. Leaks were shown to begin just 10 years after operators plugged the wells.
   
   In a 2014 report, the U.S. Geological Service warned the California State Water Resources Control Board that the integrity of abandoned wells is a serious threat to groundwater sources, stating, “Even a small percentage of compromised well bores could correspond to a large number of transport pathways.”

Comments

1. Purpose of Bill. According to the author, “Pursuant to recent legislation AB 2729 (Williams, Chapter 272, Statutes of 2016), and SB724 (Lara, Chapter 652, Statutes of 2017), California is embarking on an ambitious effort to reduce the number of non-operating idle and abandoned oil and gas wells in the state. This effort involves new standards that require operators to create plans to reduce the number of these wells under their control. In addition, DOGGR is remediating abandoned and hazardous oil and gas wells, wells where no owner can be identified. In addition, ARB passed a regulation in March 2017 to improve management of oil and gas production sites in California. This regulation requires quarterly inspection of active and idle oil and gas production sites.

“Currently there exist no requirements for operators or DOGGR to test for emissions of greenhouse gases and other air pollutants from wells being remediated.

“Some peer-reviewed research is available on the amount of emissions from idle and abandoned wells, but current research is limited at best – meaning California is unable to accurately quantify the public health, air quality and climate benefits from its remediation actions. Furthermore, the state continues to lack data on the types and locations of wells that represent the most emissions and thus prioritize these wells to be plugged first.

“AB 1328 would make potential emissions data from idle wells publically available- creating a body of information that is important to knowing the size and scope of the emissions from idle and deserted wells. Information collected under AB 1328 can be used to create a better understanding of the emissions from California’s oil and gas wells.”

1. Known unknowns in air quality. It is well known that short and long-term exposure to air pollutants can contribute to negative health outcomes, including asthma, cardiovascular disease, and in some cases, cancer. Limited information exists, however, on how oil and gas extraction facilities affect air quality in neighboring communities.

While ARB programs such as The Study of Neighborhood Air near Petroleum Sources (SNAPS) program were established to help fill the gap using a focused community-level approach, these are focused on active production sites.

The pollutants released by oil and gas operations include methane, VOCs, metals, and other criteria pollutants. Methane in particular has recently been found in other contexts to be severely underestimated. For example, ammonia fertilizer plants were found in a Cornell & Environmental Defense Fund study to emit 100 times greater amounts of methane than their self-reported estimates. Methane is a shorter-lived, but considerably more-warming GHG than carbon dioxide, and has a severe impact on atmospheric warming.

Given the likelihood that methane emissions from idle and abandoned wells may be higher than estimated, as well as that other air pollutants are likely impacting many fenceline communities, the committee may wish to consider supporting this measure to better understand the emissions associated with idle, idle-deserted, and abandoned wells.

Related/Prior Legislation

AB 3146 (Holden, 2018) would have required operators and the division to test certain oil and gas wells for emissions, as specified. This bill failed passage on the Assembly floor.

AB 2729 (Williams, Chapter 272, Statutes of 2016) revised idle well requirements, and required individual indemnity bonds for oil and gas wells – or a blanket bond for multiple wells, as specified – remain in place so long as the well is not properly plugged and abandoned.

SB 724 (Lara), Chapter 652, Statutes of 2017 revised DOGGR’s processes for addressing hazardous and deserted wells and facilities, and temporarily increased the annual cap on expenditures for plugging and abandoning wells to $3 million.

DOUBLE REFERRAL:

This measure was heard in Senate Natural Resources & Water Committee on June 25th, 2019, and passed out of committee with a vote of 7-1.

SOURCE:

Environmental Defense Fund

SUPPORT:

Clean Water Action

Coalition for Clean Air

Environmental Defense Fund

Grassroots Coalition

Natural Resources Defense Council

Sierra Club California

OPPOSITION:

None received

-- END --

SENATE COMMITTEE ON NATURAL RESOURCES AND WATER

Senator Henry Stern, Chair

2019 - 2020 Regular

Bill No: AB 1328 Hearing Date: June 25, 2019

Subject: Oil and gas: notice of intention to abandon well: study of fugitive emissions from idle, idle-deserted, and abandoned wells

