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Legislation That Would Ban the Use of Hydraulic Fracturing in California Until Regulators Write Rules Governing the Controversial Procedure.

Legislation That Would Ban the Use of Hydraulic Fracturing in California Until Regulators Write Rules Governing the Controversial Procedure.

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Published by: Leon on Jun 27, 2012
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06/30/2012

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-----------------------------------------------------------------| || SENATE COMMITTEE ON NATURAL RESOURCES AND WATER || Senator Fran Pavley, Chair || 2011-2012 Regular Session || |-----------------------------------------------------------------
BILL NO: AB 972 HEARING DATE: June 26, 2012AUTHOR: Butler URGENCY: NoVERSION: June 13, 2012 CONSULTANT: Katharine MooreDUAL REFERRAL: Environmental QualityFISCAL: YesSUBJECT: Oil and gas: hydraulic fracturing: moratorium.BACKGROUND AND EXISTING LAWCalifornia is the 4th largest oil and gas producing state andnatural resources extraction is an important contributor to thestate's economy. According to 2009 data provided by the WesternStates Petroleum Association (WSPA), approximately 100,000people were directly employed in oil and gas production inCalifornia and the state received a combined $5.8 billion infuel excise, corporate and personal income taxes. The Divisionof Oil, Gas, and Geothermal Resources (DOGGR) exists withinCalifornia's Department of Conservation (department). DOGGR'sSupervisor (supervisor) has extensive and broad authority toregulate activities associated with the production and removalof hydrocarbons (e.g. oil and gas) from the ground (PublicResources Code (PRC) §3106). This includes the subsurfaceinjection of water and other fluids. The supervisor's authorityis granted in order to prevent damage to life, health, property,natural resources, and to underground and surface water suitablefor irrigation or domestic purposes. DOGGR issues permits fordrilling new wells or re-working old ones (PRC §3203) and has 10working days to respond to each application. Once a permit isapproved, it is valid for one year from the date of issuance."Hydraulic fracturing" or "fracking" of hydrocarbon wells toenhance oil and gas recovery is an increasingly popularsubsurface process/technique. Due to technological innovations,fracking, by itself and in combination with advanced drillingtechniques (e.g. directional and horizontal drilling) haveallowed companies to develop previously uneconomic oil and gasreserves, such as those located in subsurface shale formationsthroughout the United States. Once an oil or natural gas well isdrilled and its casing properly installed and perforated in the1production zone, fluids are pumped down to an isolated portionof the producing zone of the well at pressures high enough to
 
cause or enlarge cracks in the subsurface geologic formationsurrounding the well bore. These cracks or fractures allow oiland natural gas to flow more freely into the well and then tothe surface. The pumped fracking fluid is usually - but notalways - comprised almost entirely of water with a smallfraction of additional substances (less than a few percent byvolume) added to enhance the process. In absolute terms theamount of additives may be thousands of pounds as a considerableamount of water - hundreds of thousands to millions of gallons -may be needed to frack an individual well. The fluid volumeneeded, its chemical composition and physical characteristicswill vary depending upon the particular conditions of each well.According to industry reports and academic papers, wells havebeen fracked in California for several decades. Estimates vary,but informal reports suggest that a majority of wells in thestate may be fracked. Recently WSPA, based upon voluntaryreporting by its members, reported that 628 new and existing oiland gas wells were fracked in California in 2011, considerablyless than half the new wells drilled (about 2,300) and much lessthan half of existing wells (about 50,000 producing oil and2,000 dry gas wells). Counties where wells have been frackedinclude Kern, Ventura, Santa Barbara, Los Angeles and Monterey.Recovery of the hydrocarbon reserves in the Monterey shaleformation may be an important "unconventional play" in thefuture, and some fracked wells are producing from the formationalready. However, the decline in natural gas prices - currentspot prices are less than 25% of the peak reached in July 2008 -suggests exploitation in the near term is less likely in favorof conventional reservoirs. Fracking treatments are necessaryto achieve unconventional reserves' full potential with currenttechnology. However, fracking has become a highly controversialtechnique subject to considerable scrutiny.Significant environmental contamination is attributed tofracking in cases in Wyoming, Texas, Colorado, West Virginia andPennsylvania. New York state established a fracking moratoriumuntil new regulations are developed, due, in part, to thepotential risks to New York City's watershed from watercontamination, as well as public health concerns. Recent newsreports suggest that a partial ban in New York may remain ineffect indefinitely. Vermont instituted a ban in May, and billsbanning fracking are active in New Jersey. Although theirauthority to do so is being contested, local governments in NewYork, Pennsylvania and other states have passed ordinances to2ban fracking within their jurisdiction. Other states, includingTexas, Colorado, West Virginia, Arkansas and Ohio have revisedtheir laws and regulations to provide for additional safety andprotective measures for fracking operations. At the federallevel, fracking is largely exempt from the provisions of theSafe Drinking Water Act and the Underground Injection Control
 
(UIC) well program courtesy of the "Halliburton Loophole," andthe Bureau of Land Management is in the process of developingfracking regulations.In California, despite nationwide concern and two years ofspecific legislative direction, DOGGR has not exercised itsacknowledged authority to either regulate or systematicallycollect data on hydraulic fracturing treatments under PRC §3106.In March, DOGGR finally issued a formal notice to welloperators asking for voluntary reporting of fracking data(WSPA's response is reported above). DOGGR is also conductingseven public fracking "workshops" across the state. Thesestarted in May and are expected to be completed in July. Thedepartment has announced that an independent scientific study onfracking in California will be conducted. The department'sdirector has further committed to a timetable to produce draftfracking regulations towards the end of the summer with theintent of having fracking regulations in place by the end ofthis year. While some argue that DOGGR already regulatesfracking through regulating well integrity, well casing failuresare known to occur (comprehensive data are not available fromDOGGR). Arguably, it is difficult to specify or regulate designcriteria for a well casing when all the conditions the casing isexposed to (e.g. fracking) are not known.PROPOSED LAWThis bill would :Define hydraulic fracturing and provide alternate termsfor itBar the supervisor from issuing a permit for an oil andgas well that will be hydraulically fractured untilregulations governing its practice are adopted.ARGUMENTS IN SUPPORTAccording to the author, DOGGR has not responded adequately to theLegislature regarding numerous questions related to the safety andefficacy of the Underground Injection Control Class II wellprogram and hydraulic fracturing. Therefore, AssemblymemberButler continues "in the interest of the environment and publichealth, AB 972 requires DOGGR to cease authorizing well drillingpermits where the process of fracking will be used, until DOGGR3adopts hydraulic fracturing "fracking" regulations."ARGUMENTS IN OPPOSITIONWSPA argues that "this significant, untimely burden onCalifornia's businesses and economy is unnecessary. Э?] Byobstructing an important means of growing our in-stateproduction capability, AB 972 will necessitate increased oilimports, raising the cost not only of fuel, but ofmanufacturing, agricultural operations, public transportationand all goods and services which are energy-dependent. This

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