Produced Gas Bill Put on Hold

Monday Morning Report, September 12, 2011:

The California legislative session for the year ended last week without taking up the produced gas disposal bill sponsored by CIPA. SB 711 (formerly SB 682) has been turned into a two-year bill and will be taken up in January, if necessary. Senator Rubio and the Natural Resources Agency have agreed to create a workgroup to resolve this issue during the break in the legislative session.

The bill is meant to solve a problem started when the Division of Oil, Gas and Geothermal Resources (DOGGR) quit issuing permits for the reinjection of produced gas two years ago believing they do not have the regulatory authority to permit such activity. In the fall of 2010, a legal opinion was submitted to DOGGR by industry outlining the legal authority granted under California law and the EPA’s 1983 UIC primacy agreement and used by DOGGR since 1983 to permit over 120 gas injection wells. 31 other oil and gas producing states also permit such activity under EPA primacy agreements. The legal opinion was submitted to DOGGR with the understanding that there would be a written response. To date, no written response from DOGGR has been received.

Given the lack of movement in resolving this issue, CIPA introduced a simple, one sentence bill. The current bill reads:

The division shall have the authority to permit the underground injection of gas, as defined in Section 3007, including the constituents associated with the gas that are produced from downhole in connection with exploration, development, or production operations for the purposes of disposal.

Senator Rubio is committed to finding a resolution to the issue over the interim and before the legislature returns in January. If the issue is not resolved, SB 711 will be heard early in next year’s legislative term.

For additional information on the bill, please contact Blair Knox.