American Oil and Gas Reporter - May 2017 - 88

ConventionSection: California Independent Petroleum Association
legislation each year since she returned
to the State Capitol in 2012."
He says SB 465 "could be classified
as redundant" in that it directs the supervisor of the California Division of Oil,
Gas and Geothermal Resources to "encourage the intelligent, safe and efficient
development of oil and gas resources"
by regulating, among other things, the
drilling, stimulation, completion, operation,
reworking, maintenance and abandonment
of wells. In other words, Thomas characterizes, DOGGR should continue to do
what it already is doing.
He adds that SB 465 also excludes
"acid well stimulation treatment," hydraulic
fracturing and "well stimulation treatment"
from the definition of enhanced oil recovery, which is redundant with last year's
AB 2729.
Similarly, Thomas describes AB 1328
by Assemblywoman Monique Limon, DSanta Barbara as "a duplicative measure
that would vastly expand chemical disclosure and monitoring."
He says AB 1328 aims to require operators monitor and report quarterly the
chemicals they use in virtually every
aspect of oil production, including drilling,
well maintenance, routine acidizing, and
completions. "This includes a requirement
that operators monitor and report how
chemical constituents have changed over
time, and may include similar reporting
after a well has been plugged and abandoned," Thomas says.
For the roughly 61,000 active oil and
gas wells in California, Thomas estimates
that would equate to about 2.7 million
data points that would have to be reported
four times a year. "The amount of data
reporting called for is technically infeasible
and would add very little informational
value to the state," he charges.
Furthermore, Thomas says, much of
AB 1328 is required already through
2013's SB 4 and 2014's SB 1281, both
of which he characterizes as "data intensive
management programs that have proven
of little value in public policy."
SB 1281 mandates operators collect
data on production and disposition of
water, use of untreated water suitable for
freshwater uses, water treatment methods
and volumes, and details about entities
receiving the water for other beneficial
uses.
An example of overreaching legislation,
Thomas continues, is AB 1645 by Assemblyman Al Muratsuchi, D-Torrance,
which would ban the use of hydrogen
88 THE AMERICAN OIL & GAS REPORTER

fluoride and hydrofluoric acid (HF) by
facilities that store or handle more than
250 gallons of it and are located within
two miles of a residence. HF is a key
component in producing California-specification gasoline, Thomas imparts, as
well as a variety of fluorine-containing
materials such as refrigerants, pharmaceutical intermediates and fluoropolymers.
Other uses range from glass etching and
polishing to agriculture, preparing semiconductors and producing specialty metals.
HF also is commonly used in the oil
industry to eliminate scale and clean
wellbores, points out Layton. "It has been
used for decades in this industry, and it
would be a very significant expense for
us to try to maintain our wellbores without
it," he remarks.
Thomas says Muratsuchi introduced
similar legislation two years ago, apparently as a reaction to a February 2015 refinery explosion that local press accounts
said "nearly resulted in a catastrophic
disaster that would have released deadly
modified hydrofluoric acid into the surrounding communities."
Well Abandonment Bill
CIPA's "number one bill," according
to Thomas, is SB 724 by Senator Ricardo
Lara, D-Bell Gardens. He says SB 724
seeks to allow a city or county to request
DOGGR order an operator to abandon
any well that is idle for two years, "regardless whether a threat to public health,
safety or the environment exists."
SB 724 also would allow a local government to contract with DOGGR to perform the abandonment work itself, and
proposes to raise the industry's assessment
for the state's orphan well fund from $1
million to $5 million a year.
"We certainly want to negotiate that
more south than north," Thomas says of
the latter proposal. "We think $2.0 million-$2.5 million probably is more appropriate."
Of course, he adds, CIPA adamantly
opposes letting local governments determine which idle wells should be abandoned, but also has concerns about letting
them do the work. He worries their lack
of expertise could lead to ineffective
plugging and/or unnecessary expense.
Annual Meeting
One California Democrat who appreciates the role the oil and gas industry
plays in providing high-paying jobs for

her constituents, offers CIPA Chief Executive Officer Rock Zierman, is Assemblywoman Blanco Rubio from Los Angeles. He reports Rubio will lead a legislative panel during the annual meeting
general session on Saturday, June 10.
Other general session highlights include
an examination of global oil markets by
IHS Chief Upstream Strategist Bob Fryklund, and a more targeted look at California's resource base by geologist, consultant and author Donald L. Gautier.
Gautier consults at the California Council
on Science and Technology/Lawrence
Berkeley Laboratory, and in his nearly
four-decade career has advised the U.S.
Energy Information Administration, Department of State, Coast Guard and Central
Intelligence Agency, as well as a number
of international agencies and institutes.
Layton comments that Monterey "traditionally has been a very popular meeting
for CIPA's membership."
Director of Marketing & Events Laura
Wilkin says this year's convention again
features a number of recreational opportunities, including CIPA's annual golf
scramble, which is being played Friday,
June 9 at the completely renovated Poppy
Hills Golf Course. Other Friday options,
Wilkin says, are a whale watching cruise
and a Segway tour. A nature walk along
Point Lobos is on Saturday's agenda, and
kayak, bicycle and paddle board rentals
are available also, she adds.
A private dinner at the Monterey Bay
Aquarium concludes Friday's recreational
agenda.
Even with all the challenges they face,
CIPA members approach their annual
meeting with a rebounding sense of optimism, Layton surmises. "This industry
is not just trying to pick up the crumbs of
what is left behind after oil has been produced in this state for the last hundred
years or so," he says. "There is way more
oil left in the ground than has been produced to date.
"Folks who are still in this business
are working really hard. They are looking
for projects to invest in and for ways to
grow their businesses," Layton says. "To
me, that speaks to the character of the
people in this business."
❒

Coming In June
Special Report:
Permian Basin Activity Update



Table of Contents for the Digital Edition of American Oil and Gas Reporter - May 2017

Contents
American Oil and Gas Reporter - May 2017 - 1
American Oil and Gas Reporter - May 2017 - 2
American Oil and Gas Reporter - May 2017 - Contents
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