BACKGROUND AND EXISTING LAW

1. Existing law establishes the Division of Oil, Gas, and Geothermal Resources (division) in the Department of Conservation (department). The division is the state’s oil and gas well regulator. The State Oil and Gas Supervisor (supervisor) leads the division.
   1. The supervisor has broad authority to supervise the drilling, operation, maintenance, and abandonment of the state’s oil and gas wells, among other things, so as to prevent, as far as possible, damage to life, health, property, and natural resources, and certain other detrimental impacts. (Public Resources Code (PRC) §3106)
2. Existing law requires the operator of any oil or gas well, before commencing the work of drilling the well, to file, as specified, a written notice of intention to commence drilling. Drilling shall not commence until the notice is approved. If operations have not commenced within 24 months of receipt of the notice, the notice shall be deemed canceled, the notice shall not be extended, and the cancellation shall be noted in the division’s records. (PRC §3203)
   1. However, for well abandonment operations, the written notice of intention is valid for a term of one year only. (PRC §3229)
3. In the last few years, the department and the division have made a concerted effort through department-sponsored bills to revise and update several outdated elements of state law governing certain requirements imposed upon operators of oil and gas wells and related infrastructure. This is one aspect of the division’s “Renewal Plan,” originally released in October 2015. These bills include:
   1. AB 2729 (Williams, Chapter 272, Statutes of 2016) which substantially revised idle well requirements, and required individual indemnity bonds for oil and gas wells – or a blanket bond for multiple wells, as specified – remain in place so long as the well is not properly plugged and abandoned. AB 2729 increased well bond amounts too.
   2. AB 2756 (Thurmond, Chapter 274, Statutes of 2016) substantially enhanced the division’s penalty and investigative authority and allowed penalties to be spent on environmentally beneficial projects, among other things.
   3. SB 724 (Lara, Chapter 652, Statutes of 2017) substantially revised the division’s processes for addressing hazardous and deserted wells and facilities, and temporarily increased the annual cap on expenditures for plugging and abandoning wells such as these to $3 million.
4. In California, an idle well is a well that has not been used for two years or more and has not yet been properly plugged and abandoned to the division’s satisfaction. Modern plugging and abandonment involves permanently sealing the well with a cement plug to isolate the oil- and gas-bearing geologic formation from water. Many of the state’s oil and gas fields have been in production for decades. Older wells in those fields may well have not been plugged and abandoned to modern standards which came into effect in the 1970s. These older wells may be plugged by or buried with whatever materials were available (e.g. reportedly tree stumps, telephone poles, or logs in some instances). If a well is not properly plugged and abandoned, it may provide a path for oil, gas, or other contaminants to migrate through the well and into drinking water or to the surface. For example, in September 2014, two abandoned wells in a residential neighborhood of Los Angeles were found to be leaking. At least one of the wells had been originally drilled over 100 years earlier. The division re-plugged and abandoned those wells at a cost of over $1 million each.
   1. There are approximately 30,000 wells in California categorized as idle, of which almost half have not produced oil or gas in at least 15 years.
   2. Idle-deserted wells are idle wells where no party responsible for the oil or gas well can be found. (PRC §3251)
   3. According to the division, last year 1,234 idle wells were plugged and abandoned.
5. Updated regulations to improve maintenance of idle wells became effective on April 1, 2019. The regulations specify far more rigorous testing requirements that better protect public safety and the environment from the potential threats posed by idle wells. The regulations require idle wells to be tested and, if necessary, repaired, or permanently sealed (plugged and abandoned).
6. The division is in the process of starting to update well construction standards and factors affecting the integrity of abandonment are under discussion.
7. In the last several years, scrutiny has increased of the potential for gas-phase emissions from oil and gas wells. The South Coast Air Quality Management District, for example, through its Rule 1148.2 requires reporting of certain chemicals and activities associated with oil and gas wells. In addition in May 2017, the California Air Resources Board approved its regulations for monitoring and repairing methane leaks associated with oil and gas production, and related activities.
8. In 1986, the division had a study conducted examining the presence of hazardous gas concentrations emitted from soil in certain oil and gas fields in urban areas deemed to be at highest risk of a gas buildup and possible explosion. In only one location was a high concentration of natural gas associated with petroleum found and that was in an area in Los Angeles known for its seeps. Emissions from oil and gas wells are one of the sources of methane under investigation in the State’s methane research program (AB 1496, Thurmond, Chapter 604, Statutes of 2015).
9. The uncertainty in “top-down” methane emissions inventories can be high – on the order of 50% based upon ambient measurements. There are highly likely to be additional sources of methane emissions that are not being quantified. Methane (i.e. natural gas, likely to be a significant component of gas leaked from an oil and gas well) is a short-lived climate pollutant.
   1. Recent research by a consulting firm, the University of Cincinnati, and Washington State University measured methane emissions at 138 abandoned wells. Of the over 100 plugged wells, just one had a small methane leak. Of the unplugged (in other words – idle) wells, a much higher fraction (40%) was leaking methane. The leak rate was much higher too: on average the emissions rate from unplugged wells was a factor of 5,000 higher than for plugged wells.
   2. While well construction and regulation and geology vary from state-to-state, these recent results suggest that idle, idle-deserted, and abandoned wells may be one of the sources of methane to the California atmosphere that is not well-known.

PROPOSED LAW

This bill would standardize the valid period for notices of intention approved by the division, and require a study of the emissions from idle, idle-deserted and abandoned wells to be conducted and reported on or by January 1, 2023. Specifically, this bill would:

1. Extend the time period to commence abandonment operations from one year to 24 months before the notice of intention is deemed canceled.
2. Require the division, in consultation with the State Air Resources Board, to initiate a study to be conducted by independent experts, with specified experience, of fugitive emissions from idle, idle-deserted, and abandoned wells in the state. These emissions can contribute to climate change or endanger public health and safety, as specified.
   1. The division shall seek input from experts on fugitive emissions, oil and gas well operators and people with relevant experience in nongovernmental organization.
   2. The study shall be limited to a total of no more than 500 wells, utilize existing practices and methods, as defined, to allow data collection without disruption to the well site, limit surface disturbance, and limit the cost to $1 million.
      1. The division shall work with independent experts, oil and gas operators, and nongovernmental organizations to identify a stratified random sample of wells, as described, and set of pollutants to measure. The study design shall allow extrapolation to all idle, idle-deserted, and abandoned wells in the state.
         1. A well that is selected for measurement that is scheduled to be plugged, abandoned or reabandoned shall be tested using a designated screening method or an alternative methodology, if available, prior to plugging, abandonment or reabandonment operations start. If the well is emitting hydrocarbons in specified quantities, additional testing shall be performed, as specified, to measure the emissions flow rate and the amount of total and speciated hydrocarbons.
         2. Oil and gas operators with wells selected for sampling will make reasonable efforts to permit access to the wells by the division and independent experts, and will not interfere with the measurements, as specified.
   3. The division shall minimize disruption and costs to the operators, as specified.
   4. On or before January 1, 2022, the department shall post all results of testing conducted on the department’s internet website in a machine-readable format.
   5. On or before July 1, 2022, the independent experts contracted to undertake the study shall complete a written document that includes an executive summary of the findings, a description of the results, the findings, and an estimate of hydrocarbon emissions from the state’s idle, idle-deserted, and abandoned wells. Before public release pursuant to subdivision (e), the written document shall be provided for peer review and comments, to the operators whose wells were included in the sample, and to a group of independent experts and nongovernmental organizations selected by the division.
   6. On or before January 1, 2023, the division shall make the results of the study, as per the written document required pursuant to subdivision (d), available on its internet website.
3. Make appropriate motivating and relevant legislative findings.
4. Establish a state-mandated local program and provide for no reimbursement for specified reasons.

