American Oil and Gas Reporter - July 2015 - 152

ConventionCoverage: California Independent Petroleum Association

Uncertainty Injected Into
California Industry
By Del Torkelson

CORONADO, CA.-Lawsuits, regulatory primacy questions, and upheaval
at the top of the California Department
of Conservation have clouded the outlook
for the state's underground injection control program (see "Green Groups Opposing
California Injection Wells," AOGR, June
2015).
California Independent Petroleum Association Chief Executive Officer Rock
Zierman acknowledged producers'
predicament at the group's annual convention, held June 11-14 at the Coronado
Island Marriott Resort & Spa. But before
Golden State oil and gas producers lose
heart, he counseled, they should recall
2013, when the general assembly not
only was debating a severance tax, but
also hydraulic fracturing bans.
Eventually, Zierman observed, California lawmakers opted to regulate fracturing instead of banning it when they
passed SB 4. "There are expenses associated with SB 4," he allowed. "It takes

time. At first, it moved in fits and starts.
Nonetheless, fast-forward two years, and
we are able to do what we always have
done."
Ultimately, Zierman predicted, the
same will prove true for California's injection wells. "There is going to be a lot
of noise," he forecast. "There will be a
lot of frustration during the next two
years, but . . . I think we are going to
look back, as we did with fracturing, and
say, 'We laid out the facts, the legislature
and regulatory bodies took action, and
we will proceed to do what we do.'"
But in the meantime, such challenges
can leave companies in limbo, noted
CIPA Chairman Ken Hunter, president
and chief executive officer of Vaquero
Energy Inc. in Bakersfield, Ca. "You
have to know what is coming before you
strategize," he reasoned. "We have been
stymied for almost a year and it looks
like that probably will not change anytime
soon."
The complications Hunter cited include
injection operations drawing new scrutiny

Despite insinuations to the contrary, gaps in the California Division of Oil, Gas and
Geothermal Resources' underground injection control paperwork under the Safe Drinking
Water Act are not evidence that DOGGR has failed to protect the environment, indicates
John "Jack" Quirk of Bright & Brown (center), as David A. Ossentjuk (left) with Ossentjuk
& Botti, and Peter L. Candy (right) from Hollister & Brace listen. The three attorneys
participated in a legal panel on the third day of CIPA's annual convention, June 11-14 at
the Coronado, Ca., Island Marriott Resort & Spa.

152 THE AMERICAN OIL & GAS REPORTER

from the California Water Resources
Control Board, which is forcing companies
to navigate a new layer of bureaucracy
and is raising jurisdictional questions.
He said the uncertainty expanded when,
a week before CIPA's conference, Conservation Director Mark Nechodom resigned. "It was unanticipated," Hunter
described. "It certainly does not help
when there is turmoil at the top. We are
not sure where that is going to end."
Paperwork Gaps
Attorneys David A. Ossentjuk with
Ossentjuk & Botti, John "Jack" Quirk of
Bright & Brown, and Peter L. Candy
from Hollister & Brace discussed California's UIC program during one of the
annual meeting's panel discussions.
Although there may be inherent tension
between the Division of Oil, Gas and
Geothermal Resources' tasks of regulating
the industry to protect human health,
safety and the environment while also
promoting maximum hydrocarbon recovery, Quirk said DOGGR had done a
tremendous job of demonstrating the missions were not irreconcilable.
"Why is there so much concern?" he
posed. "Because the individuals at DOGGR have been focused on the technical
realities of achieving those goals as opposed to the significant but secondary
realities of ensuring compliance with paperwork regulations."
Quirk likened the situation to building
a home. Although a homeowner should
take note of a contractor's license, permits
and code compliance, he compared, a
contractor burdened with none of that
paperwork may construct a sound house,
while another contractor with all that
documentation still can build a substandard
one. Nevertheless, he related, a lack of
paperwork will prompt many to assume
the house is shoddily constructed.
"The division is under a lot of pressure
for exceptions in the area of paperwork
compliance with UIC requirements under
the Safe Drinking Water Act," Quirk described. "It is being perceived as having
cut corners. An inference . . . is that it
has not protected the environment."

American Oil and Gas Reporter - July 2015

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