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Tuesday, Aug 30 2011 07:06 PM

Federal review calls for changes in state oil regulations

By BYJohn Cox Californian staff writer jcox@bakersfield.com

A recent federal review calls for tightening California's oversight of certain underground injection activities common in Kern County oil fields.

Saying more should be done to protect underground sources of drinking water, the U.S. Environmental Protection Agency-commissioned review recommends several measures that could make it harder for oil companies to get permission to inject steam, wastewater and other materials underground.

The review comes at a sensitive time for California local oil producers. For months the industry has howled about the more cautious, time-consuming approach that Sacramento has taken to regulating underground injection projects over about the last year and a half. Trade associations say delays cost jobs and worsen California's dependence on foreign oil.

Industry representatives said Tuesday it is unclear what exactly will be the impact of the review, a summary of which was posted online Friday by the state Division of Oil, Gas and Geothermal Resources. Oil industry spokespeople noted that DOGGR officials have not officially responded to the review.

Rock Zierman, CEO of the California Independent Petroleum Association, said he saw no "red flags" raised in the report. The most important question, he said, is how the recommendations are implemented by the state, if it comes to that.

"Keep in mind that much of what they're raising is a paperwork problem," Zierman said.

A DOGGR spokesman wrote in an email Tuesday that some of the review's findings are reflected in regulatory changes already instituted at DOGGR over the last three years. Spokesman Don Drysdale indicated that this point will be discussed in meetings tentatively set to begin next month between State Oil and Gas Supervisor Elena Miller and David Albright, the San Francisco-based manager of the EPA's Pacific Southwest Ground Water Office.

Drysdale added that any new rules would have to be drafted by DOGGR and then go through a public review process before being reviewed by the state Office of Administrative Law.

Since 1983, DOGGR has regulated underground injection projects under a "primacy" agreement with the EPA. The agreement requires periodic reviews such as the one posted in summary form Friday.

Three specific issues

In a letter to Miller dated July 18, Albright made specific mention of three issues discussed in the review, which was conducted by Horsley Witten Group, an East Coast environmental science and engineering firm:

• Unlike federal rules, DOGGR regulations do not clearly require the agency to protect water containing up to 10,000 milligrams per liter of dissolved solids. State rules define "fresh water" as containing no more than 3,500 milligrams per liter of dissolved solids;

• State regulators are approving underground injection projects based on reviews that extend a quarter mile around the proposed injection well. "Whereas the fixed radius approach may be appropriate for some injection wells," Albright wrote, other wells may require a wider area of study;

• Federal and state laws say that the maximum surface injection pressure must not exceed a level capable of fracturing the area's underground geology. DOGGR regulators, however, often use only estimates of the fracturing pressure, and that when they perform a more detailed pressure study, then fail to gather "the more accurate combination of surface and bottom-hole measurement."

Albright's letter to DOGGR made brief reference to several other matters raised in the Horsley group's review. These range from the professional qualifications of DOGGR's underground injection control staff and the frequency of project reviews to well plugging and abandonment requirements.

A theme raised repeatedly in the review is that DOGGR has lacked adequate staffing to address various regulatory challenges. It also notes that DOGGR has recently received approval to hire more staff.

DOGGR wrote Tuesday that in fiscal year 2010-11 it received approval to fill 17 underground injection control positions statewide. That brought DOGGR's total payroll to 157, not all of these related to underground injection.

The DOGGR district that includes Kern County performs more underground injections than any other district, comprising 86 percent of the state's active underground injection wells.

The specific uses of Kern injection wells range from cyclic steam (58 percent of all California's active underground injection wells) and steam flooding (14 percent) to water disposal (3 percent).

Cathy Reheis-Boyd, president of the Western States Petroleum Association, said she and her staff were anxious Tuesday to get a copy of the full EPA-ordered review, which was not available on DOGGR's website. She said the goal of WSPA, which represents the state's largest oil producers, was to begin work with DOGGR to address the federal government's concerns as quickly as possible and then return to the business of producing oil.

"From a bigger policy perspective," she said, "we really need to come to agreement on how we're going to proceed with all parties."

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