Oil and gas companies and oil-­field service providers with California operations should scrutinize newly proposed rules on hydraulic fracturing and well stimulation, with comments due by mid-­January.

Introduction -

On November 15, 2013, the California Department of Conservation, Division of Oil, Gas & Geothermal Resources (DOGGR) issued two key documents relating to hydraulic fracturing and other well-­stimulation treatments: (1) proposed regulations to implement recently enacted Senate Bill 4 (SB 4) and establish a permit program for well-­stimulation treatments;; and (2) a notice of preparation (NOP) that initiates review of well-­stimulation treatments under the California Environmental Quality Act (CEQA). These two actions mark the beginning of agency implementation of SB 4’s various requirements. This regulatory activity will continue through 2015, and may be followed by possible litigation and judicial review. Energy companies and oil-­field service providers engaged in California oil-­and-­gas extraction should scrutinize the regulations to assess whether their operations might be affected. Public comments on the draft regulations are due on or before January 14, 2014.

Neither the draft regulations nor SB 4 imposes an express moratorium on well- stimulation treatments while the regulations are being promulgated. Rather, if certain enumerated conditions are met, SB 4 explicitly allows continued use of well-­stimulation treatments. DOGGR progress in developing the regulations and undertaking the CEQA review provides an important hedge against any interruption of well-­stimulation treatments. Oil-­and-­gas operators should be able to satisfy other statutory conditions, as described in more detail below.