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California Officials Acknowledge Lax Oil, Gas Oversight, Submit Overhaul Plan

Acknowledging insufficient oversight of the oil and natural gas industry in the past, California energy officials on Thursday released a "renewal plan" for regulatory efforts along with a state legislative-mandated report (SB 855) detailing shortcomings of past efforts, which are concentrated in the Department of Conservation (DOC).

"As I have told the state legislature and other public forums, the Division [of Oil, Gas and Geothermal Resources, DOGGR] hasn't lived up to its regulatory responsibilities in the past, but we're rapidly moving toward doing that," said Stephen Bohlen, the state oil/gas supervisor heading DOGGR. "In the last two years the division has increased all of those activities that speak to us having a much more active presence as regulators."

Conceding the state's efforts need change, David Bunn, the newly installed DOC director, said the release of the renewal plan marks the continuation of an "overhaul" of the state's oversight of the oil/gas industry. It is designed to strengthen DOGGR's oversight, bring in state-of-the art science and technology, "elevate and enlarge" the enforcement team, and modernize well management and documentation, moving from a paper-driven to an electronic data-gathering, monitoring and record-keeping system.

Bunn said the DOGGR enforcement efforts in the past have sometimes struggled and other times failed.

Regarding the legislative report on the state's stepped-up underground injection control (UIC) program, the Western States Petroleum Association (WSPA) said its oil/gas operator members are "committed to protecting underground water supplies and ensuring that injection wells are operating safely," characterizing these wells in California as operating with "necessary permits, and producers providing state regulators with an unprecedented amount of data."

Responding to questions from news media on a conference call, both Bunn and Bohlen said there is increased pressure from state political leaders and others for DOGGR to "improve the state's regulatory compliance monitoring" of the oil and gas industry in the third largest oil-producing state in the nation. While additional staff is coming, it most likely will not be enough, Bohlen said, calling California's oil/gas regulatory effort "modest" compared to other oil/gas-producing states.

"In implementing the well stimulation law (SB 4), we have hit all of our targets so far, and we have the toughest rules governing hydraulic fracturing [fracking] than any state in the country by far," Bohlen said.

DOGGR has embarked on an aggressive oversight of the UIC wells (see Shale DailyFeb. 9) and undertaken an internal reorganization (see Shale DailyAug. 26) within the span of a few months this year under Bohlen who came in 18 months ago as oil/gas supervisor.

Bonn said the renewal plan will build on major reforms already under way, citing DOGGR joining the U.S. Environmental Protection Agency and California's Water Resources Control Board earlier to get the state UIC program in full compliance. He pointed out that DOGGR has issued a shut-in order for 23 wells and is testing to continue verifying that there is no contamination of groundwater near any of those sites (see Shale DailyAug. 13).

"We have analyzed past and present regulation of underground injection and find that the permitting unit -- created more than 50 years ago -- has struggled and sometimes failed to embrace a transparent enforcement process driven by scientific research and best practices," Bunn said.

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