ARGUMENTS IN SUPPORT

According to the author, “[p]ursuant to recent legislation AB 2729 (Williams), Chapter 272, Statutes of 2016, and SB 724 (Lara), Chapter 652, Statutes of 2017, California is embarking on an ambitious effort to reduce the number of non-operating idle and abandoned oil and gas wells in the state. This effort involves new standards that require operators to create plans to reduce the number of these wells under their control. In addition, DOGGR is remediating abandoned and hazardous oil and gas wells, wells that no owner can be identified [for]. In addition, ARB passed a regulation in March 2017 to improve management of oil and gas production sites in California. This regulation requires quarterly inspection of active and idle oil and gas production sites.”

“Currently there exist no requirements for operators or DOGGR to test for emissions of greenhouse gases and other air pollutants from wells being remediated.”

“Some peer-reviewed research is available on the amount of emissions from idle and abandoned wells, but current research is limited at best – meaning California is unable to accurately quantify the public health, air quality and climate benefits from remediation actions. Furthermore, the state continues to lack data on the types and locations of wells that represent the most emissions and thus prioritize these wells to be plugged first.”

“AB 1328 would make potential emissions data from idle wells publically available – creating a body of information that is important to knowing the size and scope of emissions from idle and deserted wells. Information collected under AB 1328 can be used to create a better understanding of the emissions from California’s oil and gas wells.”

ARGUMENTS IN OPPOSITION

None received

COMMENTS

This bill is double-referred to the Senate Committee on Environmental Quality. Elements of the bill under that Committee’s jurisdiction are included here for context and completeness only. That material will be discussed before Environmental Quality Committee when the bill is heard.

Data! Given the uncertainty in the state’s methane inventory, the significant impact of atmospheric methane concentrations on global climate change, the plausible theory that poorly abandoned wells or idle wells in this state may be responsible for significant fugitive methane emissions, and other efforts underway to identify methane emission hot spots, obtaining observational data sufficient to characterize emissions from idle, idle-deserted, and abandoned oil and gas wells may well be long overdue.

An interim progress report. The final report is due on January 1, 2023, and testing is expected to be completed and reviewed by January 1, 2022. In view of this, the Committee may wish to find it appropriate to ask for an interim progress report by January 1, 2021. [Amendment 1]

Oil and gas field worker health and safety. Some of the earliest documented health concerns related to the decade-old boom in hydraulic fracturing of oil and gas wells in the United States stemmed from worker exposures to high ambient sand (i.e. proppant) concentrations and high volatile organic compound concentrations associated with the fracking fluid tanks. While the existing emphasis in the study on climate and public health and safety likely will yield information useful to occupational safety, the Committee may wish to explicitly ensure that occupational health and safety is addressed by the study. [Amendment 2]

Clarifying amendments. The Committee may wish to make two minor changes to the findings and legislative intent section to clarify existing law and expected study outcomes. [Amendment 3]

Community Air Protection Program. AB 617 (C. Garcia, Chapter 136, Statutes of 2017) directed the California Air Resources Board (CARB) to establish the Community Air Protection Program in order to reduce exposure in communities most impacted by air pollution. At least two of the ten initial locations – Shafter (Central Valley) and Wilmington/West Long Beach/Carson – are in oil and gas producing regions. The study proposed by this bill may help to inform CAPP. Additionally, CARB has also, pursuant to AB 617, developed the Study of Neighborhood Air Near Petroleum Sources (SNAPS) program to better characterize air quality in communities near oil and gas operations. In September 2018, CARB selected two communities in Kern County and two in Los Angeles County to start the study (Kern County produces the vast majority of the state’s oil and gas, and Los Angeles County remains one of the state’s top oil producing counties). These programs are not focused on idle, idle-deserted, and abandoned well emissions, but may yield insight into overall oil and gas production-related emissions.

Determination of emissions. For wells that are part of the study, the first measurement of the concentration of emissions from the well is a screening test. Detailed chemical composition data will not be generated – rather some form of aggregate hydrocarbon emissions or concentration data will be generated. The bill specifically refers to the US Environmental Protection Agency “Method 21” which is one such screening method used to determine leaks of volatile organic compounds. Method 21 does not specify the test equipment to use but, rather, requires the test equipment to meet certain performance criteria related to chemical detection. The bill also authorizes the use of an optical gas measurement device by a certified technician, or some agreed-upon alternative testing method for the screening. In the instance where emissions from the well exceed the screening threshold, different equipment will be used to measure the leak rate and chemical composition of the emitted material. The South Coast Air Quality Management District, for example, used six different analytical methods to speciate air samples taken from oil well sample sites. Of the six different analytical methods, four are US EPA standard methods. Speciate in this instance means to provide concentration measurements of the individual chemical compounds in the sample. Whereas the screening method is probably a hand held device of some form, the sampling method for the detailed composition work would be to collect an emissions sample into a specialized flask or canister and then return that flask or canister to a laboratory for analysis.

