American Oil and Gas Reporter - May 2018 - 73

ConventionSection: California Independent Petroleum Association
suggests. Therefore, he says, CIPA hopes
to use the appropriations review process
to discuss with Chau possible ways to
mitigate compliance costs. "Thousands
of natural gas sources feed a pipeline,"
Thomas observes. "It would result in a
massive effort and cost to accurately measure to cap-and-trade standards. If out-ofstate entities are not required to be as accurate as in-state ones, what is the point?
It will be expensive, thus the reason the
appropriations committee looms huge."
California's cap-and-trade system already includes reporting requirements for
emissions on oil imports from countries
that lack actual data, Zierman points out.
"The state began with an estimate
when it first started the cap-and-trade
program based on publicly available data,"
he explains. "It overestimated our own
emissions anywhere between 150 percent
and 800 percent. I can only imagine how
far off the Middle East crude calculations
are, and it is probably in the opposite direction, because any information from
there is based on government-owned minerals and production. Knowing how prevalent venting and flaring are there, I doubt
we have a very good handle on that."
Coastal Conflict
Both AB 1775, co-authored by Al
Muratsuchi, D-Torrance, and Monique
Limón, D-Santa Barbara, and the companion bill, SB 834 by Hannah-Beth
Jackson, D-Santa Barbara, sought to prohibit the California State Lands Commission from entering into any lease, renewal, extension or modification that
would result in any additional development
or exploration for oil or natural gas from
federal waters, Thomas says.
The bills are a response to the Trump
Administration's attempt to expand offshore production on the California coast,
Zierman says, but both threaten existing
production and constitute a direct attack
on the future of California oil and gas
production.
"To bring product on shore from an
existing lease, you would need a lease
from the State Lands Commission, so if
you have new production on a federal
lease the bill prohibits the SLC from approving a permit to bring it on shore,"
Zierman explains. "A big problem originates in the term 'new production.' The
bill doesn't say new leases. We have 27
existing platforms off our coast and operators are drilling all the time. Can it be
said that additional oil from a well on the

same platform is new production?"
Both CIPA and the Western States Petroleum Association testified in two policy
committees that the bills impacted current
production and infrastructure, Thomas
says. To ensure the bills apply only to oil
and gas production from new leases and
to protect production from existing leases,
CIPA and its allies have sought to ensure
changes in the bill reflect accordingly,
he says. The proposed amendments appear
to clarify that the measures apply to new
state leases that authorize new construction
of oil and gas related infrastructure upon
tidelands and submerged lands within
state waters associated with outer continental shelf leases issued after Jan. 1,
2018, Thomas details.
Proposed amendments also prohibit
state lease renewals, extensions or modifications for activity on tidelands and
submerged lands within state waters that
facilitate new or additional oil and gas
exploration, development or production
from the OCS, he says. The amendments
define new or additional production to
mean activities that increase the capacity
of any infrastructure used to convey,
transport, or process oil or natural gas
from OCS leases issued after Jan. 1,
2018, Thomas says.
"In these cases, the bill appears to
apply the lease prohibitions to oil and
gas production from leases issued after
Jan. 1, and also narrows the prohibition
to new or expanded infrastructure," he
reports. "Both bills are headed to their
respective appropriations committees
where, if the amendments stand, CIPA
will re-evaluate its current position."
With opposition from CIPA and others,
SB 465 by Jackson was on the assembly's
inactive file, but was changed to a measure
not impacting oil and natural gas. According
to Zierman, the bill would have hampered
the role of the Conservation Committee
of California Oil and Gas Producers.
"It would have placed a bunch of
people on the committee with no technical
expertise, including activists, which is a
poor fit for a technical committee," Zierman says. "It would be like the Food and
Drug Administration putting a bunch of
advocates with no medical knowledge
on the board that approves new drugs. It
simply doesn't make sense."
Produced Water
In other legislation with the industry's
attention, CIPA is relieved to learn that
Assemblywoman Laura Friedman, D-

Glendale, has decided to pull AB 2828.
The legislation calls for additional testing
requirements for produced water that is
used to help irrigate crops in California's
Central Valley, Zierman reviews.
"An urban legislator was trying to legislate activities in the Central Valley, where
the oil and gas industry delivers about
50,000 acre-feet of produced water that
is of sufficient quality to be treated,
blended with freshwater and used for irrigation," Zierman says. "It is highly regulated as a water source. It has been found
totally safe for the fruit and vegetables
grown with it, but environmental groups
and activists apparently dislike any benefit
from oil and gas, so they attack that."
The bill's sponsor, the Environmental
Working Group, claims that the use of
produced water for irrigation threatens
public health and has not been properly
evaluated, Thomas says, but tests at the
Lawrence Berkeley Lab show all concentrations of tested compounds are within
acceptable ranges for safe consumption.
The original version of AB 2828 required the State Water Board to conduct
hearings to determine whether produced
water posed a public hazard and would
have permitted regional water boards to
issue the permits if the SWB signed off,
Thomas says. With amendments approved
April 17, he continues, a regional board
could approve a waste discharge requirement for the use or reuse of produced
water for agricultural purposes, and for
groundwater recharge, but only under
certain conditions.
Even with the amendments, CIPA considers such legislation unnecessary and
duplicative at best, he characterizes. For
more than a decade, farmers and water
providers have adhered to the strictest
water and safety regulatory standards,
Thomas asserts. Specifically, the benefits
of produced water have been documented,
he says, and produced water has proven
to be an important resource during California's historic five-year drought, helping
to ease the pressure both on groundwater
resources and sensitive ecosystems.
Although air and water activist groups
likely backed the bill as a way to target
the oil and gas industry, proponents failed
to anticipate the enormous amount of
opposition from the agricultural and water-producing community, Thomas assesses. If such a bill becomes law, he
predicts, it will devastate California agriculture and produce ripple effects across
the country and possibly the world. r
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American Oil and Gas Reporter - May 2018

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