Nearly two months ago, on November 19, 2019, the Department of Conservation’s Division of Oil, Gas and Geothermal Resources[1] (“DOGGR”) announced a moratorium on approvals of new oil extraction wells that use a high-pressure cyclic steaming process to break apart a geological formation to extract oil.

The announcement did not contain much, if any, detail for the timing of the regulatory framework needed to implement the moratorium, or how it would be carried out in practice.  Finally, on January 7, 2020, the California Geologic Energy Management Division (“CalGEM”) (formerly DOGGR) issued its long-awaited Notice to Operators regarding the moratorium (“NTO”) that offered industry some guidance on how the moratorium will be put into place and how it will be tailored over time.  The NTO expands on DOGGR’s November announcement, and states that the moratorium applies to new projects and wells that inject steam underground at high pressure to break rock formation and allow oil production.  The moratorium does not affect proposed projects that use cyclic steaming at pressures that are demonstrated to take place below the fracture pressure.

During the moratorium, CalGEM, in consultation with experts from the Lawrence Livermore National Laboratory, will review the practice of high-pressure cyclic steam operations above the fracture pressure to determine whether such operations can be performed safely, and if so, to identify specific criteria to be incorporated into CalGEM’s regulations.  The NTO states that this review could lead to new safety requirements for cyclic steam above the fracture pressure, updated regulations, or an indefinite halt on new projects using this technique.

The NTO is available here: https://www.conservation.ca.gov/calgem/for_operators/Pages/NoticetoOperator.aspx

[1] As of January 1, 2020, DOGGR is now the California Geologic Energy Management Division, or CalGEM.