Recent related legislation

AB 3146 (Holden, 2018) would have required operators and the division to test certain oil and gas wells for emissions, as specified. This bill failed passage on the Assembly floor.

SB 724 (Lara, Chapter 652, Statutes of 2017) substantially revamped the state’s idle wells program.

SB 1383 (Lara, Chapter 395, Statutes of 2016) established the state’s short-lived climate pollutant program.

AB 2729 (Williams, Chapter 272, Statutes of 2016) instituted a number of division reforms, including to the idle wells program.

SUGGESTED AMENDMENTS

AMENDMENT 1

After the first sentence in PRC 3206.2(c) add:

“On or before January 1, 2021, the department shall produce and post to the department’s internet website an interim progress report describing the status of the study conducted pursuant to this section, including, but not limited to, the number of wells where testing has been completed, the number of wells remaining to be tests, study costs, and any preliminary testing results, as available and subject to subdivision (d).”

AMENDMENT 2

In PRC 3206.2 (a) (4) insert “occupational and” between “endanger” and “public health”…

AMENDMENT 3

Revise the first finding to read: “(1) The Legislature has established a directive statutory requirements for the Department…”

Revise the legislative intent expressed in Section 1 to read: “(b) It is therefore the intent of the Legislature to require the Division of Oil, Gas, and Geothermal Resources, in consultation with the State Air Resources Board, to undertake a study of a representative sample of idle, idle-deserted, and abandoned wells in California to better understand the emissions from these wells which may help to identify and provide information on hazardous wells.

SUPPORT

Environmental Defense Fund (sponsor)

Clean Water Action

Coalition for Clean Air

Grassroots Coalition

Natural Resources Defense Council

Sierra Club California

OPPOSITION

None Received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1328

Author:(Holden)

As Amended Ver:March 20, 2019

Majority vote

SUMMARY:

Requires, until January 1, 2027, operators to test wells being plugged and abandoned to determine the presence of atmospheric emissions of hydrocarbon pollutants. Requires, until January 1, 2027, the state's Oil and Gas Supervisor (Supervisor) to determine the presence of atmospheric emissions of hydrocarbon pollutants at any hazardous well or idle-deserted well ordered abandoned by the Supervisor. Requires all testing results performed pursuant to this bill to be posted on the Division of Oil, Gas, and Geothermal Resources (DOGGR) and the Air Resources Board's (ARB) website.

Major Provisions

1. Requires, on or before January 1, 2021, DOGGR to perform a statistically relevant review of the works conducted to plug and abandon wells, including conducting post-closure air testing to determine the overall effectiveness of the work to prevent air emissions.
2. Requires, until January 1, 2027, the operator of a well that is being plugged and abandoned, including pursuant to an idle well management plan or required by DOGGR's testing regulations, to conduct specified testing.
3. Requires any operator who, pursuant to federal, state, or local regulations, has conducted testing on a well within three months before the start of physical work to plug and abandon the well to be exempt from testing requirements.
4. Requires, until January 1, 2027, the Supervisor for any action ordered by the Supervisor to abandon a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility to conduct specified testing.
5. Requires the performance of testing of wells to be waived for any well deemed hazardous by the Supervisor.
6. Requires DOGGR and ARB to jointly assemble and perform an appropriate analysis of all information received from testing requirements to determine the effectiveness and appropriateness of existing and planned measures to perform research on or control emissions from idle and abandoned oil and gas wells in the state.

COMMENTS:

According to a February 2018 report of the Los Angeles County Department of Public Health (LA DPH), "In some neighborhoods, such as South Los Angeles, residences are located only several feet away from the boundary of a drilling site and as close as 60 feet from an active oil well. LA DPH has responded to residents' health complaints of headaches, nausea, vomiting, respiratory irritation, and eye, nose, and throat irritation. LA DPH's health investigation revealed insufficient regulatory oversight and inadequate mitigation measures to reduce exposures and associated impacts. LA DPH also found that while South Coast Air Quality Management District has imposed some monitoring requirements, the current monitoring activities for oil and gas operations can be sporadic. As part of implementation of AB 617 (Cristina Garcia), Chapter 136, Statutes of 2017, ARB has developed a Study of Neighborhood Air Near Petroleum Sources (SNAPS) to better characterize air quality in communities near oil and gas operation. In September 2018, ARB selected four communities for the SNAPS program, two in Kern County and two in Los Angeles County, however, the study will not focus on idle wells. On January, 1, 2018, ARB began implementing the Oil & Gas Production, Processing, and Storage regulation to require methane detection and leak elimination on a facility basis.

Methane is a short-lived climate pollutant. In the first two decades after its release, methane is 84 times more potent than carbon dioxide. Scientists at the consulting firm GHD Services Inc., the University of Cincinnati, and Washington State University measured methane emissions at 138 abandoned wells. Out of over 100 plugged wells, just one was emitting methane, and only at a low level. By contrast, 40% of the unplugged wells were leaking methane, and the average leak rate was over 100 times higher than the single leaking plugged well. Overall, average emissions of unplugged wells were 5,000 times higher than plugged wells. This bill will institute basic monitoring requirements for wells being plugged and abandoned to better understand the air quality and GHG emission reduction benefits of plugging and abandoning idle wells. If California's stock of idle wells are representative of the findings of the study mentioned above, this could be a significant source of emissions.

