American Oil and Gas Reporter - May 2016 - 86

ConventionSection: California Independent Petroleum Association

California Regulators Target
Groundwater, UIC Wells
By Dan Holder
SACRAMENTO, CA.-Judging by
their actions, California's regulators have
not noticed the global oil and natural gas
price collapse, observes Rock Zierman,
chief executive officer of the California
Independent Petroleum Association.
Speaking in advance of the association's
annual convention, scheduled for June 912 at the Meritage Resort & Spa in Napa,
Ca., Zierman points to a disconnect between the financial reality of low oil
prices and the likely costs of government
plans regarding groundwater and underground injection control regulations.
While state legislators continue to
consider anti-industry bills, such as a
proposal to impose new abandonment
requirements on idle wells (see related
story), California's regulators are proposing
new sets of rules likely to prove onerous
as well, Zierman says, pointing to one
California agency working on groundwater
rules while another targets UIC reforms.
Zierman notes that UIC also is a national concern, with Washington scrutinizing California's program. The U.S.
Environmental Protection Agency is examining aquifer exemptions, including
those that have been permitted but not
approved by EPA. Zierman says there
even are wells under review that previously
were approved by EPA. He says the deadline for federal approval is February 2017.
Despite the regulatory uncertainties,
CIPA Chairman Steve Layton says he
sees some reasons for market hope.
"There is a hint of optimism in the
California industry; eyes are looking upward rather than downward, following
the trend of oil prices," says Layton,
president of E&B Natural Resources in
Bakersfield, Ca. "There is some sense of
optimism, but that definitely is impacted
by concerns over increased pressure from
regulators and some state legislators."
Groundwater Regulations
On April 1, CIPA submitted comments
to the California Department of Water
Resources on its proposed changes to
groundwater management regulations,
86 THE AMERICAN OIL & GAS REPORTER

Zierman says.
In its comments, CIPA urges regulators
to abide by the governor's and legislature's
intent for local groundwater management.
The association contends local agencies
have the power to assess and protect their
water basins, and also have decades of
experience in dealing with produced
water, groundwater, and drinking water
supplies.
"It is best to spend limited resources
on remediating groundwater rather than
on compliance paperwork. Regulatory
efficiency, incentives and innovations are
key tools," Zierman says in the association's comments.
He adds the association seeks to mitigate any hurdles the state could be imposing on beneficial use of produced water.
Aquifer Exemptions
State regulators don't classify water
produced from hydrocarbon zones as
groundwater, and water extracted with
petroleum from designated hydrocarbon
zones is, by definition, not a drinking
water source, CIPA says.
The California State Water Resources
Control Board and the Division of Oil,
Gas and Geothermal Resources are collaborating on a review of most of the exempted areas in Kern County. CIPA predicts that review will lead to modified
boundaries and validation that those areas
are not principal aquifers and don't yield
drinking water resources, and thus warrant
exempt status.
Staff members of the two water boards
say they have recommended conditional
approval of an aquifer exemption for the
Dollie Sand in the Pismo formation in
the Arroyo Grande oil field in San Luis
Obispo County. They say this is the first
coordinated aquifer exemption in California under the new regulatory process.
The agencies note that EPA approval of
the exemption still was pending as of
early April
The Central Coast Water Board adds
that it is recommending injection well
operators use monitoring wells, as well
as additional protections, to make sure

injected fluids remain within the exempted
portions of the aquifer. Under the proposed
exemption, an operator could continue
Class II injections into the aquifer either
for enhanced oil recovery or fluid disposal
from oil production at the field.
"We need to ensure the state water
board and DOGGR work diligently to
review all these permits and look at them
scientifically, given that all the applications
are in areas that never could be used for
drinking water purposes," Zierman says.
UIC Regulations
In early March, CIPA submitted comments on the California Department of
Conservation's proposed changes to UIC
rules. The association points out that
more than 90 percent of injection wells
reinject fluid for enhanced recovery projects, making it the most environmentally
sensitive way to manage oil field fluid
flows.
The pre-rule-making draft regulations
that DOC released in January have several
shortcomings, CIPA says, including:
* They take a one-size-fits-all approach. The association says that is inappropriate for addressing operations with
a wide range of site-specific conditions.
* The language used essentially would
prohibit producing from shallow, lowpermeability formations, including the
Diatomite in the Southwest San Joaquin
Valley, a formation that produces nearly
10 percent of the state's daily crude
output.
* The regulations place significant
burdens on operators to supply data, much
of which is duplicative under other DOC
regulations. CIPA says many of the proposed data requests will not add value to
the reviews DOC must conduct to ensure
operations addressed by the UIC program
protect natural resources and the environment.
* The regulations don't clearly specify
their applicability to existing UIC projects,
or provide a clear administrative process
for DOC review or operator appeals.
DOGGR reports state and regional
water boards are analyzing 47 Class II
UIC wells in the Central Coast area that

American Oil and Gas Reporter - May 2016

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