American Oil and Gas Reporter - May 2017 - 89

ConventionSection: California Independent Petroleum Association

California Sees Regulatory Onslaught
SACRAMENTO, CA.-California regulators this year have approved new requirements for discharging produced water
to surface ponds, and restrictions on the
oil and gas industry's methane emissions.
Meanwhile, reports California Independent Petroleum Association Chief Executive Officer Rock Zierman, the state
Division of Oil, Gas and Geothermal Resources, and the Water Resources Control
Board continue to slog through a yearslong review of aquifer exemptions necessary to the state's underground injection
control program while the California Air
Resources Board searches for ways to
implement a newly beefed-up greenhouse
gas reduction mandate.
Throw in a variety of local control initiatives, including a voter referendum approved last November in Monterey County
that essentially bans all oil and gas operations, he observes, and the association
has more than enough to keep it busy.
CIPA's top regulatory priority the past
year, Zierman says, has been the aquifer
exemptions, which trace back to a 2010
audit of California's Class II UIC program
by the U.S. Environmental Protection
Agency. That audit found the state had
permitted injection wells into aquifers
that had not been properly exempted as
underground sources of drinking water
under the Safe Drinking Water Act.
The issue escalated after the water
board released a report in September
2014 that disposal wells appeared to be
injecting into protected sources of groundwater, and several environmental groups
sued DOGGR to stop produced water injections (AOGR, June 2015, pg. 14).
Since then, Zierman says, DOGGR
and the water board have developed a
procedure for demonstrating that geologic
zones receiving produced water are not
currently, and are highly unlikely to ever,
be used as sources of drinking water, and
that any injected fluid will not migrate to
other zones. EPA issued a letter in January,
concurring with the state's process, but it
has been arduous, Zierman notes.
Thus far, he says, the state has submitted four aquifer exemptions and EPA
has approved three for the Fruitvale,
Round Mountain and Tejon oil fields in
Kern County. However, Zierman points
out, nearly 40 applications remain. "(Water
board officials) said they would be done
in November, then January, then February,"

he reflects. "As of April, only five or six
had been pushed forward."
In January, DOGGR ordered 475 injection wells in 23 fields to stop operating
by Feb. 15-the deadline for completing
aquifer exemptions-although it said another
1,650 wells in 29 fields could continue
injecting (AOGR, February 2017, pg. 23).
Zierman reports CIPA responded by seeking-and then obtaining-an injunction to
halt DOGGR's action. "So now, in order
to shut down a well, the state will have to
show actual harm," he remarks, adding,
"Keep in mind we are talking about a paperwork issue, not a threat to the environment. These are aquifers we have been
injecting into for 30 years."
The whole process has created a huge
burden for industry to supply all the information required by the state, attests
CIPA Chairman Steve Layton, president
of E&B Natural Resources in Bakersfield,
Ca. "I am not exaggerating when I say
my technical staff is spending far more
time working on these regulatory issues
than they are the actual production of oil
and gas," he states. "It is really tough for
folks who come to work every day trying
to add value by increasing production, because they can't do what they know they
need to do to add value to the company."
Part of the problem, Zierman suggests,
is the water board using criteria that CIPA
believes is beyond the scope of the program. "The worries focus on the quality
of water being injected, rather than the
quality of the water in the aquifer we are
injecting into, which is the purpose of
the program," he explains. "The board
does not want anyone to increase the
salinity of the groundwater, but that isn't
how the program works."
Surface Water Discharges
In a separate, although somewhat related
development, Zierman says, on April 6,
the Central Valley Water Board (CVWB)
adopted its General Orders for Oil Field
Discharges to Land (pond orders). The
upshot of the new regulations, he acknowledges, "For some people, it just isn't going
to be viable to use sumps in the future."
CIPA's water consultant, Robert J. Gore,
who works as a regulatory advocate for
The Gualco Group in Sacramento, describes
the pond orders as highly complex, and
consisting of three general orders that regulate, among other things, discharges of

produced water to impoundments, for dust
control, and for construction activities, as
well as solids used as road mix within
production facility boundaries.
Gore says the orders require companies
to perform hydrogeological testing to assess groundwater quality, as well as to
monitor drinking water wells within one
mile. He adds that the water board retained
a requirement-to which CIPA "strongly
objected"-that within that one-mile radius,
operators must test wells on adjacent
properties. However, he adds, if a property
owner refuses entry, board staff indicate
they will accept a simple notification to
that fact, Gore says.
Nevertheless, "We continue to object
to being required to do what is a state
agency task," Gore declares.
Finally, he mentions, "We anticipate
fees will increase over the next two years
as the program matures, but we have no
idea how much they will go up."
Although the new rules are strenuous,
Gore says over the 14-month rule-making
process, CIPA was able to negotiate a
number of improvements. As an example,
he says, "We have a commitment from
the board's chief counsel, acknowledging
that these regulations are evolutionary.
We will be working on improvements as
we proceed."
The orders prohibit discharging water
from wells that have received a stimulation
treatment such as hydraulic fracturing or
acid matrix stimulation, but Gore says
operators have three years to develop alternate disposal methods, demonstrate
that produced waters do not contain stimulation-treatment fluids in concentrations
that threaten groundwater, or show that
groundwater is not drinking water quality.
Importantly, he mentions, operators will
be able to employ government data to establish water quality, including information
from a research partnership between
CVWB and the U.S. Geological Survey.
Operators discharging fewer than 250
barrels of water a day have an additional
year to comply with the groundwater
monitoring requirements, Gore notes.
Also, he says, the general orders recognize
that jobs associated with oil and gas development are "a desirable public benefit,"
which "puts it on equal footing, at least in
our eyes, with environmental protection."
Gore says the CVWB's jurisdiction
extends from the Tehachapi Mountains
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