AB 2716: Oil and gas: low-production wells: sensitive receptors.

Existing law establishes the Geologic Energy Management Division in the Department of Conservation, under the direction of the State Oil and Gas Supervisor, who is required to supervise the drilling, operation, maintenance, and abandonment of oil and gas wells, as provided. Existing law requires the operator of a well to file a written notice of intention to commence drilling with, and prohibits any drilling until approval is given by, the supervisor or district deputy. Existing law requires the operator of any idle well, as defined, to either (1) no later than May 1 of each year, for each idle well that was an idle well at any time in the last calendar year, file with the supervisor an annual fee according to a specified schedule of fees based on the length of time a well has been idle, or (2) file a plan with the supervisor to provide for the management and elimination of all long-term idle wells. A violation of these or other laws regulating oil and gas operations, as provided, is a crime.

Existing law generally prohibits the division from approving any notice of intention within a health protection zone, defined as an area within 3,200 feet of a sensitive receptor, as provided. These provisions related to health protection zones are the subject of a referendum on Chapter 365 of the Statutes of 2022 to appear on the November 5, 2024, statewide general election ballot.

This bill would require the division, on or before July 1, 2025, to identify all low-production wells that are located within 3,200 feet of a sensitive receptor, and determine the length of time each of those wells has continuously been a low-production well, as provided. The bill would define a low-production well for these purposes as an oil or gas well that produces, on average, fewer than 15 barrels of oil a day during any period of 12 consecutive months, or a natural gas well whose maximum daily average gas production does not exceed 60,000 cubic feet of gas, per day, during any period of 12 consecutive months. The bill would include specified idle wells within the definition of a low-production well and exclude a natural gas storage well, a dedicated injection well, an active observation well, and a fully plugged and abandoned well from the definition of a low-production well, as provided. The bill would require the division, on or before July 1, 2026, to notify the owners of wells identified as low-production wells, as provided.

The bill would prohibit, commencing July 1, 2026, a well located within 3,200 feet of a sensitive receptor from being a low-production well for more than 24 months. Upon a violation of that prohibition, the bill would require the supervisor to charge an administrative penalty of $10,000 per day to a low-production well owner, until the low-production well is plugged and abandoned, as provided. The bill would require the division to waive this penalty on a low-production well when the owner submits a request for a notice of intention to plug and abandon the well, as provided. Because a violation of these requirements would be a crime, the bill would impose a state-mandated local program.

Existing law establishes and requires the division to administer and manage the Oil and Gas Environmental Remediation Account in the Oil, Gas, and Geothermal Administrative Fund. Existing law requires moneys in the account to be used, upon appropriation by the Legislature, to plug and abandon oil and gas wells, decommission attendant facilities, or otherwise remediate sites that the supervisor determines could pose a danger to life, health, water quality, wildlife, or natural resources, as specified.

This bill would require the above-described administrative penalties for operating low-production wells to be deposited into the Oil and Gas Environmental Remediation Account.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.