According to the Author:

Pursuant to recent legislation AB 2729 (Williams), Chapter 272, Statutes of 2016, and SB 724 (Lara), Chapter 652, Statutes of 2017, California is embarking on an ambitious effort to reduce the number of non-operating idle and abandoned oil and gas wells in the state. This effort involves new standards that require operators to create plans to reduce the number of these wells under their control. In addition, DOGGR is remediating abandoned and hazardous oil and gas wells, wells that no owner can be identified. In addition, ARB passed a regulation in March 2017 to improve management of oil and gas production sites in California. This regulation requires quarterly inspection of active and idle oil and gas production sites.

The plugging and abandonment process for wells must be done with precision, in accordance with new standards established by DOGGR. This means that crews are onsite preparing and performing well plugging and remediation upwards of weeks to months to complete. Currently there exist no requirements for operators or DOGGR to test for emissions of greenhouse gases and other air pollutants from wells being remediated.

Some peer-reviewed research is available on the amount of emissions from idle and abandoned wells, but current research is limited at best – meaning California is unable to accurately quantify the public health, air quality and climate benefits from its remediation actions. Furthermore, the state continues to lack data on the types and locations of wells that represent the most emissions and thus prioritize these wells to be plugged first.

Arguments in Support:

Environmental Defense Fund, in support of this bill, states idle and abandoned wells can and do leak, and when they do it can result in emissions that contribute to climate change and endanger the public health. AB 1328 addresses this need by requiring the submission of testing data conducted on idle and abandoned wells for publication on the DOGGR's website.

Arguments in Opposition:

The Western States Petroleum Association, in opposition to this bill, states oil and gas production operations are currently subject to multiple stringent emissions rules from both the federal and state government. In addition, there are existing "Leak and Detection and Repair" programs, some with daily monitoring, which have been in place for decades. With these regulations and requirements already in place, it is difficult to understand whether the new testing requirements mandated by AB 1328 will identify any significant sources of new emissions beyond what is identified by existing programs.

FISCAL COMMENTS:

According to the Assembly Appropriations Committee:

1. Increased one-time DOGGR costs of up to $330,000 and up to $120,000 ongoing for new testing required until 2026.

Detection of emissions beyond the presence or absence of immediate hazards is beyond the expertise of current DOGGR staff. In 2020, DOGGR anticipates overseeing the plugging and abandonment of approximately 35-40 idle-deserted or hazardous wells. If 25% of these wells are found to be leaking that would cost approximately $3,000 to $8,000 per well to undertake the required testing.

If a less costly alternative is developed in consultation with the ARB, cost might be lower. However, DOGGR anticipates plugging and abandoning substantially more deserted idle wells now that regulations are in effect. This testing would not be an eligible expenditure from existing funding sources dedicated by the Legislature for plugging hazardous or idle-deserted wells. (The Hazardous Idle Deserted Well Abatement Fund or the $3 million specifically directed for deserted well plugging under existing law. Additional costs would have to be funded from an increase in the per barrel assessment to the Oil and Gas Administrative Fund).

1. ARB annual ongoing costs of approximately $375,000 (special fund) to perform an analysis to determine the effectiveness and appropriateness of existing and planned measures to control emissions from idle and abandoned wells, and make the results of the analysis available its websites by December 31, 2026.

VOTES:

ASM NATURAL RESOURCES: 8-3-0

YES: Friedman, Chau, Eggman, Cristina Garcia, Limón, McCarty, Muratsuchi, Mark Stone

NO: Flora, Mathis, Melendez

ASM APPROPRIATIONS: 12-5-1

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Eduardo Garcia, Petrie-Norris, Quirk, Robert Rivas

NO: Bigelow, Brough, Diep, Fong, Obernolte

ABS, ABST OR NV: Maienschein

UPDATED:

VERSION: March 20, 2019

CONSULTANT: Michael Jarred / NAT. RES. / (916) 319-2092 FN: 0000491

Date of Hearing: May 8, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1328

Author:(Holden) – As Amended Ver:March 20, 2019

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill requires the supervisor of the Division of Oil, Gas and Geothermal Resources (DOGGR) to test plugged or abandoned wells to determine the presence of hydrocarbon emissions before the start of and after completion of physical work.

The bill requires, among other things, that well operators perform testing using federal Method 21 or an optical gas imaging instrument approved by the California Air Resources Board (ARB). The bill authorizes the supervisor to consult with ARB on the development of alternate testing methodologies and requires DOGGR to transmit testing results to local air districts and ARB.

Lastly, the bill requires ARB and DOGGR to perform a joint analysis to determine the effectiveness and appropriateness of existing and planned measures to control emissions from idle and abandoned wells, and make the results of the analysis available on their websites by December 31, 2026.

FISCAL EFFECT:

1. Increased one-time DOGGR costs of up to $330,000 and up to $120,000 ongoing for new testing required until 2026.

Detection of emissions beyond the presence or absence of immediate hazards is beyond the expertise of current DOGGR staff.  In 2020, DOGGR anticipates overseeing the plugging and abandonment of approximately 35-40 idle-deserted or hazardous wells.  If 25% of these wells are found to be leaking that would cost approximately $3,000 to $8,000 per well to undertake the required testing. 

If a less costly alternative is developed in consultation with the ARB, cost might be lower. However, DOGGR anticipates plugging and abandoning substantially more deserted idle wells now that regulations are in effect.  This testing would not be an eligible expenditure from existing funding sources dedicated by the Legislature for plugging hazardous or idle-deserted wells.  (The Hazardous Idle Deserted Well Abatement Fund or the $3 million specifically directed for deserted well plugging under existing law. Additional costs would have to be funded from an increase in the per barrel assessment to the Oil and Gas Administrative Fund).

1. ARB annual ongoing costs of approximately $375,000 (special fund) to perform an analysis to determine the effectiveness and appropriateness of existing and planned measures to control emissions from idle and abandoned wells, and make the results of the analysis available its websites by December 31, 2026.

