American Oil and Gas Reporter - July 2016 - 31

CIPA's Efforts Lead To Rewritten Bills
SACRAMENTO, CA.-California legislators still have a lot of calendar in
front of them, with the 2016 session not
scheduled to close until late August. But
the California Independent Petroleum Association is reporting some success well
before crucial legislative deadlines on
three pieces of legislation that either have
been modified to satisfy the association
or defeated outright.
CIPA Director of Government Affairs
P. Anthony Thomas calls AB 2729 the
association's top priority for 2016. Introduced by Assemblyman Das Williams,
D-Carpenteria, the bill revises how the
state defines and treats idle wells. AB
2729 passed the Assembly on June 2,
and now is in the Senate.
According to the California Legislature
website, AB 2729 changes the definition
of an idle well from one that has not produced oil or natural gas, or has been
used to inject fluids, for six consecutive
months during the past five years, to any
well not operated for 24 consecutive
months. The bill transfers abandoned underground property, including wells, to
the mineral rights owner when the well
operator loses the right of removal.
Under the terms of the legislation, as
of Jan. 1, 2018, all wells not satisfactorily
plugged and abandoned would require indemnity bonds. The bill sets the blanket
indemnity bond amounts to $200,000 for
operators with 50 or fewer wells up to $3
million for operators with more than 10,000
wells. Operators also would be required
to eliminate all long-term idle wells at
specified rates. The website says operators
with 250 or fewer idle wells must eliminate
at least 4 percent of them annually, while
operators with more than 1,250 wells must
eliminate 6 percent annually.
In negotiations with the Division of Oil,
Gas and Geothermal Resources, CIPA secured two changes, Thomas says: increasing
the $3 million bond threshold from 1,500
total wells to 10,000, and adjusting the
trigger for the 6 percent well abandonment
obligation from 1,000 to 1,250 wells.
"CIPA successfully negotiated this
bill. There a lot of things in it, and the
main thing is the idle well count will decrease, but it will decrease at a respectable
number," Thomas says. "There will be
integrity testing to ensure that a bad well
will be addressed. However, if the well
meets the correct standards, it should, as
CIPA feels, stay in production."
Thomas adds the association has heard
reports the Senate will attempt to introduce
an amendment to AB 2729, but he asserts
CIPA's position on the bill is firm. "The

association has negotiated with the administration and state agencies, so I feel
this bill is a done deal. Any further amendments that are unwarranted likely will
bring opposition from the association and
its allies. As a caveat, if senators have
something that improves the bill, CIPA
certainly will look at it," he says.
Fines And UIC
CIPA also succeeded in getting legislators to revise a measure on regulatory

fines and defeat a bill on underground
injection controls, Thomas says.
AB 2756, introduced by Assemblyman
Tony Thurmond, D-Richmond, revises
DOGGR's civil penalty structure and appeals process, the legislative website states.
It establishes major and minor violations
that are separate from well stimulation
treatment penalties, which are retained.
Under the legislation, a major violation
is defined as one that harms persons or
property, provides a significant competitive

JULY 2016 31
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American Oil and Gas Reporter - July 2016

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