Posted on 12/03/2013 5:26:20 AM PST by thackney
Depending on whom you ask, it looks like California is getting closer to tapping the nearly 15 billion barrels of recoverable oil that lies deep in the Monterey Shale. On September 20, 2013, Governor Jerry Brown signed SB 4 into effect, a bill that provides California with its first set of requirements specifically associated with hydraulic fracturing and other well stimulation techniques, such as acidizing. Less than one month later, the California Department of Conservation (DOC) has released proposed regulations applicable to well stimulation treatments in the state, initiated the State’s environmental review process and set the stage for the release of Emergency Regulations, under which owners and operators will be able to proceed with well stimulation in the interim.
While both industry and environmental groups may have wanted more from out of SB 4, its passage and swift implementation will provide some certainty now for oil and gas operators looking to develop the Monterey Shale, and avoids a situation like that in New York State, where the future of hydraulic fracturing remains in limbo.
Further studies
SB 4 requires California’s Natural Resources Agency to, by January 1, 2015, complete a comprehensive independent scientific study on well stimulation treatments, including an evaluation of “the hazards and risks that well stimulation treatments pose to natural resources and public, occupational, and environmental health and safety.” SB 4 requires the study to be truly comprehensive, covering everything from the chemical make-up of the treatment to the way that flowback is treated after stimulation. Specifically, SB 4 provides that the study should consider well stimulation treatments, additive and water transportation to and from the well site, the mixing and handling of well stimulation treatment fluids and additives at the well site, options for the use of nontoxic additives in treatments, the use or reuse of treated or produced water in well stimulation treatment fluids, and the treatment and disposal of flowback fluids and other materials, if any, generated by the treatment. The study must also consider “acid matrix treatments” and air emissions, including potential greenhouse gas emissions.
SB 4 also provides that the DOC’s Division of Oil, Gas and Geothermal Resources (DOGGR) must conduct an Environmental Impact Report (EIR) to provide the public with detailed information regarding “any potential environmental impacts of well stimulation in the state. The requirement to perform an EIR goes beyond the analysis that is typically required for oil and gas activities in California. The state Senate Rules Committee noted in its analysis of SB 4 that “DOGGR regularly approves oil and gas development proposals under the CEQA categorical exemptions for minor alterations to land or existing facilities, or by way of negative or mitigated negative declarations. As a result, oil and gas permits are rarely reviewed in EIRs that would evaluate the potential risks associated with hydraulic fracturing.”
On November 15, 2013, DOC published a “Notice of Preparation” of an EIR “to evaluate the impacts of existing and potential future oil and gas wells stimulation treatments” occurring in the state. DOC has stated that the objectives of the EIR process are to:
identify, evaluate and disclose the potential environmental impacts of well stimulation treatments of both conventional and non-conventional oil and gas resources within the State;
further the State Legislature’s efforts to ensure that well stimulation practices are conducted in a manner that assures environmental protection, public safety, data collection and reporting, interagency coordination, regulatory oversight and monitoring, and public disclosure; and
allow for the safe recovery and production of the State’s oil and gas resources.
In December 2013 and January 2014, DOGGR will host several Scoping Meetings to solicit public comment on determining the scope and content of the EIR. Down the road, the study will result in publication of a Draft EIR and a Final EIR. Once the Draft EIR is released, there will be a 30-60 day public comment period.
Proposed regulations
Previously, in December 2012, DOGGR released a pre-rulemaking “discussion draft” of regulations applicable to hydraulic fracturing. The discussion draft did not trigger the formal rulemaking process and simply acted as a means of engaging stakeholders in the process early on. DOGGR withdrew the discussion draft following the passage of SB 4.
SB 4 directs DOGGR to develop regulations by January 1, 2015, that include the following components:
revisions to the rules and regulations governing construction of wells and well casings to ensure the integrity of wells, well casings, and the geologic and hydrologic isolation of the oil and gas formation during and following well stimulation treatments;
full disclosure of the composition and disposition of well stimulation fluids;
a provision for the well operator to provide for baseline and follow-up water testing upon request by a nearby property owner; and
threshold values for acid matrix stimulation treatments.
SB 4 also sets forth the need “to promote regulatory transparency and accountability.” To accomplish this, SB 4 directs DOGGR to enter into formal agreements with other agencies as necessary to clearly delineate “respective authority, responsibility, and notification and reporting requirements associated with well stimulation treatments and well stimulation treatment-related activities, including air and water quality monitoring.”
As directed by SB 4, DOC released its proposed regulations on November 15, 2013. Generally, the DOC proposed “SB 4 Well Stimulation Treatment Regulations” define the types of well stimulation treatments, e.g. “hydraulic fracturing,” and set out various requirements applicable to such treatments. Some of the requirements covered by the proposed regulations include the need to
obtain a permit prior to the treatment,
provide pre-treatment notice to property owners so that baseline water testing can be conducted,
perform an evaluation of the well integrity prior to treatment and monitoring during treatment,
adhere to standards for storage and handling of well stimulation fluids, (v) perform post-treatment monitoring, and
submit to the Chemical Disclosure Registry information relating to the contents of the treatment.
The release of the proposed regulations kicks off the beginning of the formal rulemaking process and the 60-day comment period. DOC has indicated that, in alignment with SB 4, the regulations are scheduled to go in to effect on January 1, 2015. In the meantime, DOC plans to implement emergency regulations effective January 1, 2014 “to ensure the major requirements of SB 4 are addressed in the interim.”
In the meantime…
Unlike New York, California does not expect industry to sit on the sidelines until January 1, 2015 when the final rules are to be promulgated. SB 4 provides that, until the rules are finalized and implemented, DOGGR “shall allow” all well stimulation treatment activities, provided various conditions are met. DOC plans on releasing a “streamlined interim procedure” by December 13, 2013.
