Is There a De Facto Moratorium on Well Stimulation in California?

by Stoel Rives LLP
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SB 4 did not place a moratorium on the use of hydraulic fracturing or other well stimulation treatments.  SB 4 specifically states that so long as an operator complies with the notification and documentation requirements added to the Public Resources Code, the Division of Oil, Gas & Geothermal Resources (“DOGGR”) shall allow well stimulation activities until the permanent regulations are finalized and promulgated.  The permanent regulations are currently due on January 1, 2015, though as reported in our March 26, 2014 post, the due date may be pushed back to July 1, 2015.

Despite SB 4’s clear language and DOGGR’s public statements on SB 4’s implementation, in real terms well stimulation in California has been stymied since January 1st of this year.  According to DOGGR’s index of Interim Well Stimulation Treatment Notices (“IWSTNs”) as of Friday, April 4, 2014, not a single groundwater monitoring plan was approved in the first quarter of 2014, which is required to obtain an approved IWSTN in those instances where protected sources of water are present.  DOGGR insists that there is no “de facto” moratorium on well stimulation activities in 2014, despite internal, administrative delays processing Interim Well Stimulation Treatment Notices (“IWSTNs”).

In DOGGR’s recent emergency regulations to implement SB 4 in 2014, DOGGR has required that an operator either create an acceptable groundwater monitoring plan or obtain a written concurrence from the “Water Boards” that there is no protected water within the area to monitor.  See § 1783.4(c).  One operator has achieved a written concurrence for the South Belridge Oil Field (which is notoriously dry to start with), and no other operators have been able to obtain an approved IWSTN in the meantime. 

Given that under SB 4 an operator must give surface owners at least 30 days’ notice of well stimulation activities – and wait for any requested water testing by the surface owner as required by SB 4 – as of today, the earliest an operator who has not already obtained a written concurrence of no protected water could begin well stimulation is May 7, 2014.  Considering the difficulty and expense of scheduling and obtaining drilling services without any real certainty of dates, even this is an unlikely timeframe.

The emergency regulations appear to not only have created significantly more problems than they solved for the industry in California, they also have created by administrative regulation the moratorium that the Legislature and Governor rejected at the end of 2013 legislative session.

 

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