COMMENTS:

1. Purpose. According to the author:

The state is increasing its focus on the safety and public health aspects of critical wells, wells that are within 300 feet of a building intended for human occupancy. There are more than 50,000 of these critical wells throughout California, with half in Los Angeles. Many critical wells are also classified as hazardous, idle, or long-term idle wells and are required to be plugged

The plugging and abandonment process for wells must be done with precision, in accordance with new standards established by DOGGR. This means that crews are onsite preparing and performing well plugging and remediation upwards of weeks to months to complete. Currently there exist no requirements for operators or DOGGR to test for emissions of greenhouse gases and other air pollutants from wells being remediated.

1. Background. DOGGR has identified more than 2,000 potential orphan wells that require further investigation. Many of these are “buried-idle” wells with antiquated, vague or nonexistent records, below densely-built and populated urban areas in southern California. Some of these wells may never result in problems or may be remediated as a condition of permitting new construction projects as downtown LA and other areas are redeveloped.

From 2007 to September of 2011, DOGGR plugged and abandoned 142 orphan wells at a cost of $5 million. This led to an average cost per well of just over $35,000. The vast majority of these wells were in lower-cost, sparsely populated areas of the state and the cost per well since that time has been significantly higher. Between 2012 and 2016, DOGGR plugged 41 wells at an average cost of $81,000 per well.

Plugging and abandonment costs for deserted wells are highly variable and, in many cases, difficult to predict. When an operator is plugging and abandoning one of their own wells, they are generally aware of the situation at a well, including obstructions that they may encounter based on having worked with the well.

In September 2014, DOGGR personnel were asked to investigate complaints of odors from an orphan idle well called Patel 1 in a residential neighborhood in Los Angeles. DOGGR estimated Patel 1 was drilled before 1903 and found it was leaking low levels of hydrogen sulfide, a toxic gas. DOGGR found another neighboring well called Rogalske 10, was also leaking and producing a strong smell. DOGGR, at the cost of more than $1 million and after two years, plugged and abandoned the two wells to protect the community. This bill will institute basic monitoring requirements for wells being plugged and abandoned to better understand the air quality and GHG emission reduction benefits of plugging and abandoning idle wells.

1. Prior Legislation. AB 3146 (Holden) of the 2017-18 Legislative Session was substantially similar to this bill. The bill failed passage on the Assembly Floor.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 8, 2019

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Laura Friedman, Chair

ABPCA Bill Id:AB 1328 (

Author:Holden) – As Amended Ver:March 20, 2019

SUBJECT: Oil and gas: well testing requirements for idle wells, hazardous or idle-deserted wells, and hazardous or deserted facilities

SUMMARY: Requires, until January 1, 2027, operators to test wells being plugged and abandoned to determine the presence of atmospheric emissions of hydrocarbon pollutants. Requires, until January 1, 2027, the state's Oil and Gas Supervisor (Supervisor) to determine the presence of atmospheric emissions of hydrocarbon pollutants at any hazardous well or idle-deserted well ordered abandoned by the Supervisor. Requires all testing results performed pursuant to this bill to be posted on the Division of Oil, Gas, and Geothermal Resources (DOGGR) and the Air Resources Board’s (ARB) website.

EXISTING LAW:

1. Requires the operator of any well, before commencing the work of drilling the well, to file with the Supervisor or the district deputy a written notice of intention to commence drilling. Specifies that 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 notice is considered approved. Requires the notice to be deemed canceled if operations have not commenced within one year of receipt of the notice.
   
2. Defines “production facility” to mean any equipment attendant to oil and gas production or injection operations including, but not limited to, tanks, flowlines, headers, gathering lines, wellheads, heater treaters, pumps, valves, compressors, injection equipment, and pipelines that are not under the jurisdiction of the State Fire Marshal.
3. Defines "idle well" as any well that has had 24 consecutive months of not producing oil, natural gas, or water to be used in production stimulation, enhanced oil recovery, or reservoir pressure management. Defines "long-term idle well" as any well that has been an idle well for eight or more years.
4. Allows an operator to file one blanket indemnity bond with the Supervisor to cover 20 or more wells instead of individual indemnity bonds. Requires, on January 1, 2018, the bond to be the following amounts:
   1. $200,000 for 20 to 50 wells;
   2. $400,000 for 51 to 500 wells;
   3. $2,000,000 for 501 to 10,000 wells; and,
   4. $3,000,000 for more than 10,000 wells.
5. Requires an operator to do one of the following:
   1. File with the Supervisor annual fees of the following amounts:
      1. $150 for each idle well that has been idle for three years but less than eight years;
      2. $300 for each idle well that has been idle for eight years or longer, but less than 15 years;
      3. $750 for each idle well that has been idle for 15 years or longer, but less than 20 years; and,
      4. $1,500 for each idle well that has been idle for 20 years or longer.
   2. File an idle well management plan with the Supervisor for approval that eliminates between 4 and 6% of their long-term idle wells each year.
6. Requires a well to be properly abandoned before an individual or blanket indemnity bond can be terminated or canceled.
7. Requires DOGGR to review, evaluate, and update its testing regulations pertaining to idle wells.
8. Authorizes DOGGR to make expenditures up to $3 million for four years to plug and abandon hazardous or deserted wells or hazardous or deserted production facilities.
9. Requires the ARB, among other things, to control emissions from a wide array of mobile sources and coordinate with local air districts to control air emissions from stationary sources in order to implement the Clean Air Act.
10. Requires, pursuant to the California Global Warming Solutions Act [AB 32 (Nuñez), Chapter 488, Statutes of 2006], the ARB to adopt a statewide greenhouse gas (GHG) emissions limit equivalent to 1990 levels by 2020 and to adopt rules and regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions.
11. Requires ARB to reduce GHG emissions at least 40% below the statewide GHG emissions limit no later than December 31, 2030. Authorizes, until December 31, 2030, ARB to permit the use of market-based compliance mechanisms (i.e., the Cap-and-Trade Program) to comply with GHG reduction regulations once specified conditions are met.
12. Requires ARB to prepare a monitoring plan regarding the availability and effectiveness of toxic air contaminants (TAC) and criteria pollutant advanced sensing monitoring technologies and existing community air monitoring systems (CAMS), as well as the need for, and benefits of, establishing additional community air monitoring systems.
13. Requires ARB, based on the monitoring plan, in consultation with air pollution control districts, and based on an assessment of the locations of sensitive receptors and disadvantaged communities, to select the highest priority locations around the state to deploy CAMS in communities with high exposure burdens for TACs and criteria pollutants. Requires any district with a location selected by ARB to deploy a CAMS by July 1, 2019. Permits districts to require a stationary source to deploy a fence-line monitoring system or other appropriate real-time, on-site monitoring.

