With state leadership pushing to accelerate the move away from fossil fuels, California oil and natural gas regulators have released a series of stricter regulations on drilling and related activities.
The California Department of Conservation's Division of Oil, Gas and Geothermal Resources (DOGGR) has increased its oversight of hydraulic fracturing (fracking), imposed a moratorium on the use of high-pressure steam injection in oil drilling and established a series of initiatives that could be problematic for one of the nation's largest oil-producing states.
DOGGR's rules would place a moratorium on the use of high-pressure cyclic steam and scientific reviews in the permitting process for well stimulation, including fracking.
“The state Office of Audits will be reviewing the overall permitting process, and in the meantime, the Lawrence Livermore and Sandia National Laboratories will conduct third-party reviews of permits,” DOGGR spokesperson Don Drysdale said. The reviews apply to all wells, he noted.
“The cyclic steam moratorium applies to steaming at high pressures that can fracture geologic formations,” said Drysdale. He pointed to the recent incident at Chevron’s Corp.’s Cymric field in which an abandoned well leaked more than 1 million gallons of oil and water in California’s San Joaquin Valley.
The industry has also stepped up public health and safety operations after a series of steps taken by first-year Gov. Gavin Newsom to tighten restrictions on oil and gas operations. The moves, Newsom has said, are aimed at phasing out “our dependence on fossil fuels."
DOGGR's latest changes reflect an evolving state mission that "emphasizes public health and safety, environmental protection and reduces climate impacts associated with oil production," said Natural Resources Secretary Wade Crowfoot.
The state's largest producer, California Resources Corp. (CRC), indicated the requirements should not have a significant impact on operations. Spokesperson Richard Venn said the independent "is not dependent on any single field, drive mechanism or completion method," and its extensive steam flood operations "do not require high-pressure cyclic steam injection.”
CRC is operating eight rigs that are drilling wells, “none of which require well stimulation," Venn said.
Berry Petroleum Co., another California-focused operator, also does not see any near-term impacts.
"This moratorium will not impact the company’s 2019 financial performance and only potentially impacts its future thermal diatomite wells,” said Berry investor relations chief Todd Crabtree. “Additionally, the company has an extensive bullpen of drilling opportunities and a diverse asset portfolio."
Western States Petroleum Association (WSPA) President Catherine Reheis-Boyd expressed disappointment with the rules, indicating they were redundant to ones already in place. The state is "pursuing additional studies when multiple state agencies already validate our protection of health, safety and the environment during production." She said the state should equally consider "reliability, affordability and resilience of our energy supply."
She reiterated the WSPA mantra that "every barrel delayed or not produced” in California “will only increase imports from more costly foreign sources that do not share our environmental and safety standards.”