The interim procedure will take the form of Emergency Regulations, effective January 2014, for a one-year period. Under the Emergency Regulations, owners and operators will be able to proceed with well stimulation treatments without obtaining a permit, as long as certain conditions are met. Based on DOC’s SB 4 Implementation Plan, the Emergency Regulations will:
define well stimulation treatments covered by the interim procedure, including threshold values for acid volume;
with assistance from the State Water Board, provide initial guidance for owners and operators on the development of groundwater monitoring plans;
specify how operators are to certify compliance with SB 4, including disclosures relating to:
-the date and location of the well stimulation treatment;
-the makeup and volume of fluids other than water, by CAS number and trade name;
-disposition of fluids;
-tracer use;
-radioactivity of produced fluids;
-water use and water management planning compliance;
-groundwater monitoring compliance;
-compliance with requirements for neighbor notification and neighbor testing rights; and
-the posting of chemical information to the Internet.
Looking forward
Governor Brown included a signing statement with SB 4 that specifically references permitting under the new law and the need for efficiency in issuing permits. In that statement, Governor Brown directs the DOC to “develop an efficient permitting program for well stimulation activities that groups permits together based on factors such as known geologic conditions and environmental impacts, while providing for more particularized review in other situations when necessary.”
Governor Brown has pledged to work with the state legislature to address certain areas of SB 4 and to develop amendments as needed. While there is still work to be done, the passage of SB 4 signals that California has recognized the tremendous potential of the Monterey Shale and is working toward establishing a regulatory program to facilitate the development of that resource now. Despite some challenges on the horizon, SB 4 demonstrates California’s commitment to developing the Monterey Shale, which provides the oil and gas industry with some certainty. The end result could be a boon to a state economy that has had its fair share of rough spots over the last few years.
And on the political side, Monterey Shale is looking better.
Wow, this will get the enviroweenies knickers all in a twist. Good!
If you thought the protests over the Keystone XL pipeline were bad, wait until you see what the environmentalists do about this, which is right in their backyard, so to speak. I’d better stock up on popcorn, the next time I go grocery shopping.
The state smells money and wants its cut. The anticipated pile of cash is just too large to ignore.
And who thinks they won't tie the whole thing up with lawsuit after lawsuit?
Just the requirement that local landowners can request water sampling and testing could slow down the process of bringing a well to market enough to eventually make the Monterey Shale formation unprofitable. I'm fine with that, though, since it will keep this resource from being used to postpone the eventual financial collapse of Kalifornia.
There is so much oil in California its seeping out of the ground.
After the ambulance chasers swarmed in Pennsylvania, it is common for oil companies to test local water wells BEFORE drilling begins for comparison afterwards. This is normal practice now for many. I suspect most oil companies won't wait for a request, but rather request it themselves long before a local drill rig shows up.
There are significant technical problems in the Monterey Shale.
Oil Firms Seek to Unlock Big California Field
http://online.wsj.com/news/articles/SB10001424127887323932604579052933974060844
Sept. 22, 2013
California’s Monterey Shale formation is estimated to hold as much as two-thirds of the recoverable onshore shale-oil reserves in the U.S.’s lower 48 states, but there’s a catch: It is proving very hard to get.
Formed by upheaval of the earth, the Monterey holds an estimated 15.4 billion barrels of recoverable shale oil, or as much as five times the amount in North Dakota’s booming Bakken Field, according to 2011 estimates by the Department of Energy. The problem is, the same forces that helped stockpile the oil have tucked it into layers of rock seemingly as impenetrable as another limiting factor: California’s famously rigid regulatory climate.
California has become one of the U.S.’s top oil-producing states over the past century, largely by tapping into the easier-to-get oil that has seeped out of the Monterey beneath places like Bakersfield and Los Angeles County. But with production in general decline since the 1980s, producers are trying a smorgasbord of techniques—called enhanced oil recovery in industry parlance—in an effort to tap into the mother lode.
So far, there have been no production breakthroughs.
Venoco Inc. of Los Angeles, for example, said in a report that after drilling 29 wells in the Monterey Shale from 2010 to 2012, no “material levels of production or reserves” resulted. A Venoco spokeswoman declined to comment further.
So far, Brown has acted completely like a republican, ruled by austerity, lid off teachers, frozen teachers pays, sold off unsused assets and now the fracking. I wonder what California democrats are thinking now? Brown is doing all the things he accused Meg Whitman was going to do......
Sometimes I love living in this state, just to see how stupid democrats really are
And where do you suppose the money comes from to pay for an army of high-priced lawyers and lobbyists to tie this thing up in court and the legislature? Hint: it’s not grandma sending $10 because she saw a picture of a sad looking polar bear.
Follow the money.
SB4 passed house & senate and was signed already by the Governor.
While many can try to disrupt the study and influence the results for new rules, SB 4 provides that, until the rules are finalized and implemented, DOGGR “shall allow” all well stimulation treatment activities, provided various conditions are met.
The work starts now.
Yeah right. Trust me when I say this will NEVER happen. The ‘bullet’ train has a better chance of happening.
What a ridiculous come on. The on;y way this would happen is if California all of a sudden went back in time to being a more conservative state…….
There has already been drilling in the Monterey Shale field.
Nonsense. If that were the case they would allow drilling off of Santa Barbara. California is hopelessly lost in the 60s groove thing. Manufacturing of ICs became so difficult (and expensive) that companies moved the manufacturing out decades ago.
And he pushed the ridiculous bullet train which will be the money hog for ever. DOn’t fool yourself. There is a super majority in the legislative branch if they get fed up Brown will get his
but it is California and the work won’t start now
Never going to happen.
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