THIS BILL:

1. Requires, on or before January 1, 2021, DOGGR to perform a statistically relevant review of the works conducted to plug and abandon wells, including conducting post-closure air testing to determine the overall effectiveness of the work to prevent air emissions.
2. Requires, until January 1, 2027, the operator of a well that is being plugged and abandoned, including pursuant to an idle well management plan or required by DOGGR's testing regulations, to do all of the following:
   1. Perform testing before the initiation of physical work for leaks on any well and associated equipment using specified methods;
   2. If the well or associated equipment is found to release hydrocarbons in observable quantities using an optical imaging device or in concentrations greater than 1% by volume testing before the initiation of physical work, to perform additional testing using a direct measurement method consisting of high-volume sampling, bagging, or a calibrated flow measuring instrument, to determine the flow rate and concentration of atmospheric emissions of total hydrocarbon pollutants before the initiation of physical work; and,
   3. Report the results of any tests performed to the Supervisor.
3. Requires any operator who, pursuant to federal, state, or local regulations, has conducted testing on a well within three months before the start of physical work to plug and abandon the well to be exempt from testing requirements.
4. Requires, until January 1, 2025, the Supervisor for any action ordered by the Supervisor to abandon a hazardous well, an idle-deserted well, a hazardous facility, or a deserted facility to do both of the following:
   1. Perform testing before the initiation of physical work for leaks on any well and associated equipment using specified methods; and,
   2. If the well or associated equipment is found to release hydrocarbons in observable quantities using an optical imaging device or in concentrations greater than 1% by volume testing before the initiation of physical work, to perform additional testing using a direct measurement method consisting of high-volume sampling, bagging, or a calibrated flow measuring instrument, to determine the flow rate and concentration of atmospheric emissions of total hydrocarbon pollutants before the initiation of physical work.
5. Requires the performance of testing of wells to be waived for any well deemed hazardous by the Supervisor.
6. Requires all testing results performed pursuant to this bill to be posted on DOGGR's and ARB’s website.
7. Authorizes the Supervisor, in consultation with ARB, to develop alternative methodologies for testing undertaken pursuant to this bill.
8. Requires DOGGR and ARB to jointly assemble and perform an appropriate analysis of all information received from testing requirements to determine the effectiveness and appropriateness of existing and planned measures to perform research on or control emissions from idle and abandoned oil and gas wells in the state.

FISCAL EFFECT: Unknown

COMMENTS:

1. Author’s statement:

Pursuant to recent legislation AB 2729 (Williams), Chapter 272, Statutes of 2016, and SB724 (Lara), Chapter 652, Statutes of 2017, California is embarking on an ambitious effort to reduce the number of non-operating idle and abandoned oil and gas wells in the state. This effort involves new standards that require operators to create plans to reduce the number of these wells under their control. In addition, DOGGR is remediating abandoned and hazardous oil and gas wells, wells that no owner can be identified. In addition, ARB passed a regulation in March 2017 to improve management of oil and gas production sites in California. This regulation requires quarterly inspection of active and idle oil and gas production sites.

The state is increasing its focus on the safety and public health aspects of critical wells, wells that are within 300 feet of a building intended for human occupancy. There are more than 50,000 of these critical wells throughout California, with half in Los Angeles. Many critical wells are also classified as hazardous, idle, or long-term idle wells and are required to be plugged.

The plugging and abandonment process for wells must be done with precision, in accordance with new standards established by DOGGR. This means that crews are onsite preparing and performing well plugging and remediation upwards of weeks to months to complete. Currently there exist no requirements for operators or DOGGR to test for emissions of greenhouse gases and other air pollutants from wells being remediated.

Some peer-reviewed research is available on the amount of emissions from idle and abandoned wells, but current research is limited at best – meaning California is unable to accurately quantify the public health, air quality and climate benefits from its remediation actions. Furthermore, the state continues to lack data on the types and locations of wells that represent the most emissions and thus prioritize these wells to be plugged first.

1. Background. California has a long history of oil production and has ranked fourth in the nation in oil production behind Texas, North Dakota, and Alaska. In the early 1900s, the Los Angeles Basin produced one-quarter of the world’s oil. In 2017, 174 million barrels of oil were produced in California. A large portion of the oil produced in California is mixed with significant amounts of water, which is called produced water. That water is separated from the oil by the operator. Produced water can be treated and reinjected or disposed of either through underground injection or discharged into ponds or surface water. In limited cases, produced water is treated and used for irrigation. Oil production in California has been increased by the application of several technologies, including water flooding, cyclic steaming, steam flooding, acidizing stimulation, and hydraulic fracturing.

