Admitting that an agency founded nearly 100 years ago has failed to keep up with changes in how oil and gas is brought out of the ground, the state's top oil regulator has said in a long-awaited letter that changes are necessary that could increase the cost of local oil production.
New regulations, additional staffing and possibly new legislation are needed to address federal concerns that California oil field practices do not adequately protect groundwater, said the letter by State Oil and Gas Supervisor Tim Kustic.
Sent last week to the U. S. Environmental Protection Agency's Ground Water Office in San Francisco, the letter provides new details on California's evolving approach to underground waste disposal and other injection well operations.
It concedes that the state Division of Oil, Gas and Geothermal Resources, known as DOGGR, has failed to keep up with industry progress since the agency's founding in 1915.
"With changes in oil field practices and advancements in technology, the division has been slow to change its regulatory framework," he wrote. "Although the division has a strong regulatory program, the division is pursuing greater and more consistent enforcement."
By virtue of Kern County's vast oil reservoirs, any changes to California's injection program would be felt more keenly here than anywhere else in the state.
Kustic's letter largely mirrors plans he shared publicly at a Sept. 20 meeting in Bakersfield with oil industry representatives wary of changes to longstanding practices.
Just last year oil companies' complaints about state injection project reviews led to upheaval in Sacramento. But this week industry groups voiced support for staffing increases called for in Kustic's letter, and they indicated a readiness to work with the state on any proposed rule changes.
"We are always willing to look at sensible new regulations when they are needed," Rock Zierman, CEO of the California Independent Petroleum Association, wrote in an email.
Underground injection wells are crucial to local oil operations. They are typically used to dispose of toxic fluids and gases that come up during pumping.
Many of these injected materials exist underground naturally, though they sometimes include chemicals pumped underground as part of hydraulic fracturing, or "fracking," an increasingly popular technique credited with spurring the domestic oil and gas boom. Underground injection as a regulatory category also includes cyclic steam injection, a process pioneered in Kern County and widely used locally to produce heavy oil in the prolific Midway-Sunset and other oil fields near Taft.
Kustic and his boss, Mark Nechodom, director of the state Department of Conservation, have stepped carefully with regard to injection wells, winning industry praise for their flexibility and outreach. The timing of Friday's letter, delivered 16 months after the EPA requested it, likely reflects their sensitivity.
Kustic and Nechodom's deliberative approach is not coincidental. Gov. Jerry Brown ousted their predecessors last fall amid loud complaints by industry and Kern County politicians that unprecedented scrutiny by state regulators starting in 2009 was delaying injection well projects, costing many local workers their jobs.
Renewed discussion of how California should oversee injection work has come at an unusually busy time for state oil regulators.
Under pressure from legislators and environmental groups, Kustic and Nechodom have spent much of the past year considering new rules for fracking, which is related to underground injections but classified separately. The Department of Conservation plans to release proposed fracking regulations by year's end; this would kick off a rulemaking process that Nechodom has said would come before any new underground injection rules.
Much of the impetus for California's re-examination of injection wells permitting began with the U.S. EPA. Last year the agency released audit results concluding that many of California's injection rules and practices are at odds with stricter federal guidelines. (See box.)
David Albright, manager of the EPA's Ground Water Office in San Francisco, said he was satisfied with the direction Kustic's letter points to, and said his staff will likely offer input as the state moves toward updating its rules on injection projects.
He predicted that DOGGR will take industry concerns into account along the way.
"I don't think the industry needs to be nervous about what the Division of Oil and Gas is talking about here," Albright said.