Oil and gas development in Los Angeles County is located in densely populated areas. Currently, there are approximately 68 active oil fields in the Los Angeles Basin with different operating conditions. According to a February 2018 report of the Los Angeles County Department of Public Health (LA DPH), “In some neighborhoods, such as South Los Angeles, residences are located only several feet away from the boundary of a drilling site and as close as 60 feet from an active oil well. Two smaller neighborhood facilities, in which LA DPH has responded to concerns or complaints, were found in a state of disrepair with environmental conditions that impact the health of neighboring residents.”

1. Idle wells. DOGGR has identified more than 2,000 potential orphan wells that require further investigation. Many of these are “buried-idle” wells with antiquated, vague, or nonexistent records, below densely-built and populated urban areas in southern California. Some of these wells may never result in problems or may be remediated as a condition of permitting new construction projects as downtown Los Angeles and other areas are redeveloped. However, with so many wells, some dating back to the turn of the last century, it is probable that some will present health or safety concerns. Just one or two in any given year in an urban environment has the potential to consume DOGGR’s entire hazardous deserted idle well budget, leaving it unable to plug more than a few orphan wells every year throughout the entire state. There are currently approximately 30,000 idle oil wells in the state, nearly a quarter of which have not produced oil or gas in over 25 years. An idle oil well can become an orphan well if the operator goes out of business or can’t be located. AB 2729 made various changes to the laws governing idle wells including increased fees, improved idle well management plans, and additional testing regulations. These changes create pressures for operators to reduce their stock of idle wells. According to DOGGR, last year 1,234 idle wells were plugged and abandoned.
2. Abandoning wells. From 2007 to September of 2011, DOGGR plugged and abandoned 142 orphan wells at a cost of $5 million. This led to an average cost per well of just over $35,000. The vast majority of these wells were in lower cost, sparsely populated areas of the state and the cost per well since that time has been significantly higher. Between 2012 and 2016, DOGGR plugged 41 wells at an average cost of $81,000 per well.

Plugging and abandonment costs on deserted wells are highly variable and, in many cases, difficult to predict. When an operator is plugging and abandoning one of their own wells, they are generally aware of the situation at a well, including obstructions that they may encounter based on having worked with the well. When DOGGR is approaching a hazardous deserted well that could be as old as 100 years, they may not know if the previous operator had attempted to plug it in the past, what material may have been placed in the well, if the casing is intact, and other information that is critical to understanding potential cost of plugging and abandonment. Costs can range from as low as $11/foot in a well in Kern County if the project goes smoothly to well over $200/foot in an urbanized area with high ancillary costs, such as temporarily moving utility lines, higher staging and mobilization costs, and where “junk” obstructs downhole operations and leads into delays and cost over runs.

In September 2014, DOGGR personnel were asked to investigate complaints of odors from an orphan idle well called Patel 1 in a residential neighborhood in Los Angeles. Patel 1 was estimated to have been drilled before 1903 and was leaking low levels of hydrogen sulfide, a toxic gas. Another neighboring well called Rogalske 10 was also found to be leaking and producing a strong smell. DOGGR, at the cost of more than $1 million and after two years, plugged and abandoned the two wells to protect the community.

1. Monitoring. LA DPH has responded to residents’ health complaints of headaches, nausea, vomiting, respiratory irritation, and eye, nose, and throat irritation. LA DPH’s health investigation revealed insufficient regulatory oversight and inadequate mitigation measures to reduce exposures and associated impacts. LA DPH also found that while South Coast Air Quality Management District has imposed some monitoring requirements, the current monitoring activities for oil and gas operations can be sporadic. As part of implementation of AB 617 (C. Garcia), Chapter 136, Statutes of 2017, ARB has developed a Study of Neighborhood Air Near Petroleum Sources (SNAPS) to better characterize air quality in communities near oil and gas operation. In September 2018, ARB selected four communities for the SNAPS program, two in Kern County and two in Los Angeles County, however, the study will not focus on idle wells. On January, 1, 2018, ARB began implementing the Oil & Gas Production, Processing, and Storage regulation to require methane detection and leak elimination on a facility basis.

Methane is a short-lived climate pollutant. In the first two decades after its release, methane is 84 times more potent than carbon dioxide. Scientists at the consulting firm GHD Services Inc., the University of Cincinnati, and Washington State University measured methane emissions at 138 abandoned wells. Out of over 100 plugged wells, just one was emitting methane, and only at a low level. By contrast, 40% of the unplugged wells were leaking methane, and the average leak rate was over 100 times higher than the single leaking plugged well. Overall, average emissions of unplugged wells were 5,000 times higher than plugged wells. This bill will institute basic monitoring requirements for wells being plugged and abandoned to better understand the air quality and GHG emission reduction benefits of plugging and abandoning idle wells. If California’s stock of idle wells are representative of the findings of the study mentioned above, this could be a significant source of emissions.

1. Prior legislation. SB 724 (Lara), Chapter 652, Statutes of 2017, authorizes DOGGR to make expenditures up to $3 million for four years to plug and abandon hazardous or deserted wells or hazardous or deserted production facilities. The bill authorizes the Supervisor or district deputy to order the decommissioning of a production facility.

AB 3146 (Holden, 2018) was substantially similar to this bill. The bill failed passage on the Assembly Floor with a vote of 30-35.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

Western States Petroleum Association

Analysis Prepared by: Michael Jarred / NAT. RES. /